Omni-channel: Myths, distortions and, yeah, that’s just silly

Let me be clear: I’m pretty into all things omni-channel. Get me started talking about creating a single view of the customer, silo-busting, frictionless commerce, creating a seamless experience, etc. you might want to order a pizza. We could be here for a while.

I was named the VP of Multi-channel Integration at Sears way back in 1999. I led multi-channel initiatives and enterprise customer analytics at the Neiman Marcus Group from 2004-2008. I’ve written dozens of related posts and given numerous speeches on the topic during the last few years. I’m a believer.

Yet much of what passes as inspired strategy on the part of brands extolling their new-found “omni-ness” is, well, let’s just say it ranges between being disingenuous and outright foolhardy. And then there are the legions of analysts, pundits, consultants and software providers peddling a guaranteed path to customer-centricity nirvana. Much is hype. Some is just plain dumb. Here’s an attempt to move toward more “truthiness.”

  1. You don’t really mean “omni.” “Omni-channel” means “all” or “every” and typically refers to both channels for communications and for transactions. Do you really intend to sell on cruise ships? In airports? How about door-to-door sales? Are you going to do infomercials? I didn’t think so. What you really mean is expanding your marketing and sales channels to those essential for the acquisition, growth and retention of key consumer segments–and being really good at doing it. A rush to invest in omni-channel without an actionable segmentation–and without understanding which levers are really the most important to hone in on–is a license to lose money and waste precious time.
  2. Omni-channel customers are not your best customers. Chances are it’s the other way around. And causality matters. A lot. The customers that already trust your brand are often the early adopters of new media and new places to buy. There is a dangerous false narrative that suggests that simply by becoming omni-channel a world of new sales will open to you. As Kevin Hillstrom has pointed out, many companies that have gone omni-channel have failed to improve their business. This is usually because the brand’s core is weak and merely adding more places to research and buy does not fix the underlying issues (see Sears). The best multi-channel strategies are rooted in a deep understanding of current customer behavior–and prioritize opportunities to stem defection, address new customer acquisition barriers and build add-on sales. A sensible growth strategy has clear building blocks, not a mad rush into e-commerce or rolling-out the next bright and shiny mobile or social media application.
  3. You say you want a revolution. Yet, organizational and data silos abound. Yet, analysis of most promotions still have a single channel focus. Yet, much of your marketing remains mass, rather than personalized. The underlying move to omni-channel is about customer-centricity. As long as you hold on to traditional metrics, silo-ed organizational structures and rely on fragmented data and batch, blast and hope marketing programs, not much is really changing.
  4. Confusing necessary with sufficient. To be sure, more and more customers are becoming cross-channel shoppers and, particularly with the rapid growth of mobile devices, the distinction between e-commerce and physical retail is blurring. Certain “omni” capabilities like order online, pick up in the store are becoming base expectations. It’s hard to imagine that many retailers will survive, much less thrive, without robust integration capabilities and compelling web and mobile offerings. But far too many brands think that by adding these newish features they are doing enough. They’re not. Many of these capabilities are becoming table-stakes. In other cases, they are expensive and complicated “nice to have’s.” What you need to do to keep pace is not the same as what you need to do to become differentiated and remarkable. Confuse this at your own peril.
  5. New hybrid-models are genius. The press is eating up Warby Parker’s, Bonobos and many other e-tailers move into physical locations and raving about their productivity numbers. First, this isn’t new (see Williams-Sonoma). Second, the move into actual stores had to happen. Over 3 year ago I was sitting with the CEO of one of these companies and asked him when they would think about opening stores. He answered: “we will never have physical stores.” Now he’s on CNBC singing their praises. Did I have the gift of prophecy? Of course not; the move was totally foreseeable given the known economics and limitations of pure-play e-commerce. Lastly, what would be remarkable about these hybrid-models’ sale productivity in their initial forays into the physical realm is if they did NOT do huge numbers. Bear in mind, they have opened stores in trade areas where they already have a density of customers and are in very small locations. Comparing their initial results to more mature specialty stores is silly. Comparing them to say, the top 2 or 3 bays of Neiman Marcus’ beauty counters in the Beverly Hills, Bal Harbour and Michigan Avenue stores is more apt (hint: it would be well over $3,000/sf). I am a repeat customer of the two brands I mentioned and believe they have bright futures. But let’s be careful of false positives. There is much more of this story to play out.

Omni-channel is a nice catch phrase, and there can be no question that we are witnessing an incredible transformation in how consumers shop and how brands need to do business. The status quo is not an option, but neither is a blind rush into all things “omni.”

The future of omni-channel will not be evenly distributed. The path you choose is critical.

3 thoughts on “Omni-channel: Myths, distortions and, yeah, that’s just silly

  1. Reblogged this on Shopper Boffin's Site and commented:
    This article perfectly sums up how I feel about this topice “Omni-channel is a nice catch phrase, and there can be no question that we are witnessing an incredible transformation in how consumers shop and how brands need to do business. The status quo is not an option, but neither is a blind rush into all things “omni.”

    Like

  2. Hi Steve,

    Interesting post. Maybe we could clarify 2 different topics:
    Multi-channel = offering the customer more channels
    OmniChannel = integrating all the communication and sales channels with 2 aims:
    1. customers to see a single view of your business a.k.a “We are one brand no matter where you interact with us”
    2. retailers to see the integrated customer journey across all his touchpoints and interactions and to have consistent product/order/… data
    We can call them as we like: A and B. I would not focus on semantics and etymology

    I get it that you are clear about the differences but I think you are referring to the multi-channel topic in your 5 points. Moreover, I would not mix strategy (OmniChannel – customer centricity) with tactics (the fanciest mobile app).

    Cheers,
    Cosmin

    Like

  3. Pingback: My top ten posts of 2015 | Steve Dennis' Blog

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