Why Omnichannel Strategy Failed and How to Make It Work? (Part Three)
From Omnichannel Marketing to Practical Omnichannel Marketing
So, should we get rid of omnichannel completely, as some marketers have suggested? Probably not for two reasons. First, after more than 15 years of numerous presentations, webinars, articles, and panel discussions to promote omnichannel, many people were under the impression that omnichannel will be the de facto standard of marketing communications for retailers. It is simply not easy to eliminate the word “omnichannel” from marketers’ language. Second, there are still many good points in the omnichannel theory worth pursuing. For instance, omnichannel marketing helps break down silos and requires all departments to work together. Also, omnichannel marketing integrates the different communication channels to communicate consistent messages with customers. Therefore, a more practical and realistic way is to redefine the concept and gain consensus on the definition of the new term among marketers.
The definition of omnichannel marketing
The new practical omnichannel marketing is different from the old omnichannel marketing in the following three ways:
First, the new omnichannel marketing has different objectives
The old omnichannel theory inexplicitly implies that the seamless customer experience across channels is the paramount issue in marketing. It inappropriately exaggerates the importance of customer experience by making it a panacea to cure the demise of retailing. The new omnichannel marketing acknowledges that customer experience is super important, but it is only one of the critical elements that drive customer engagement and sales. Also, the new omnichannel marketing believes that the so-called seamless customer experience is, in essence, merely a convenience. Convenience helps nurture an excellent customer experience, but it is not the only factor that produces excellent customer experience, because customer experience encompasses more aspects such as the product (quality, features, reliability, ease of use, etc.), price, value, advertising, and so on. And often, product, price, and product value are more important than convenience.
Therefore, the ultimate purpose of the new omnichannel marketing is not to create the so-called seamless shopping experience across channels, but rather it tries to address this ultimate challenge – how to understand why the core customers use a given essential channel and at each meaningful moment, then provide them personalized and contextual communications and offers. In a nutshell, the new omnichannel is about how to leverage and unify the strength of each of the relevant channels to create an effect where the whole is bigger than the sum of its parts. In other words, the new omnichannel marketing aims to create a result of 1+1>2 that will effectively increase engagement, stimulate sales, and increase profitability, thus foster a much profound and better shopping experience with customers.
Second, the new omnichannel marketing is more realistic.
For those who had the experience of buying a diamond engagement ring would have known that the value of a diamond is determined by the so-called for Cs: carat, clarity, color, and cut. Undoubtedly, your significant other will be very happy if you buy a piece of stone that has the best grade in each of the four Cs. However, in reality, most buyers cannot afford such a perfect diamond ring; they have to make tradeoffs between the four Cs according to what is most important to them.
The seamless customer experience, in essence, is like a piece of flawless diamond stone that sounds appealing, but for most retailers, it is merely a hard-to-achieve aspiration. So, why set up a goal that you cannot accomplish?
The new omnichannel recognizes that most organizations have limited marketing dollars. Retailers cannot invest their limited money on every channel. Therefore, instead of trying to be channel-agnostic, the new omnichannel marketing focuses on core customers and a handful of selected marketing channels where these core customers are most likely to use.
Third, the new omnichannel marketing believes that any measure to increase customer experience must pass the profitability viability test.
The old omnichannel theory misled retailers to invest heavily in something that will generate very low returns. For instance, in the old omnichannel approach, the modern supply chain is a must-have for creating a seamless customer experience. The new omnichannel marketing insists that any marketing initiatives must be financially sound, the cross-department supply chain is no exception. Whether or not you should update your legacy supply chain depends on the types of customers, the products, and the company’s positioning strategies. Not every business needs a modern supply chain. Any significant investments to increase customer experience must pass the threshold of financial viability. Therefore, retailers must link customer experience to profitability and spend their marketing dollars more carefully and wisely.
Five Steps to Make the New Omnichannel Marketing Successful
The key to successful omnichannel marketing is cross-channel personalization, which is made possible via data consolidation, advanced analytics, and channel integration. To make the new omnichannel marketing work, retailers need to follow these five steps:
Step 1: Gain more in-depth insights into your customers by integrating customer data and creating a 360-degree customer view. To gain the visibility into customers and provide personalized and relevant communications with every customer across different channels, companies must first and foremost focusing on the integration of customer data and creating a 360-degree customer view that has the records of a customer’s entire history, preferences, interactions at different vital touchpoints, and a coordination across all channels.
Step 2: Improve the capability of analytics maturity of your organization. Understanding what factors influence a consumer’s buying behavior relies on marketing analytics. Advanced analytics-driven organizations use tools such as web analytics, mobile analytics, predictive modeling, customer segmentation, customer profile, customer journey mapping, the 360-degree customer view, customer lifetime value to identify and understand the pain points and behaviors of their core customers. Davenport’s DELTA Model, Eckerson’s Analytics framework, and Mu’s ALADA model for small to midsized retailers are all great tools that not only can help assess the analytics capability of your organization, but also provide both a compass and roadmaps towards the maturity of analytics.
Step 3: Optimize your strength portfolio to beat the competition. The insights gleaned from analytics will tell you what factors are most important to your customers. Retailers must adopt a practical and realistic approach to carefully review available transactional, rational, and emotional drivers and improve and optimize their unique competitive advantages. This unique strength portfolio must offer a compelling positioning strategy that will differentiate themselves from the competition. For some retailers, delivering the top customer experience might be the game-changer, for other retailers, the competitive prices and discounts might be the most critical factors.
Step 4: Break down the department silos. Channel silos hinder the continuous flow of contextual and historical information between channels, causing inconsistent brand images and different customer experience across different channels. Breaking down departmental silos is a must for connecting online and offline channels and align their messaging, goals, objectives, and design across each channel and device. A cross-department committee is necessary to lead the omnichannel initiatives. Channel integration sometimes requires significant structure paradigm changes.
Step 5: Measure the profitability of omnichannel marketing. Any omnichannel marketing initiatives must pass the financial viability test. Retailers must learn how to link customer experience to profit by measuring the direct and indirect incremental profit generated by the improved customer experience.
The current prevailing omnichannel theory is “ill-defined.”It is a theoretically perfect marketing utopia that is attractive but hard to achieve. It misleads retailers to spend their time and money to chase after the so-called seamless experience that is important but not the most important thing to most customers and will reap modest or even negative returns on the investments.
Therefore, marketers must redefine the concept of omnichannel and gain consensus among marketers about the impacts and limitations of the new omnichannel marketing.
The new omnichannel proposed in this article acknowledges that the ultimate goal of omnichannel marketing is not to achieve the so-called seamless experience. Instead, it leverages and unifies the strength of each of the relevant channels to create an effect where 1+1>2. That amplified synergy of channel integration will effectively increase engagement, stimulate sales, increase profitability, and foster a much deeper and mutually beneficial experience with customers.
 Thomas H. Davenport, Jeanne G. Harris, Robert Morison, Analytics at Work: Smarter Decisions, Better Results (Harvard Business School Publishing 2010).
 Wayne Eckerson, Secret of Analytical Leaders: Insights from Information Insiders, Westfield NJ: Technics Publications (2012).
 Mu Hu, Highly Effective Marketing Analytics, Business Expert Press (2020).
 Steven Dennis, June 3rd, 2019, Omnichannel Is Dead. The Future Is Harmonized Retail, https://www.forbes.com/sites/stevendennis/2019/06/03/omnichannel-is-dead-the-future-is-harmonized-retail/#730e91a265e8