I shop using three different devices—a phone, a laptop, and a tablet—throughout the day and night; I research before I buy, sometimes over the course of multiple visits. I see lots of advertising on the internet; most of it is not that good. I’m not that loyal; you can win me with a discount, but I will pay a little more to buy from a brand I already trust. Who am I?—Your customer.
Understanding your customers’ cross-channel and cross-device behavior is necessary for competing in the retailscape today. Retailers looking to create the next generation of customer experience must adapt to a world in which shoppers use many devices to complete a single task. Thanks, omnichannel! It’s only by getting to know the consumer behind the device that retailers can engage at the right moment with the right message and win their business.
There’s a lot to do to make the full transformation from an omnichannel retailer to a customer-centric one, but here’s one natural place to start. Ask yourself: Is my data showing me how my customers jump across channels/devices on their way to a purchase? Does it tell me which customers use multiple channels/devices to shop? These simple questions unearth a lot about an organization’s data quality (read: usefulness). If your data isn’t giving you these relatively basic insights, can you expect it to be good for much else?
You might be wondering: What’s the financial upside of understanding my customers? Well I can’t give you a complete answer to that in this one post without giving you a lot more than you bargained for. But I can give you this.
For one thing, customers who shop in more than one channel spend more money than those who shop in just one. Macy’s, after investing $1 billion in their omnichannel systems, reports that their multichannel customers are eight times more valuable than their single channel customers. Many other companies and studies note that multichannel shoppers are more valuable, but their estimates of the difference in value are more modest, typically between two to four times that of single-channel customers. This gap in what I call the “omnichannel boost factor” between high-performing companies (like Macy’s) and low performers indicates that:
extracting full value from multichannel shoppers can create massive revenue growth, and
most companies still have a lot of room to grow.
So how much revenue are companies leaving behind? Let’s calculate this for a company on the low end of the scale, at a 2x boost factor (i.e. multichannel shoppers are two times more valuable than single channel). Assume that about 65% of consumers are multichannel., That means that with a 2x boost factor your multichannel shoppers make up about 79% of your total revenue. Double the revenue you’re making from those multichannel customers, from 2x to 4x, and you increase your total revenue by 79%. Reach Macy’s-level (8x boost factor), and your total revenue more than doubles, increasing by 236%.
Any company looking to achieve a Macy’s-level boost factor needs to first learn how many and which of their shoppers are engaging in multiple channels. Once you know who your multichannel prospects are, you can begin targeting them with more effective targeted campaigns in attempts to convert them with higher frequency. The amount that these customers ultimately spend justifies any extra marketing cost.
The investment in your multichannel shoppers is further justified when you consider that these are the shoppers who are most likely to stick around for a long time. They are the loyal ones, and they are loyal to the experience, not the lowest price. So what you invest upfront in infrastructure and marketing you make back on higher lifetime values and larger margins. Your multi-channel customers are also the most likely to become brand evangelists, and tout your wares in their social circles.
Therefore, having a picture of cross-channel and cross-device customer behavior is a prerequisite for dominating the world of omnichannel retail. Without this insight, you will be stuck wasting dollars going after the wrong customers and not devoting enough to the right ones. Only by knowing who your multichannel customers are can you meet them with the right message at the right moment and win their business.
If you are looking to deliver a revenue boost that stacks up with the best, begin by looking at your data. What is it really telling you? Is it telling you which shoppers visit your site using multiple devices? Does it tell you which of your online visitors have made a purchase in your store? The first step to building a better strategy is asking the right questions. If you start getting better insight into your customers today you will be able to engage them more intelligently tomorrow.