How to profit from multi channel marketing

By Arthur Middleton Hughes

Multi channel today usually concerns the web. When marketers first began to use the web, there was a question as to who should be responsible for it. Some companies made the mistake of thinking of the web as a technology project, putting the leadership in IT. They produced websites that did not sell very much. Today, most companies see the web as a marketing function with the direction and funding coming out of the marketing organization.

What is multi channel?

The word is widely used, but has various meanings. Strictly speaking there are two multi channel avenues: promotion and product ordering. Multi channel promotion includes direct response ads (including web ads) that contain a phone number, and a web site, or invitation to visit a retail outlet with a coupon. Multi channel promotions also include direct mail and catalogs, email and outbound telemarketing. Multi channel product ordering includes phone and web ordering plus retail visits. Using these terms, multi channel marketing would include an email or direct mail piece containing a link to a web site where the customer could print out a coupon for a retail visit.

On the web, there is a difference, however. Except for travel, books, porno and music the web is not really a separate selling channel. Web sites without a catalog, TV, radio or print promotion to drive people to visit the site seldom sell much. The web tends to be more of an ordering channel for customers who are stimulated to buy by another medium.

Those responding to multi channel marketing are different from single channel customers. They tend to be more affluent. Even more significant: customers that make purchases on two or more channels spend more per year than single channel shoppers.  Early research in this field was done by Sears Canada. They learned that Canadians who bought both in retail and through the catalog spent almost twice as much as those who bought goods on only one of those two channels. The same thing can also be true of customers who use the web plus retail or phone ordering. Multi channel customers buy higher priced options, are less price sensitive, and are cheaper to serve. This can be learned by any company with a customer marketing database that consolidates purchases from all channels.

Since these benefits exist, companies have been trying to get more customers to use the web to make their purchases. Web ordering has advantages and disadvantages. On the plus side, web orders can be processed faster and at less expense. On the negative side, a good phone operator can often get more cross sales than a web site. A cross sale occurs when a customer calls up to order one thing, buys it, and while she is on the phone is talked into making a second purchase that she had not been thinking of when she made the call. Cross sales like this occur when a good customer sales rep is equipped with the customer’s purchase history on her screen, plus a suggested Next Best Product which is created dynamically by collaborative filtering software while the customer is on the phone. The web can do the same thing, but in most cases web sites do not do as good a job as a live operator.