Why Multi-Channel Data Integration?

This article is brought to you by Retail Technology Review: Why Multi-Channel Data Integration?.

Why should retailers care about the seamless integration of data between distribution channels? The answer: sales, retention and, ultimately, profitability. Multi-channel customers are excellent targets for up-sell and cross-sell opportunities and are likely to have a high lifetime customer value (LTV).

Much of the growth in multi-channel retailing has come from the use of the web as a marketing channel. An increase in online spending has created a host of data management issues. Without the ability to track purchases and to understand customer buying behavior, marketing efforts can be misdirected and opportunities missed. Many retailers are still using spreadsheets other non-automated methods to track cross-channel purchasing patterns and make important decisions regarding the allocation of marketing dollars.

Many catalog retailers today cannot answer key questions about their business such as what percent of online spending came from catalog sales and which promotional efforts are most profitable. Data integration allows the retailer to analyze the true triggers for purchase and to make an intelligent allocation of marketing dollars across channels. The solution need not be expensive, but the organization must be committed to understanding its customer's purchasing patterns.

A typical catalog retailer is faced with a number of questions. Is the customer purchasing on the web because of a catalog mailing, or is web investment driving purchase patterns? Should investment be made in search engine optimization and web site design versus catalog design and mailing? Which are the best lists to use in promotional efforts, and how can valuable multi-channel shoppers be identified? Are specific promotions within particular channels effective?

Multi-Channel Expectations
Currently, a multi-channel shopper is often the most valuable customer to the company and is most familiar with the company and its products and services. Not only are multi-channel customers most profitable, but customers have come to expect a certain level of seamless purchase and delivery options across channels. The multi-channel shopper expects that all purchases will be counted toward his or her stock and trade with the firm, not just purchases made in one particular channel. Customers expect to be able to purchase in one channel, and return the item in another and be treated the same no matter where the product was purchased. It is no longer acceptable to treat a customer as a new customer because they purchased through a new channel. Customers also want to be able to choose how to interact with the company; inbound call-center activity continues to be brisk because many customers still prefer that purchase channel.

How are retailers expected to meet these particular challenges? Clearly, the ability to service the multi-channel customer and target marketing efforts to them profitably is facilitated through strong data management practices and software that allows for easy manipulation of the underlying customer data.

Next Steps
There are several ways to determine your organization's readiness to operate in this complex and challenging environment. One suggestion is to simply take the time to go through your own company's shopping experience by acting as a customer, or seek the assistance of an independent party to benchmark against competitors.