Monday, August 2, 2010

Multichannel: the digital holy grail or a poisoned chalice?

It is the received wisdom that the 360 degree view of the customer should be the ultimate goal of all marketing functions. By combining their customers' online and offline activities the company can monitor how frequently and through which channels these customers are touched by or touch them, ascertain how the customers respond to incentives, and use this information to determine how best to market to them. But should this be the goal of analytical functions? Might it actually be a waste of time?

There are a number of implementation issues that have to be overcome for this sort of project to avoid turning from the digital holy grail to a poisoned chalice. Firstly, accuracy. Whilst we've been told before that accuracy isn't so important in web analytics, this isn't the case when it comes to combining multiple databases - having an all-singing-all-dancing database means nothing if your data's not up-to-scratch. Your offline data needs to be regularly cleaned to remove deceased customers and update addresses, otherwise your finely-honed marketing campaign will be flawed from the start. In addition to this there's the problem of linking the offline to the online records - if any of these are inaccurate, then you're going to have problems merging the two. So there's little point executing this project unless you're satisfied that databases can be accurately linked. Finally, this isn't cheap. This of course is no reason not to implement a scheme providing the ROI warrants it. But can that be guaranteed, given some of these potential pitfalls?

Once the implementation problems are out of the way, you face your next hurdle (which ideally you'd have considered before the implementation). This relates to the type of industry your company sits in. A multichannel programme is going to be of little use to you if your customers don't purchase from you that frequently, which could be the case if you're in a very competitive industry, or one where the purchase frequency is low (cars, for example). If your customers don't purchase from you through any channel that frequently, this causes two problems for you: the statistical robustness of the data is weakened and the accuracy of the data you hold on them is likely to deteriorate between purchases, as customers identifying information changes. Finally, and crucially, this data only deals with the purchasers through your differing channels, and obviously won't pick up those who fail to purchase, assuming that visitors to your site only login during the purchasing process. It provides little help for converting prospects by determining why they didn't purchase from you.

And this leads me on to my main point - assuming you've got this far and set up an accurate multichannel database with a 360-degree view of your customers who are purchasing frequently enough from you to keep it all together, what next? It won't have happened overnight, and it won't have been free. Is being able to determine that customer A has responded better to a direct mail than an email campaign, whereas customer B only purchases online really going to provide huge insight? Obviously insight is there to be found, and it may be of benefit to some companies. But wouldn't a well constructed and segmented email campaign have already told you that customer A didn't respond well? Looking at it in terms of the opportunity cost of implementing such a costly and timely scheme, isn't there something more productive you could have done instead? For example, looking at segmenting your email campaigns more effectively, and analysing their on-site behaviour compared to other visitors might give you an improved response rate to your campaigns.

It seems to me that this is the end result of a marketer's fantasy gone mad, with little thought for the practical realities of its implementation and shortfalls. It's part of a familiar scenario: we've got too much data, and we're struggling to deliver true, clear insight. So what do we do to solve the problem? Bring in more data, or try and link existing datasets in an attempt to find it. But often there is no identifiable answer, and actually customer A asked his partner who happens to be customer B to buy it for him online. Focussing on the basics could provide as much ROI implementing a mulitchannel solution.

Again, let me reiterate, I'm not saying there's nothing to be gained from doing this; just that it's being sold as solving all our problems and being some sort of Utopian ideal, when in fact it takes a lot of time and money to implement, and there are still many key questions out there that remain unanswered.

1 comment:

  1. These days there are so many channels being added to the mix (mobile/apps, Facebook/apps, Twitter, Foursquare, etc. etc. etc.) that a 360 degree seeems like the 90s. You need at least a 720 degree view or 1440 degree view to truly get the full picture.

    Just kidding, of course.

    But the point is that a full picture view of customers is not feasible even if you buy, read, and apply my book on Multichannel marketing metrics/methods 8-).

    So, I agree with the author that the goal shouldn't be to start with the 360 degree view. Instead, look for small wins and build from there.

    What I have seen working at companies is to begin in the following 5 areas that can be informed by adding online click behavior to customers' profiles:
    * re-targeting
    * cross-sales
    * lead prioritization
    * retention marketing
    * on-boarding

    Unica and the
    Multichannel Marketing blog.


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