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Tuesday 29 October 2019

A successful digital strategy #5:
omnichannel - from dream to reality

Anna notices an advert in a magazine for a pair of shoes by her favourite manufacturer. She scans the QR code on her mobile and finds more details. Back in the office, she compares providers and prices on Google Shopping on her PC and asks a question about the material using a chatbot. She then orders the shoes using click & collect and tries them on in her local shop. She buys the shoes and likes them on Facebook. 

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The “omnichannel” idea is not a new one: using different channels in the purchase process has become part of a customer’s everyday shopping experience. The concept was developed around 15 years ago by the US electronics dealer Best Buy who wanted to strengthen its customer focus and compete with the electronics department of Walmart. 

OPPORTUNITIES & CHALLENGES  

Whilst multichannel, cross channel and omnichannel strategies implemented on different levels have been stagnating over the past decade, digitisation has brought marketing strategies involving several channels up to the next level. A whole range of ideas, visions and genuinely “seamless” transitions have suddenly become feasible thanks to new technical possibilities. 

This is an urgent necessity when there is such a divergence between dreams and reality where omnichannel is concerned: whilst customers are understandably moving more and more between different channels (be it in the B2C or B2B environment), around 80 % of German dealers still have no clear omnichannel strategy according to a study by Roland Berger. 

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The internal digitisation of structures, skills, processes and culture is not yet sufficiently developed in many firms. Others have problems with their CRM systems and customer data management.

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-  Tobias Göbbel, Partner of Roland Berger business consultancy 

Due to the growing number of touch points, it is becoming more and more difficult for providers not to lose customers along their journey. It is particularly important, therefore, to develop a carefully thought-out concept which works effectively both in terms of technical aspects and logistics. Companies need to create the right touch points and reach customers at the right time with the right offers and messages. This represents a huge challenge not only for their IT infrastructure and data management but also for their corporate culture. 

THE 8 SUCCESS FACTORS FOR OMNICHANNEL 

Roland Berger defines eight success factors in becoming a “Customer Journey Champion” and refers to this as the 8Cs omnichannel approach: Competence, Category, Channel, Customer Data, Code, Chain, Cost and Culture. 

1.    “COMPETENCE” 

Many dealers still lack the necessary skills and competences within their teams. It is often difficult particularly for companies from the off-line world to assess the potential of innovative technologies realistically. 

2.    “CATEGORY” 

Different category areas require different strategies. Companies need to identify their customers’ information and purchase preferences for each product and service segment and continually align their actual presence at different touch points with developments among competitors in order to develop successful omnichannel concepts. 

3.    “CHANNEL” 

Anyone who knows their customers’ preferences can define a cross channel customer journey from click & collect to chatbots and from QR codes to virtual fitting rooms, etc. The challenge goes beyond the standard multichannel approach and consists in connecting the channels intelligently with one another so that customers can actually swap between them. 

4.    “CUSTOMER DATA” 

Customer data has to be recorded, analysed, systematically combined and used to develop personalised offers at every touch point. Many firms are still lagging behind in the implementation of legal provisions in dealing with personal data (key word GDPR). 

5.    “CODE” 

Anyone wishing to achieve omnichannel excellence will have to introduce new digital technologies quickly and efficiently and optimise the performance of all back-end and front-end processes. The competences required in this context (see point 1) will have to be developed within many companies or guaranteed by partnerships. This presents a major challenge at a time when innovation cycles are becoming ever shorter and technologies more disruptive. 

6.    “CHAIN” 

Omnichannel models increase the complexity of the supply chain be it in terms of real-time indications of goods availability or decentralised returns management. The movement of goods needs to be faster and more flexible and above all presentable transparently through all channels. 

7.    “COST” 

The merging of channels makes it difficult to allocate costs and therefore to assess the efficiency of the individual channels. Intensive controlling is therefore more important than ever in omnichannel in order to optimise the cost structure. 

8.    “CULTURE” 

Omnichannel excellence requires a corporate culture which overcomes the silo mentality, supports a trial and error approach and welcomes change. This change has already begun in many companies: cross-functional teams, intrinsic motivation, collective performance standards and new forms of hierarchy and innovation are all part of a future-proof corporate culture. 

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Omnichannel is what consumers expect but what very few providers can seamlessly offer. The future belongs to whoever is the first to achieve this.

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- Achim Himmelreich, Digital Transformation Director at Capgemini and Vice Chairman of the German Association for the Digital Economy (BVDW) 

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