Monday, September 27, 2010

Channel Choice

Via The Hub Magazine, Masha Sajedeh

"A multichannel eco-system serves shopper needs.

In the era of multichannel marketing, the roles and relevance of both traditional and new channels is being questioned. As the battle for channel supremacy rages, we are left wondering: What role does the store play in a world where people have many other shopping and buying options? Why should a shopper have to go to a retailer and a manufacturer website? Can a last-minute price check on a mobile phone in-store really match the diligence of comparison-shopping online?

Amidst this chaos, three imperatives have emerged for maximizing the relevance of channels both new and old in their role to ultimately move the shopper closer to a sale: First, a channel must emphasize its unique comparative advantages. Second, a channel must meet a minimum threshold on shopper expectations. Third, channels must collaborate to enhance the multichannel experience for the shopper.

With our channel choices including everything from the physical store to e-commerce sites, manufacturer websites to catalogs, social to mobile — and beyond — how should we use these channels to help shoppers along their journey?

Answering this question begins by examining each channel against the four needs shoppers look to address as they make their purchase choices, specifically: product; price; time and convenience; and experience.

A channel must emphasize its unique comparative advantages. Clearly, not all channels can address these needs equally, nor can an individual channel address a shopper need completely or entirely on its own (see chart one). Channels address certain needs better than others and knowing this helps a channel define its role and mission for the shopper.

Begin by understanding which shopper needs are best addressed by a channel. Then determine how a channel can deliver on that particular need better than or differently from any other channel. This will help a channel create a unique point-of-difference around a need that is relevant for the shopper.

For example, in chart one, the store is great at delivering rich experiences, but so are catalogs, manufacturer websites and some social media channels. But the first-hand experience of a store cannot be replicated in any other channel. Similarly, ideas and inspiration are unique to a catalog experience, just as in-depth information is to a manufacturer website, and personally meaningful experiences are to certain social-media channels.

Therefore, if a store really wants to win on this dimension, it needs to create an immersive and tangible experience that can only be appreciated in-person. Take American Girl Place stores, for example—the lavish tea parties and glamorous haircuts are something you can only experience by bringing your doll with you to the store.

Understanding the comparative advantage of catalogs has helped many retailers highlight their ability to inspire and seed ideas with shoppers. The latest catalog from Barneys New York comes complete with 3D visuals and the glasses to bring the fashion to life. The new Diesel catalog has been transformed from a magalog into a videolog, complete with songs, characters and scenes that allow shoppers to appreciate the fashions in context.

The internet is unique in its ability to cast a wide net to shop a lot of retailers and brands without ever leaving the comfort of one’s living room. enhances this experience by letting shoppers enter a search item once and receive suggestions for retailers that they can “flit” back and forth from.

A channel must meet a minimum threshold of shopper expectations. As shoppers become accustomed to the benefits of shopping a particular channel, they also become more demanding in the way they shop other channels. Their expectations of shopping overall evolve and they carry these expectations with them from channel to channel. It is not good enough for a channel to exceed expectations on one dimension. If a channel cannot at least satisfy basic needs on other dimensions important to the shopper, people will have no choice but to avoid it.

For instance, because of the way people have shopped in stores, they expect to try on clothes and get the opinions of others before buying. However, shopping online has people guessing and speculating about how an outfit will look and what their friends may think.

Trunk Club has overcome this void by using online service consultants who interview customers to determine their clothing needs and preferences, then send a big box of apparel to model in front of the camera. Customers keep what works and send back what doesn’t, all without setting foot inside a store.

Conversely, the internet has provided shoppers with limitless product selections and efficient navigation tools. In contrast, in-store navigation of even a relatively limited selection is still challenging. To address this, Priscilla of Boston stores have incorporated touch-screen catalogs that enable brides to preview gowns with the stroke of a finger. Stores using the touch screens have reduced the
time required to browse 250 dresses from two hours to 20 minutes.

In a multichannel world, a shopper’s channel expectations are based not only on the way they use that channel, but also on what they experience in other channels. Channels can’t afford to simply build their strengths; they also need to overcome their shortcomings.

A channel must collaborate with other channels. Earlier, chart one showed us how channels are inherently suited for doing certain tasks better than others, but no single channel can deliver on any shopper need entirely on its own. Chart two shows why people therefore use multiple channels to perform different tasks as they move along the path-to-purchase.

Certain channels are used earlier in the process because they are a good source of information (online) or ideas (catalogs), but play a limited role late in the shopping journey. Other channels (like sales associates and mobile) provide the shopper with specific information just before the moment of purchase to help facilitate the decision. The store plays a role at various stages by providing the shopper with first-hand knowledge in the midst of the process and helping to complete the transaction.

For this reason, it is important that channels not be islands unto themselves. Of course, channels need to weave a seamless network, transitioning shoppers successfully from one task to the next. But even more important, channels need to collaborate—using their strengths to build upon the weaknesses of other channels—always enhancing the shopper experience.

The multichannel model from Sears combines the conveniences of online browsing with those of in-store pick-up. From the shopper’s perspective, this delivers the best of both worlds in one experience.

Kohl’s has added in-store kiosks that let shoppers jump online and order out-of-stock items and have them shipped to their home for free.

Ikea has brought the power of mobile to enhance the way shoppers view their catalog. iPhone users can download an augmented reality app, giving them the ability to place a piece of furniture anywhere inside a room around them, “virtually.” Best Buy’s Twelpforce uses Twitter to provide access to its in-store technical assistants outside the four walls of the store.

For too long we have debated the threat of online versus in-store, mobile versus online, social versus search, and so on. The multichannel world is not a “this or that” world; it is an eco-system in which multiple channels can harmoniously co-exist. How? Channels must acknowledge the other channels to define their own unique purpose for the shopper, solve for any gaps in expectations created by other channels and collaborate with other channels to enhance the experience for the shopper. "o