Challenges of multi-channel customer management

It all used to be so simple - separate channel managers, separate segments targeted by separate channels, products aligned by channel, customers asked to deal with specific channels, measures of effectiveness purely on business transacted per channel. But things have changed.

* Companies are moving away from channels dedicated to restricted tasks and not communicating with each other, but they are not certain how to move towards channels which all work with the same data and to the same objectives.

* They have seen some of the disadvantages of having different and possibly incompatible technology platforms for each channel, but are not certain of the benefits of moving to a single platform.

* They have been through the process of setting up separate Web channels.

* Separate Web channels often had their own objectives, management, staff and systems, usually experienced escalating costs, and provided a customer experience which was very different from that of other channels.

Careful thought needs to be paid to the use of each channel in multi-channel programmes - `one channel fits all` is not the case anymore.

Doug Leather, MD, REAP Consulting

Multi-channel customer management is the use of more than one channel or medium to manage customers in a way that is consistent and co-ordinated across all the channels or media used.

Different channels may be best used for different tasks. For example, in a complex, technical, business-to-business environment, a sales person may be best for explaining the product, meeting objections and dealing with queries, and setting up initial contacts, while the Web or call centre might be used for reordering or checking progress with delivery.

A multi-channel strategy is one that provides numerous customer touch-points across several distribution channels, such as direct channels (telephone, Internet); counter and kiosk service in branch networks or retail outlets; partnerships and alliances; and sales force.

There are two main reasons for the importance of multi-channel customer management:

* Developments in new channel technology: increasing reliability and speed of storage and telecommunications technology, convergence of voice, video and data.

* Customer requirements and expectations: many customers expect technology and processes to be used to manage them more consistently across channels.

In addition, seven factors are causing companies to focus on multi-channel management: customer demand; channel costs; strategic competitive advantage and differentiation; allowing customers to manage relationships; convergence of channel roles; increased variety in customers` channel use patterns; and regulatory pressure.

Although it is now easier to ensure every channel dealing directly with a given customer has the latest data on the state of interaction between supplier and customer, and follows related, connected processes, this is not costless or without technical problems.

In particular, it should be noted that the companies for which it is suggested that multi-channel customer management will yield the most benefits are those for which achieving it is most problematic. They have the largest customer bases, the most complex lines and the longest history of systems development, with many business-critical systems that support the process of customer management being quite old. This applies, for example, to many companies in financial services, logistics and manufacturing companies.

Multi-channel integration does not come without its challenges. Problems experienced by companies include:

* Heavy investments in unconvincing multi-channel strategies and technologies that result in a poor return on investment.
* Problems in bringing together and standardising data about customers or resulting from interactions with them.
* Problems unifying different systems which may have very different data models.
* Difficulties in reducing or abolishing organisational boundaries.

For example, a survey of 50 retailers in the US revealed that 48% had learned nothing about their cross-channel customers and the biggest problem they faced was their inability to recognise known customers across all touch-points.

Research to identify how far financial institutions have moved towards integrating customer touch-points was conducted by Forrester, which interviewed 50 IT executives at banks, brokerages and insurance firms and found that for 52% of the interviewees, channel integration projects were only just commencing, and for 54% less than half of their products are integrated across channels.

Careful thought needs to be paid to the use of each channel in multi-channel programmes - `one channel fits all` is not the case anymore. Car buyers no longer just visit their local dealer, and television buyers no longer just go down to their local electrical goods store. Research shows that many customers use multiple channels throughout the buying cycle; some channels are used to research while others are used to purchase or service.

If a company decides to adopt a multi-channel strategy, it must consider whether all its channels should offer the same range of products and services, and whether all channels should support all functionality areas. If necessary, one channel can perform all three functions: online retailers or bricks-and-mortar retail outlets for example. It is essential to define the role of the various channels and how they interact. This helps identify and clarify the target customer usage and preferences.

The benefits of multi-channel customer management are numerous. The benefits that work through customers are:

* The identification and capture of opportunities for increasing value per customer.

* Increased convenience and an improved experience, reducing customer churn rates and increasing their motivation to buy more from the supplier.

* The ability to leverage an established brand creating positive impacts on brand perception and mitigating the risk of brand damage, increasing the incentive for customers to stay and buy more.

The efficiency benefits are:

* Increased efficiency through the sharing of processes, technology and information.
* Increased organisational flexibility.
* Increased efficiency in dealing with business partners, so they can reduce their costs.
* Increased efficiency in exploiting customer data to identify customer needs, possibly indicating new paths for growth.

The benefits for customers are:

* Increased choice in the way they can interact.

* The ability to switch easily between the various channels, when it suits them and wherever they want to, depending on their preference and the type of interaction, whether it be the exploration or purchase of a product or service.

For the supplier, channel integration helps the sharing of customer data across channels to create a more complete customer profile which will help to maximise cross-selling opportunities.