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What does it take to make omnichannel marketing work?
Knowledge@Wharton staff
Presented here for discussion is a summary of a current article published with permission from Knowledge@Wharton, the online research and business analysis journal of the Wharton School of the University of Pennsylvania.
A new university study highlights three big challenges to making omnichannel marketing work: data access and integration, marketing attribution and consumer privacy protection.
The paper, “Informational Challenges in Omnichannel Marketing: Remedies and Future Research,” basically defines omnichannel marketing as ensuring all the information the customer is seeing across touchpoints work in conjunction and complement each other.
“Carrying that out is not that easy because you need to have a good sense of what the data is like — all the different touchpoints that the customer has had,” said Raghuram Iyengar, Wharton marketing professor and co-author, in an interview with Knowledge@Wharton.
The data access challenge relates to customer data often being significantly siloed largely because different departments are in charge of different parts of the journey. Silos could exist for political reasons, with some seeking to control key data that drives sales, or it could be that analysts just don’t know where the data is.
Eliminating silos is easier said than done and has to be led from the top. “Companies have to realize what is the value being added by some of those silos being taken away,” Prof. Iyengar said.
Machine learning and predictive analytics offer potential to overcome silo challenges, the study found.
Marketing attribution is about which part of this touchpoint (i.e., email, catalog, salesperson interaction) was responsible for influencing the purchase and to what degree. Among the simpler solutions is testing and learning such as observing the response of an email sent to customers versus a control group not receiving the email.
One attribution challenge is context, which continues to change. Prof. Iyengar said, “Especially in the last year or so, consumer behavior has changed. What was working the year before perhaps is not going to work today.”
Finally, customers may not want to provide the data to come up with a 360-degree view of their shopping journey. They’re also increasingly gaining more control of whether and how their data is used. The study found blockchain technology offering potential to keep track of what information firms are using and appropriately compensate consumers for using that information.
Discussion Questions
DISCUSSION QUESTIONS: What are the biggest challenges for driving consistent interactions across the customer journey? Which of the three challenges cited in the article — data access, marketing attribution or data privacy — is the most challenging to overcome?
Poll
BrainTrust
There are a few things marketers need to keep in mind. Marketers who obsess about accurate attribution are chasing their tails and losing the big picture. A typical user is on multiple devices; some with ad-blockers, some that do not track activity, and some users have exposure to television or out-of-home advertising. Chasing 100 percent accuracy will lead to analysis paralysis.
Machine learning models can give pretty robust predictive recommendations and they should be used. Understanding the source of customers and their impact on lifetime value is most beneficial. Are the customers coming during a holiday period less valuable? Are the customers who sign up for newsletters more valuable? Is a particular affiliate providing high valued customers?
One of the biggest challenges is a combination of two of the three noted in the article: the use and access of customer data across all customer touch-points balanced against consumers’ heightened awareness and skepticism that organizations can keep their data safe.
Retailers have access to more data than ever about their customers thanks to a rise in digital sales which capture a multitude of data points per transaction and growth in loyalty programs which help to do the same for in-store purchases. At the same time, the near constant news cycle around data breaches and selling of personal data has many customers experiencing increasing distrust around the safekeeping and abuse of their information.
Retailers must ensure they follow best practices for the protection of sensitive data and they must ensure they lay the foundation for the full support of policies such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) because they will soon become national policies domestically. Giving customers more control over how retailers use their data can help to build back some of the lost trust and allow retailers to take more advantage of the omni-data that is being collected to curate a more personalized shopping experience regardless of channel.
To make omnichannel marketing worth its cost, you must have a long-term perspective on branding. Social media marketing does not always deliver an immediate ROI, however branding cannot be overstated as one of the most important keys to many of the most popular new brands’ successes. The most challenging aspect to overcome is the need to immediately return the dollars spent on marketing into revenue.
From the earliest days of omnichannel, the winners in this space have realized that the most critical part of the customer experience is delivering branded experiences that are consistent across all channels. This is the reason that I prefer the term “unified commerce” to omnichannel because it does a better job describing the goal of engaging customers across all available channels.
Increasing concerns by consumers about privacy should be at the center of any discussion in retail about how to improve and expand unified commerce strategies. A mistake made in the privacy sphere will have a really negative impact on any customer relationships.
While this research provides useful insights into what it takes to make omnichannel marketing work, we cannot lose sight of the fact that omnichannel marketing is not about channels, it’s about customers. Each of these challenges need to be addressed within the context of what works best for the customer.
Using a single, integrated source of data boosts consistent interactions. Data unification involves smashing omnichannel and functional silos that keep valuable insights fragmented. Knowing consumers’ individual preferences and personalizing service can shorten the customer journey.
Data privacy is the biggest challenge, as many consumers deeply desire digital anonymity. Shoppers may deliberately provide limited or false data to protect their privacy, hampering the accuracy and depth of retail insights.
The elimination of silos is a huge issue (“silos belong on farms” as I have been saying in my keynotes for years and devote a big section to in my book “Remarkable Retail”). Relentless silo-busting, must come from the top and by making the right technology and organizational investments. The second issue is becoming channel-agnostic and seeing the customer as the channel. The third is to embrace the blur that is shopping today and become committed to harmonizing the customer experience. This is best done by dissecting customer journeys (digital and physical) and rooting out pain points (table stakes) and amplifying the wow to become truly remarkable.
While data access and privacy are ongoing challenges, neither is likely to present an insurmountable hurdle for marketers. Consumers have shown they will offer up data in return for perceived value. Attribution is the one thing that could upend the entire process; just because your marketing is data-driven doesn’t mean that every last nuance can be defined.
From where I sit the biggest challenge is defining omnichannel and truly understanding/mapping all of the consumer touchpoints, data needs, and last-mile aspects. For too many, Omnichannel stops at e-commerce — I believe that leaves far too big a blindspot.
While data privacy is important (customers should feel safe providing their data and feel comfortable that it will be used to serve them better) and marketing attribution can be better approximated through AI, not having quality data in a unified manner is what separates winners from the losers.
You can make omnichannel marketing work with partial data — and for all intents and purposes you must. The ability to completely understand a customer and their situation is near impossible. Despite the enormous amounts of data collected, purchased, and shared, customers can be quite elusive. They may be paying at competitor stores in cash. Their kid can visit a site on their account days before for the marketing ad you paid for. Their neighbor may have loaned them the new lawn mower they were planning to purchase. They may have decided to close down their loyalty card due to a competitor data breach.
The constant dynamic nature of shopping is the real issue, and the best retailers are ready with offering any mechanism the customer seeks at that time to address. Those best able to connect with the customers needs in the moment gets the business. Iyengar’s comment about context is spot on. Behaviors change — all the time. This means a partial solution — you’ll never see the whole customer journey, but you should plan for all of them.
Retail has been pushed to evolve into an omnichannel business, with the relationship between the retailer and customer extending well beyond the four walls of a store. But there’s a tension that comes up between gathering the data needed to give customers exactly what they want when they want it, and ensuring their privacy is protected. Solving for this tension is the biggest challenge retailers face. Having a direct relationship with their customers can help – that way it’s more about communicating with them one on one with curated content and relevant products at the right moment with the right incentive to deliver value.