Decision 6 Multichannel communications strategy

As part of creating an Internet marketing strategy, it is vital to define how the Internet integrates with other inbound communications channels used to process customer enquiries and orders and outbound channels which use direct marketing to encourage retention and growth or deliver customer service messages. For a retailer, these channels include in-store, contact-centre, web and outbound direct messaging used to communicate with prospects and customers. Some of these channels may be broken down further into different media - for example, the contact-centre may involve inbound phone enquiries, e-mail enquiries or real-time chat. Outbound direct messaging may involve direct mail, e-mail media or web-based personalisation. Mini Case Study 2.2 'Lexus assesses multi-channel experience consistency' in Chapter 2 shows the importance of the quality of multiple channels in influencing customer experiences.

The multi-channel communications strategy must review different types of customer contact with the company and then determine how online channels will best support these channels. The main types of customer contact and corresponding strategies will typically be:

• Inbound sales-related enquiries (customer acquisition or conversion strategy);

• Inbound customer-support enquiries (customer service strategy);

• Outbound contact strategy (customer retention and development strategy).

For each of these strategies, the most efficient mix and sequence of media to support the business objectives must be determined. Typically the short-term objective will be conversion to outcome such as sale or satisfactorily resolved service enquiry in the shortest possible time with the minimum cost. However, longer-term objectives of customer loyalty and growth also need to be considered. If the initial experience is efficient, but unsatisfactory to the customer, then they may not remain a customer!

The multi-channel communications strategy must assess the balance between:

• customer channel preferences - some customers will prefer online channels for product selection or making enquiries while others will prefer traditional channels;

• organisation channel preferences - traditional channels tend to be more expensive to service than digital channels for the company; however, they may not be as effective in converting the customer to sale (for example, a customer who responds to a TV ad to buy car insurance may be more likely to purchase if they enquire by phone in comparison to web enquiry) or in developing customer loyalty (the personal touch available through face-to-face or phone contact may result in a better experience for some customers which engenders loyalty).

customers may always be right, but allowing them to follow their own preferences often increases a company's costs while leaving untapped opportunities to boost revenues. Instead customers [segments with different characteristics and value] must be guided to the right mix of channels for each product or service.

They suggest companies need to use data to assess a mismatch between the company's actual customer channel preferences and those of the market at large. Thomas and Sullivan (2005) give the example of a US multi-channel retailer that used cross-channel tracking of purchases through assigning each customer a unique identifier to calculate channel preferences as follow: 63% bricks-and-mortar store-only customers, 12.4% Internet-only customers, 11.9% catalogue-only customers, 11.9% dual-channel customers and 1% three-channel customers. This analysis shows the potential for multi-channel sales since Myers et al. (2004) state that these multi-channel customers spend 20 to 30% more.

So, the multi-channel communications strategy needs to specify the extent of communications choices made available to customers and the degree to which a company persuades customers to use particular channels. Deciding on the best combination of channels is a complex challenge for organisations. Consider your mobile phone company. When purchasing you may make your decision about handset and network supplier in-store, on the web or through phoning the contact centre. Any of these contact points may either be direct with the network provider or through a retail intermediary. After purchase, if you have support questions about billing, handset upgrades or new tariffs you may again use any of these touchpoints to resolve your questions. Managing this multi-channel challenge is vital for the phone company for two reasons, both concerned with customer retention. First, the experience delivered through these channels is vital to the decision whether to remain with the network supplier when their contract expires -price is not the only consideration. Second, outbound communications delivered via web site, e-mail, direct mail and phone are critical to getting the customer to stay with the company by recommending the most appropriate tariff and handset with appropriate promotions, but which is the most appropriate mix of channels for the company (each channel has a different level of cost-effectiveness for customers which contributes different levels of value to the customer) and the customer (each customer will have a preference for the combinations of channels they will use for different decisions)?

McDonald and Wilson (2002) suggest evaluating different distribution channels using the channel curve which is a similar tool to the electronic shopping test of de Kare-Silver (2000) described in Chapter 2. For a particular product category they suggest evaluating the customer's preference for each channel against store, mail and phone ordering channels and in terms of cost, convenience, added-value, viewing and accessibility for the customer.

To review strategic options for the role of the Internet in multi-channel marketing the channel coverage map (Figure 4.21), popularised by Friedman and Furey (1999), is a useful tool. This model is best applied to a business-to-business context. Considering an organisation such as Dell, customers will vary by value within and between segments. Low-value segments will be smaller businesses and consumers while large organisations placing many purchases will be higher-value. For consumers, Dell's preferred channel preference will be the low-cost online channel. For medium-sized companies, the preference will be a combination of desk-based sales agents in a call centre supported by the web. Through using phone contact, Dell can better explain the options available for multiple purchases. For the highest-value, large companies, the most important effective

Sales force Customer extranet

Contact-centre Web supported

Product sales complexity

Figure 4.21 Channel coverage map showing the company's preferred strategy for communications with different customer segments with different value

Sales force Customer extranet

Contact-centre Web supported

Web approach will be through field staff such as account managers. Specific web applications such as the Dell Premier extranets will form part of the strategy to support these customers. The model considers the different type of products a company sells from lower-cost standardised products through to higher-cost customised products and services such as network management.

We will return to this key decision about implementing customer contact strategies in later chapters in the book.

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