So you’ve gone through the headaches and heartbreak of constructing a digital offering. You’ve evolved from multichannel to omnichannel, striving to provide a consistent – seamless may be a stretch too far – level of service via stores, the web and mobile. Now the real hard work begins as it’s time to make full use of data and analytics to establish a clear return on investment.
Charlie Johnstone, Origination Partner at private equity firm ECI, says: “Customers increasingly shop across channels which makes it hard to attribute revenue to one particular area of spend. For example, a straight measure of PPC [pay-per-click] may suggest it is unprofitable, but this could ignore customers who are originally attracted through PPC and subsequently come to the site organically to shop, or indeed transact through another channel.
“Successful businesses are those which not only take a holistic view of the customer but are also able to understand shopping habits through analytics and behavioural insight rather than seeing each channel in isolation.”
By investing in data companies will start to see a difference. Jonathan Elliott, Europe Head of Business Transformation and of Digital Enterprise for Tata Consultancy Services, says: “Smarter businesses use analytics to micro-segment their customers, to better profile their products and also to look at how to use technology to spot bottlenecks in their operations.”
Steve Muylle, Professor and Partner at Vlerick Business School, and a Criticaleye Thought Leader, provides the example of DBS Bank, one of the largest in South-East Asia: “[It] has done a great job by enriching customer service through digital… In terms of cash allocation in ATMs, where Singaporean customers use them a lot more than in Europe, they’ve invested in data and analytics to understand everything from amounts of cash withdrawn, speed of dispensing it and where it’s being withdrawn the most…
“It took six months to develop an algorithm which they then tested for a year, but the net result was a massive improvement in cash allocation across the country and customer satisfaction went through the roof.”
At the end of last year, Gary Favell, CEO of retail concern Bathstore, launched a new e-commerce platform. He explains: “If you truly have an omnichannel strategy, the first thing you need to be able to do is track the return on investment on what you’re spending. If you haven’t got software that can track your customers and a data management system that isn’t totally integrated, you can’t tell that.”
Heather Savory, who chairs the Open Data User Group, which provides independent advice to the UK Government's Data Strategy Board, comments: “Any business that doesn’t have a digital strategy at its heart will find it difficult to continue to do business in the medium term. For example, the use of both demographic and geospatial data allows large supermarkets and other retail outlets to work with local government to plan where they should locate their new stores.”
Taking the lead
The use of data as a way to inform and shape strategy is only going to increase, whether that’s from pricing – Amazon reportedly makes 2.5 million price changes a day – to gathering intelligence on purchasing habits.
For those companies struggling to identify an ROI, a change in thinking is required. Jay Patel, CEO of mobile data provider IMImobile, says: “A lot of the return on investment hasn’t occurred because multichannel strategies are being applied to situations where companies are trying to win new customers.
“The acquisition of customers is difficult and competitive and just because you can do multichannel doesn’t mean you are going to [be successful].”
Martyn Phillips, former CEO for the UK & Ireland at DIY retailer B&Q, which in 2011 spent £35 million improving its online business, says: “You make certain decisions and review them quarterly, determine what success looks like, plan your investments for that quarter, and then stick with it.
“It changes so quickly and you can just get lost very quickly… [so] you’ll need to be prepared to change your view and rebalance your investments for the next quarter.”
Helen Murray, Chief Customer Solutions Officer at outsourced contact centre company Webhelp TSC, says: “Most of our customers have a multichannel approach to some extent but the crucial bit is developing some clarity around why you need to be in the digital space, how it’s going to benefit your customers and how your organisation is going to use it.
“There are often different silos within the business that have different objectives… but if channels aren’t connected and you can’t start a conversation in one that can be continued in another, then it’s not only disappointing for the customer but ultimately expensive for you as an organisation.”
Incentives will need to be aligned across platforms, a decision which may cause unrest among employees but one that is necessary if an organisation is to mature and move beyond the outdated dichotomy of digital versus physical. Training, development and new hires will also need to be undertaken if a company is going to succeed in building its brand and, in the process, winning and retaining customers.
John Allan, Chairman at electrical goods chain Dixons, which recently created a new Chief Marketing Officer position in order to bolster its multichannel capability, says: “Every management team benefits from having a blend of experienced people who understand the business and people with expertise from outside it, perhaps from other industry sectors… We have to keep moving forward as a business, particularly in terms of digital marketing, and having a new CMO will certainly help us to do this.”
When it comes to best practice, the airline and leisure sectors, plus elements of retail, are often heralded for executing digital strategies to a high level. However, far too many board-level executives continue to be tentative about reshaping business models in order to create that single-view of the customer.
Steve says: “You need to have a five or ten year vision for the digital side of the business and obviously the companies that succeed big time are the ones that double their revenues. They have this big ambition rather than settling for a couple of per cent of online sales in the first year and thinking that’s ok.
“What we see is that a lot of executives are afraid of engaging in digital because of fear of cannibalisation… that’s why you must have top management commitment from the start and make sure that the business is crystal clear on its online positioning to the customer.”
Be concerned if doubts and uncertainty continue to hold back progress in your company. The debate over whether or not to invest in digital moved on long ago, as the main focus for companies today is how to extract, understand and act on data to drive the best service for customers and the highest value for the business across each channel.
I hope to see you soon.