You will have heard both of these terms in the past. Omnichannel has been around since 2010 whilst Multichannel Marketing came into being just as soon as there were multiple channels to use for marketing…
You might not, however, understand the real difference between the two, and more importantly, why using Omnichannel marketing is becoming so important. In fact, I would say vital, if you are a large retailer.
What is Multichannel Marketing?
Both multi and omnichannel involve selling across a variety of physical and digital channels. However Multichannel is more about ‘pushing’ a message out. In essence, it allows interaction with potential customers on various platforms. Examples of channels include print ads, a physical store, a website, a promotional event, even the packaging of the product. Plus, of course, word-of-mouth.
What is Omnichannel Marketing?
Omnichannel, on the other hand, is about ensuring the different channels provide the customer with an integrated shopping experience. In practice, this means that a customer could be shopping online using their Smartphone at lunchtime and their desktop in the evening and the experience would be seamless.
How are they different?
Basically, the difference lies in how the customer experience is joined up across those channels. For instance, a traditional multichannel retailer’s website could be offering the same product at different prices on its website and physical store. Something that could really upset customers if they found out. On the other hand, a business that embraces Omnichannel marketing would have the same price on both channels, and what is more, would allow a customer to buy online, but return/exchange an item in a physical store.
Putting it simply, Omnichannel marketing is all about walking in your customers’ shoes, throughout all of their dealings with your business, and liking what you see…
But the difference goes even deeper than that.
First a bit of history
The concept of omnichannel was first seen in the marketing world in 2010, the term is used to describe a shopping experience that was superior to multi-channel retailing. The ideal omnichannel shopping experience was described as one that was accessible to customers on all platforms, from traditional brick-and-mortar stores to any of the channels the digital world provided.
Back in September 2010, a report from IDC Retail Insights predicted that to be successful in the long term, marketers would have to embrace omnichannel marketing or be outpaced by those who do.
Since then, companies with well-defined omnichannel customer experience strategies in place have seen an average 91% increase year-over-year increase in customer retention rates, when compared to businesses which are not using the omnichannel methodology.
It did take some time to take off though, taking to 2013 to really gain acceptance. The urgency seems to have its roots in the rise of the Smartphone and of the practice of ‘showrooming’.
What is Showrooming?
Showrooming is something that you may well have done even though the term is unfamiliar to you. It refers to the practice of shoppers, who when in a physical store, check to see if they can buy a product cheaper online or elsewhere. In many instances, businesses were (and continue to be) ‘caught out’ as they offered a lower price on their own online store. Showrooming continues to increase, causing more retailers to consider implementing omnichannel practices.
The pressure to change was notched up further when In early 2014, Marketing Land said that omnichannel marketing was a “must” for brands and retailers. Citing a report by MIT, they stated that consumers were demanding a ‘standard approach’ and are thus the “central force shaping the future of e-commerce and brick-and-mortar stores alike.”
An Example of Omnichannels’ power
This story concerns JC Penney an American department store chain with over 860 stores in the USA as well as an eCommerce platform
- The story starts in 2011 when they decided to create separate strategies for their online and physical stores. They treated e-commerce as a totally separate sales channel which had its own exclusive merchandise. Staff in their stores were not allowed to refer customers to J.C. Penney online when they couldn’t find what they were looking for. Similarly, their customers, when researching products on the retailer’s site, wouldn’t find the items in the physical bricks and mortar stores when they called in to buy.
- This had a terrible effect, online sales dropping by 32% in 2012. At first, they were unconcerned, deciding to concentrate on increasing sales in their stores. The view of CEO Ron Johnson was to deemphasise e-commerce. “Tomorrow, it will be more of an omnichannel approach, but that’s tomorrow. You’ve got to focus on where they are shopping today, and that is the physical store,”.
- It was not long before J.C. Penney reversed the strategy though, and in 2013, recognised that the separation of online and store sales was a mistake. Mike Ullman was re-appointed CEO of J.C. Penney in April of that year. He immediately cited the lack of an omnichannel strategy as one of the key mistakes the business had made. “It was an organisational mistake frankly,” Ullman said. It was “hard to have confidence at the store level [if] they can’t use dot-com to extend the sale or to help the customer solve size issues.”
- This turnaround had an immediate effect, online sales growing 6% over the previous year, and surging to a 26% increase thereafter.
J.C. Penney’s story amply demonstrates why it’s vital for retailers to align their store and web offerings in the areas of selection and price. This approach not only stops fulfilment roadblocks, it reduces the number of unhappy customers, whilst at the same time keeping all of a retailer’s sales channels — physical stores, web apps, and ecommerce websites — operating in unison.
The Deeper difference between the two methodologies
There are two different areas here. One is about the consistency (or lack of) in the messages being sent out, whilst the other is all about the data that is collected.
One of the ‘problems’ with Multichannel marketing is that the messages being sent out via the different channels may be subtly different, and in some cases could take no account of the data that is held in another channel.
For example, an email could be sent out to a person encouraging them to buy a certain model of car, when in fact they have just bought one, this happening as there was no connection between the data held by the garage and that held in their email campaign database. This sort of thing ‘annoys’ the modern customer, as they are demanding a more and more ‘personal – make me feel special’ level of treatment.
The difference can be more subtle than that, but what is important, is that the overall message must be the same. The tone can be different, but the meaning must be consistent.
This actually brings problems of its own, as potential customers are very likely using multiple social media channels. This means that you cannot use the same content on all of them, plus you have to be aware that each channel has its own set of content standards. You also must take note of the different cultures and expectations of each channel. For example, LinkedIn users expect a more ‘business-like’ approach than do Twitter users.
This makes creating content, whilst maintaining a consistent ‘message’, that bit more challenging. The key here is to understand your audience, what they like and what they want more of. This means looking at the data for each channel, and that brings out another clear difference between Multi and Omnichannel marketing, and where the latter wins hands down.
Then there is the matter of data
Each channel a business uses has its own set of data, creating a real problem for organisations that do not use Omnichannel marketing. Putting it simply, one hand does not fully know what another is doing, because it has no access to the data that would tell them what actions the other channel(s) were carrying out. And as importantly, what was working and what was not.
When Omnichannel marketing is utilised, things are very different. But only where the right software is used. In fact, a whole new type of software has had to be developed to cope with all this ‘big data’, known as “Martech”.
Big data has therefore been both a blessing and a curse for marketers. Brands now have access to a huge amount of customer data, the data from each channel, with Omnichannel, being saved in one place.
Brands have no choice but to impress
This allows them to personalise content (for each channel) based on an individual’s demographics, preferences, and stage in the buying process. However, users know that brands have all this data and expect them to use it. Brands, therefore, have no choice but to impress.
Businesses not using Omnimarketing to support their marketing and content operations will therefore obviously struggle. They cannot easily use their cross-channel information to improve their relationships with their customers or to ensure that the customer journey is optimised
Producing the right content for each channel is seen to be the key here (as well as ensuring that the prices and products remain the same whatever channel is used). This means that brands have to put content creation at the centre of their marketing activities and must use the collected data in order to ensure that this content is correctly tuned.
All the data in one place.
So, as we can see, if all the data from all the channels are collected into one place, then the marketing team can run queries, deduce patterns and more importantly, understand what the customer needs and wants.
But this amount of data causes its own problems, especially when some of it cannot be easily classified, e.g. videos, facial recognition data, social media posts. In this instance, Martech companies use what is known as ‘Data Lakes’. Unlike data warehouses, these systems do not classify and file data on the way in, but instead export it upon demand, providing the best fit it can to the users’ request. This makes for a much more flexible system but is not as fast.
This sort of data storage is important, as in some cases marketers don’t actually know what they want to do with the data when it is collected. This makes it difficult to classify as the ultimate purpose is unknown. In such cases, it is best to store first and decide classification later, which is why ‘Data Lakes’ have their own place in a marketer’s arsenal.
Cost and ROI: of omnichannel
As you can probably guess, one of the biggest barriers to the implementation of omnichannel is the cost and complexity of the Martech software. A retailer with several physical stores will already have a legacy in the store system, one that has probably been highly customised for them. Similarly, their order management and ERP systems are likely to be highly customised and integrated into their internal business systems.
Another large barrier to the adoption of omnichannel marketing is the culture of an organisation. If it is to be successful in this digital transformation, all the staff from the top down need to embrace the required changes and to adapt as needed.
Therefore, the implementation of omnichannel marketing across a business will require significant investment in technology and a deal of business change. The Martech technology will need to be integrated right across the business and may even replace some legacy systems. All of this takes a huge amount of vision and commitment by any business and needs to be driven from the very top for it to succeed.
The future of omnichannel and multichannel
At the moment there are very few retailers who fully embrace the principles of omnichannel marketing. But the expectations of consumers will soon start to drive brands to invest in this technology and the cultural change that is required to make it happen. Failure to change will introduce barriers to customers, and this will ultimately drive them towards the competition.
The writing is really on the wall now
The need to convert to an Omnichannel approach is only going to get stronger in the future, this being driven by the fact that, with the rollout of 5G, and the rapid expansion of the ‘Internet of Things’ (IoT), even more, data will soon be available. Businesses will need to store and classify this mountain of data, and then, be able to access it in a meaningful way. The only way of doing this is to adopt an Omnichannel approach. The writing is really on the wall now….