The Omnichannel Master Class

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Here's how companies are bridging the omnichannel gap.
Customer Experience

Companies are getting closer to closing the gap between digital and offline channels. Personalized experiences are rising as companies strive to align sales, marketing, supply chain, and customer service operations around the specific needs of the customer.

Challenges, such as managing returned merchandise in a cross-channel environment are also rising. For companies that have yet to adopt an omnichannel strategy, here are innovations and lessons to learn.

Closing the gap between a shopper's online and offline behavior continues to be a goal for retailers. The benefit of online shopping is that retailers can see which pages consumers clicked on and which items were placed in an abandoned shopping cart. It's more difficult to track similar actions in a physical store, but companies are getting closer to a solution.

The fashion brand Rebecca Minkoff, for example, teamed up with eBay to develop interactive dressing rooms. The dressing rooms are equipped with touch screens that double as mirrors and include a tracking system. When customers try on clothing with an attached RFID tag, the "mirror" logs the merchandise and displays suggested accessories that complement the clothing.

Customers can purchase merchandise in the dressing room (an associate will bag the items on your way out). Shoppers can also enter their email addresses to receive a list of the alternate sizes and colors of the clothing they didn't buy in case they would like to purchase these items in the future. Store managers can use this data to make recommendations for returning customers and apply it to decisions about inventory, displays, and even price.

These dressing rooms are being rolled out at Rebecca Minkoff's flagship stores in New York, Los Angeles, San Francisco, and Tokyo. Other retailers have expressed interest in these mirrors, says Craig Peasley, head of product marketing at eBay Enterprise. "This gives retailers information that they didn't have before," Peasley notes. "And they can use it to provide a more personalized experience."

Zappos is another online retailer that is integrating itself with the physical world. Between November and early January, Zappos offered a "shop and ship showroom store" in downtown Las Vegas in a partnership with the startup OrderWithMe.

Powered by the vendor's ShopWithMe solution, shoppers could try on merchandise in the pop-up store and scan item codes on POS systems to bring up a wider selection of products. Customers could then order similar or out-of-stock products to have them shipped home. OrderWithMe refers to its solution as an inventory-as-a-service POS, allowing physical retailers to leverage showrooming as a sales strategy. Zappos has not said whether it will launch a permanent version of the store, but it reflects another example of how retailers could potentially capture both online and offline sales.

As companies shift toward omnichannel experiences, it is critical to have an organized plan for redistributing returned items across channels, notes Guy Courtin, principal analyst and vice president at Constellation Research. "Omnichannel is about this notion that we'll sell you what you want, anytime and anywhere but that becomes complicated when customers want to return or exchange something and it's not necessarily through the same channel where they made the purchase," Courtin says.

Some companies like Zappos are known for customer-friendly return policies, but it can be difficult to manage a high volume of returned inventory from multiple channels. Before jumping into an omnichannel strategy, companies must examine their ability to handle returns and the cost of restocking fees and related expenses.

There is an opportunity, Courtin adds, for third-party vendors to offer affordable shipping and return solutions to small businesses that don't have the resources of huge retailers like Zappos or Amazon. When most companies receive returned merchandise, "it just goes back into inventory and many don't have systems in place for optimizing those returns across the entire network," Courtin notes. "Optimizing the supply chain [in an omnichannel environment] is still picking up steam."

Incorporating customer service intelligence with other data sets is also essential for providing an omnichannel experience, maintains Kyle Christensen, marketing vice president at Invoca, a call tracking and analytics provider.

Invoca uses cookies placed on a company's website to help it match callers with their online activity. "Call intelligence can bridge the gap between what customers are looking at on your website and when they decide to speak with someone for more specific information," Christensen says. This information, Christensen adds, can inform sales leads and help marketers make their messages more relevant.

It is also important to appoint a leader to oversee the integration of multiple channels and the various teams that are responsible for each channel. This role often falls to a chief customer officer who works closely with other members of the C-suite. And some companies, like Macy's, even have a chief omnichannel officer.

Robert B. Harrison became Macy's chief omnichannel officer in 2013 after serving as the company's executive vice president for omnichannel strategy. In addition to managing the development of strategies to integrate the company's stores, website, and mobile activities, Harrison is responsible for the company's systems and technology, logistics, and related operating functions.

In its 2013 annual report, Macy's referred to itself as "an omnichannel retail organization operating stores and websites." The company has invested billions in technology like iBeacons, mobile apps, and tablets to provide a seamless shopping experience.

Macy's, for example, teamed up with Shopkick in November 2013 to use iBeacons to send customers location-specific deals, discounts, and recommendations in theShopkickapp while in a Macy's store. Additionally, the company offers a mobile app that lets users scan barcodes to get product details, prices, and customer reviews, in addition to storing coupons. It was also one of the first department stores to accept payments from Apple Pay.

Harrison works with CIO Larry Lewark and other colleagues to integrate the company's legacy software withnewer software for processingbeacon technology and mobile payments. Harrison describes his role as constantly evolving. "Right now my role is to be the guy in the middle who helps bring everyone together but eventually that won't be necessary," Harrison says. "But looking for innovations and new ways to improve the customer experience won't change."

It is also easy to lose sight of what the customer wants while getting caught up in delivering an omnichannel experience, notes Rhonda Basler, director of customer engagement at Hallmark Business Connections. Basler guides companies in developing engagement strategies that take into account relevant touch points. Instead of focusing on the term "omnichannel," just "think of helping users move between channels," Basler advises. It may not be necessary to develop a sophisticated, interconnected system for numerous channels either. "It's important to listen to your customers to find out how they want to engage with you," she adds.

Justin Simmons, email marketing manager at Go Ahead, which offers guided tours in all seven continents, agrees that listening to your customers is essential when building an omnichannel strategy. "There's an endless stream of channels, so you have to be strategic in deciding which channels to focus on," Simmons says. "At the same time, customers want to engage with you on their terms, so understanding how customers want to speak with you is important."

Go Ahead, for example, lets travelers request a printed catalog, and if they also look at tours on the company's website and/or speak with an agent, the company uses Salesforce.com's Marketing Cloud to connect the data and provide a personalized experience.

Indeed, the lines "between marketing, sales, and customer experiences are blurring," maintains Gordon Evans, a product marketing vice president at Salesforce.com. As an example, Evans points to BMW (a Salesforce.com customer). When the "check engine" light recently came on in Evans' car, he received an email from BMW reminding him that the engine's oil needed to be changed. He could also schedule a service appointment via the email. Additionally, BMW included information about how to extend the car's warranty.

"This experience got me thinking, 'was it a marketing, service, or sales interaction?'" Evans remarks. "All those things came together, which is how many companies are starting to approach the customer experience."

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