May 26, 2021
Competing in the Age of Digital: Why Omnichannel is Critical to Your Business
Over the past year, digital investments have mostly focused on customer-facing products. What e-commerce was to retailers in 2020, an omnichannel strategy is to 2021. And as we move towards a new normal, the combination of online and in-person interactions, and how industries will continue to create ways to make in-person and digital experience seamless, will become critical. Brands will need to empower the consumers of their products – whether those products are B2C, B2B, or geared toward government customers. An omnichannel approach can help meet that need.
According to a McKinsey survey of global executives at the end of 2020, companies have accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years during COVID-19. As digital transformation becomes an increasingly key factor in success, omnichannel strategy should drive digital engagement decisions and business models.
Earlier this month, I discussed this strategy on the DisrupTV podcast with hosts R “Ray” Wang and Vala Afshar. An omnichannel strategy is an integrated customer experience that focuses on customer engagement and putting customers at the center of the brand experience. Before COVID-19, the online/digital experience was mostly relegated to websites and apps. Within the past year, the number of channels on which customers can communicate, interact, and make purchasing decisions has skyrocketed to include email, text, chat, augmented reality, social media, and more (including new channels such as Clubhouse). App development has also grown exponentially, with companies vying to offer never-before-seen features that make the consumer experience easier, quicker, or more gamified.
Why is an omnichannel strategy critical to growth? Research has found that omnichannel consumers are worth 30% more to a company than a single-channel consumer, and repeat customers, while they constitute just 8% of an average company’s customer base, are responsible for 41% of a company’s revenue, according to Adobe. So appealing to these repeat customers through optimal experience is key.
An omnichannel approach is also important because consumer preferences vary wildly. Some people are more comfortable engaging by phone and speaking with a customer service representative, while others prefer the ease of a chatbot. The key is to focus on customer comfort and consistency across the experience – what experience do they prefer, and make the interactions between channels seamless.
Disney is perhaps one of the best examples of a successful omnichannel strategy. When their biggest source of revenue – their parks – closed almost overnight, Disney pivoted quickly to become the number two streaming service in the world. Starbucks has also pivoted quickly, optimizing its mobile ordering, drive-throughs, and loyalty program to continue serving customers during the pandemic. As Kevin Johnson, Starbucks CEO, shared with marketing company WARC: “In every industry, there are periods of disruption that create great opportunity for those businesses that adapt to the disruption, invest in relevant ways and strengthen their differentiation and competitive advantage.” And Bank of America grew its digital features and channels for its 39 million digital clients, including the virtual assistant Erica, peer-to-peer payments using Zelle, and financial planning tool Life Plan.
Before COVID, a Harvard Business Review study of 46,000 shoppers found that 73% [of shoppers] used a multichannel experience. The ROBO Economy (Research Online Buy Offline) found that 82% of smartphone users consulted their phones before making a purchase in-store. These numbers will undoubtedly be higher as we move out of the pandemic.
Here are three important principles companies looking to expand their omnichannel strategy should keep in mind:
- Start with a multichannel strategy.
At 3Pillar, we have seen that the best way to grow your omnichannel strategy is to understand your multichannel strategy, first. Multichannel strategy is all about getting eyeballs on a site: increasing the number of likes and views on a channel. The next step is to then expand the number and features of channels to offer customers new ways to engage and to put customers at the heart of the retail experience, integrating multiple channels by adopting an omnichannel approach. The boundaries between channels tend to lessen, providing the customer with a consistent experience.
- Don’t silo your digital strategy.
A few years ago, those involved in digital strategy were mainly chief technology officers, but now the most successful omnichannel companies are incorporating executives across different specialties, including chief marketing officers, chief product officers, and chief information officers. As companies update their technology stacks to keep pace with the demand (incorporating features like marketing automation, content management systems, and social listening tools), they should focus on integrating the perspective of multiple departments. I’ll share more about how to approach an omni-digital strategy in an upcoming post.
- It comes down to the data.
A successful omnichannel strategy relies on data. Understand what data you have, then figure out how you can structure it to improve your digital relationship with your customer. Remember that your channels are also data collection vehicles. This means you should also be thinking of how you can use [new] data to create new and improved products for your customers.
Ultimately, an omnichannel strategy helps businesses across numerous industry sectors increase engagement, which ideally translates into a more successful customer experience and brand loyalty.
About the Author
Jennifer Ives is the SVP of Global Partnerships at 3Pillar Global.