30 Sep
Omnichannel is a buzz word that’s been around for over five years, but is still often confused with multichannel when it comes to retail. Most retailers are now multichannel, where they sell their products across more than one channel. Very few, however, are truly omnichannel.
Omnichannel retail sounds way cooler and more mysterious than multichannel retail. It’s also a little trendier these days. Everyone is talking about it. Or at least everyone who wants to get the most out of physical and online commerce should be talking about omni channel versus multichannel retail.
But what is omnichannel retail? How is it different from multichannel retail? What do either look like in practice, and which one is better? The truth is that either strategy can work if executed properly. Both approaches have their merits, so it often boils down to how attainable, scalable and effective each strategy is for your particular business. We don’t have to declare one’s supremacy over the other, as long as we all agree that nobody is talking about single-channel selling anymore.
What is omnichannel retail?
Omnichannel retail doesn’t require you to be everywhere, just everywhere your customers are. This distinction is what separates top-performing enterprises from the rest. It is a fully-integrated approach to commerce, providing shoppers a unified experience across all channels or touchpoints. True omnichannel shopping goes beyond brick-and-mortar locations to mobile-browsing, online marketplaces, social media, and wherever your users browse online through retargeting ads.
What is an omnichannel retail strategy?
An omnichannel strategy focuses on how multiple channels interact with each other and the customer. A successful omnichannel setup keeps customer data and product data synced across channels. The ultimate goal is to maximize convenience for the customer so that every interaction with a brand across different channels feels like it’s part of one seamless experience. Omnichannel retail is sometimes referred to as “seamless commerce” or “unified commerce.”
A complete omnichannel marketing strategy for a brand includes a two-way integration between online channels and a physical location, plus handoffs between online channels. A brick-and-mortar location should be able to share relevant and accurate data, such as available inventory, with an online channel. Likewise, an online channel should be able to pass important data to the brick-and-mortar location, like when a customer has placed an order for pickup.
Ideally, a customer can go from product discovery to purchase on any channel, including a physical store, online store, and even social media. There should also be additional opportunities for marketing and increased brand interaction whenever a customer takes action.
How does omnichannel ecommerce work?
Omni-channel retail (or omnichannel commerce) is a multichannel approach to sales that focuses on providing a seamless customer experience whether the client is shopping online from a mobile device, a laptop or in a brick-and-mortar store. The omnichannel approach relies on data being collected and communicated across various channels so that customers’ experiences feel unified whenever and wherever they’re interacting with a brand. Sometimes, the integration between channels helps customers continue their journey where they left off, almost as if the brand “remembers” them.
Although omnichannel strategies have the potential to deliver a memorable experience, it’s also possible to create a negative impression for the customer with a solution that doesn’t work as intended. Here are the basic steps for omnichannel retail:
1. Identify customer touchpoints and opportunities for improved interaction with the brand
Adopting a customer-centric view of your brand helps you identify opportunities to deliver a more convenient or personalized experience for consumers. The point of purchase is only one touchpoint along the customer journey. Brands can create a positive and lasting impression before and after the sale, and increase brand loyalty. It’s also possible to add more touchpoints to the customer journey or redirect customers to a better option for continuing behaviors they’re already exhibiting.
2. Build a strategy around the customer experience
Identify which processes need to be executed to deliver a quality experience from a customer experience point of view. Where are the pitfalls and potential cracks in the system? What is the brand’s goal for each touchpoint along the customer journey? How many touchpoints can branch off into new or repeated engagements with the customer?
3. Connect systems and people to pass data back-and-forth
Good data holds everything together, and it often requires the right tech stack to preserve high-quality data across different platforms. For example, a retailer that wants to use local inventory ads to show which products are currently available for curbside pickup needs to accurately track in-store inventory, send the inventory values in a product feed to the ad channel, and continue to update the inventory values as they change.
In this example, it’s also important to create a process that keeps the physical store associates informed of new orders, and have someone on hand who knows how to resolve any issues that may occur.
4. Execute the strategy
This can be a multi-step process depending on what the goal is, and what part of the customer journey is being targeted. For example, an in-store purchase might present an opportunity for directing a customer to a loyalty program or creating an account to receive additional promotions. In an omnichannel approach, a customer profile is accessible in the store and on mobile and desktop devices, while customer service representatives on social media channels should also be able to help with account issues.
5. Collect and measure additional data
In a completely unified omni channel setup, every customer action triggers an additional action from the brand. Collecting data allows brands to identify where customers are in the customer journey, gauge interest, and decide which action to take next to nurture the relationship.
As networks like Google and tech companies like Apple respond to concerns about consumer privacy, the ways that consumer data is tracked are changing. The decline of third-party cookies means that first-party data is even more valuable. First-party data is typically collected when users choose to provide additional data about themselves.
Although it may take some creativity to entice potential customers to share more information, customers who do so are already interested in deepening their relationship with your brand, and are more valuable in the long term compared to consumers who aren’t really looking to engage further.
What is multichannel retail?
Multichannel retail is the practice of selling or listing products on more than one channel. The channels can be digital, physical or a combination of both. A business can sell products on its website, a brick-and-mortar location and through different platforms or marketplaces.
Multichannel selling enables a business to reach more customers on different channels with the same product catalog. It’s important to note that merchants can of course reserve specific inventory for different channels, and even customize and optimize different product titles, images and other product attributes for different channels. A multichannel retail model can be part of a multichannel marketing approach that utilizes email, social media, the company website, and other channels to reach customers.
Multichannel retail maximizes exposure for a brand and gives consumers more choices about where to purchase products, but it is not an integrated experience like an omnichannel model. All omnichannel retail must be multichannel by design, but not all multichannel retail is omnichannel. In multichannel retail, the customer’s experiences on any given channel are siloed, or happening in relative isolation from each other. Although each sales channel supports the main business, data synchronization across channels is minimal or nonexistent.
Some challenges in multichannel retail include keeping operations scalable, meeting requirements for expanding to additional channels and delivering a consistent experience across all channels. A multichannel approach is generally less complex than an omnichannel approach, but still requires diligence and the proper investment to make it manageable and keep customers happy.
Automating as many manual processes as possible can help a business improve efficiency and reduce human error. Fortunately, many technology partners today assist businesses with product optimization and listing, order fulfillment and have experienced customer service and support teams that make it easy to expand to more channels.
In most cases, a successful multichannel retail model allows brands to increase their sales volume wherever possible, but does little in the way of creating a personalized customer experience. However, retailers who want to provide a solid omnichannel experience first need to streamline their multichannel approach, since omnichannel retail relies on the integration of multiple channels.
How does multichannel retail work?
Multichannel retail is all about making products available to shoppers. When we talk about multichannel, we’re usually referring to a mix of ecommerce sites or online shopping destinations that brands use to reach more customers. This includes ads on search engines, social media, direct sales on a marketplace, and a company’s own website. According to a report from Omnisend, a multichannel approach has a 90% higher customer retention rate than a single-channel approach.
A multichannel approach is built on a foundation of product data. Many companies choose to use ecommerce platforms for organizing their inventory and product data. Modern ecommerce platforms have many direct integrations, tools, and partnerships for helping a business solidify and streamline its online presence.
These are the basic steps for a multichannel retail approach:
1. Product data is housed on an ecommerce platform or a merchant’s website
Before product data is syndicated anywhere, it needs to exist. Merchants can upload all the product data they have, including multiple images, descriptions, UPCs, variations like different colors and sizes, prices and stock availability. This product data repository is the source of truth for all the other places that the merchant plans to distribute their product data.
2. Product data is formatted and syndicated to external channels
Because different channels have different data requirements, integrations and policies, the merchant’s product data cannot be exported as-is to any channel on the web. Having the right technology solutions makes this process considerably easier, especially for companies that have a high SKU count in their catalogs.
Product listing partners import the raw product data to a centralized platform, optimize the product listings to improve performance on every targeted channel and then create product feed exports to those channels using existing integrations. The product feed is continually refreshed with the most up-to-date information available about the products, such as availability, new products or price changes.
Companies can do all of this themselves, but they need to invest a significant amount of time and money for in-house development, channel expertise and continued maintenance of their data feeds.
3. Businesses that sell products on marketplaces need to manage incoming orders from multiple channels
To fulfill orders from a marketplace, a business must receive the order, match the ordered item to the correct product, ship it and return tracking information to the marketplace so that the customer is notified. As more marketplace channels are added to the mix, fulfilling orders becomes time-consuming, so finding ways to automate the process allows a company to significantly streamline their multichannel operations.
Product listing partners take order data from a marketplace and insert it into a merchant’s ecommerce platform as if the order was placed from the merchant’s website. Once the order is processed and fulfilled by the merchant as usual, the listing partner reports the order tracking information back to the website.
Omnichannel vs Multichannel Differences
Although an omnichannel strategy is built on a multichannel foundation, there are key differences in the customer experience, goals and execution.
1. Omnichannel is more customer focused, and multichannel is more product focused
An omnichannel strategy relies on identifying all of the touchpoints between a customer and a brand, and finding ways to capitalize on those moments to increase convenience for the customer or enhance the customer’s connection to the brand. In a multichannel strategy, businesses try to put products in front of as many valuable customers as possible, but the emphasis is primarily on increasing their online presence, not on deepening the customer experience.
2. Omnichannel retail links channels directly so that they work together, and multichannel does not integrate channels with each other
Omnichannel retail typically refers to the way brick-and-mortar stores and a business’ online operations work in tandem. Multichannel retail refers to a business with physical storefronts and online stores, but the operations are siloed into separate channels of the overall business rather than integrated.
Multichannel marketing uses a variety of channels to send a customer the same content or unrelated content, while omnichannel marketing builds upon interactions on other channels in order to advance the customer journey at any touchpoint.
3. An omnichannel approach creates new customer experiences, while a multichannel approach limits the customer’s experience to the capabilities of individual channels
Leveraging different channel capabilities together enables brands to create new and memorable customer experiences that consumers wouldn’t normally get through a single channel.
A multichannel approach helps customers find products they want and lets them make purchases on channels they’re already comfortable with—such as Amazon—but the customer’s brand exposure is limited to that site. The brand can employ additional marketing tactics to incorporate its Amazon business into a holistic omnichannel strategy.
When should you choose omni channel or multichannel?
Retailers have proven success with omnichannel and multichannel strategies, so the key is choosing the right strategy and executing it effectively and consistently.
1. When should you choose omnichannel?
An omnichannel retail strategy relies on a strong multichannel backbone. If a business doesn’t have a streamlined and consistent approach to its multichannel operations, then customers will have a negative experience when they are the center of an omnichannel approach. For example, imagine a customer who purchases a product online, arrives at the store to pick it up, and is informed that the inventory displayed online was inaccurate and the order was cancelled (without notifying the customer). If the systems don’t work independently, they won’t work together.
Developing an omnichannel approach requires significant investment and continued maintenance. Businesses without sufficient in-house resources need to invest in the right tech solution. Because omnichannel seeks to create personalized customer experiences, the investment is higher than it would be for a multichannel setup, but the payoff is improved customer retention and brand loyalty due to increased customer engagement.
2. When should you choose multichannel?
Companies that want to reach more customers can find success listing products in more places. Before deciding which channels to advertise or sell on, it’s a good idea to do some research to determine if the products are accepted on the channel, if it would be profitable in light of different fees per channel, if there is a market for the products on a particular channel, and if the business is prepared to handle an increase in volume or operations without sacrificing quality.
Multichannel is a good option for businesses that don’t want to invest in a full omnichannel approach, but the right tech stack is still necessary to streamline their multichannel operations. Businesses that aren’t able to automate a significant portion of the work in a multichannel setup will become overwhelmed as they grow.
What are the key benefits of omnichannel?
When customers don’t get enough channels or there is no seamless transition, it creates friction and impacts the customer’s experience. As per Google, “Shoppers who buy through multiple channels have a 30% higher lifetime value than others.” By implementing an omnichannel strategy you can exemplify customer experiences. Here are the key benefits of an omnichannel communication approach.
1. Higher return of investment (RoI)
Businesses choosing an omnichannel approach are likely to make significant investments in advanced technology and tools. Implementing the latest tools needs to integrate it right across the business systems.
It involves a broader vision by businesses and needs to be driven from the very top for it to be successful. However, investing in customer engagement strategies results in a higher RoI in the long run. The significant benefits witnessed by the businesses are:
- Lesser touchpoints – The strategy empowers your agents to understand customers’ concerns faster and provide effective solutions in the first go. This improves the first call resolution (FCR) metric and reduces the number of touchpoints.
- Higher satisfaction – When customers receive quick feasible solutions with the right systems and technology in the first contact, the satisfaction level increases. It improves the lifetime value of the customer (CLTV) significantly.
2. Streamline conversations under one platform
Omnichannel support unifies all your customer conversations in one place to understand your customer journey better. By analyzing it you can gain deep insights to personalize engagement with customers across all touchpoints.
You need to be where your customers are. By being active on the preferred touchpoints you can offer real time engagement and improve customer experience. Here are the key steps to create an omnichannel customer experience:
- Map your customer journey – It helps to understand your customer needs better and use the insights to create strategies to engage them better across all touchpoints.
- Identify the preferred channels – Know what are the frequently used channels by your customers to connect with you. Be active where your customers are to deliver a great experience.
- Build the right strategy – By using the customer insights and knowledge about channels, build the right strategy to deliver a seamless experience across channels.
- Identify the gaps – Know the gaps in your communication strategies or the fragmented experiences and bridge the gaps to deliver the best omnichannel experience.
3. Understand your customer journey to gain insights
The omnichannel strategy helps to gain valuable insights into previous interactions made by customers with your brand. It helps to use customer journey maps to meet customer needs and deliver an optimal omnichannel experience.
Knowing customers’ behavior helps to optimize your processes to reduce customer frustration, bridge the gaps in the process, and nudge them towards conversion. How does mapping customer journey help to create a great omnichannel experience?
- Identify the touchpoints – You can understand the major touch points where your customers need your assistance and be actively present to engage them.
- Take proactive actions – Understanding all touchpoints will help you to act proactively across the behavioral stages of the customers.
- Create processes – You can define specific strategies to deliver effective real time support with the right channel to improve customer experience.
- Develop self-service options – Having self-service options such as tutorials, videos, etc. helps customers to find solutions before they reach you.
- Collect customer feedback – Regularly ask your customers feedback, share with the relevant teams, and continuously improve the gaps.
4. Better team productivity
Generally, a lot of time is involved in resolving a single issue by having many back and forth conversations with the customers. Omnichannel dashboard empowers your team with real time feedback about their interactions on their customer interactions handled on each channel.
Being omnichannel helps to meet the key KPIs to improve team performance. The key metrics are First Contact Resolution (FCR), Total Resolution Time, Average Response Time, and Missed Conversations.
How omnichannel improves agents performance and increases team productivity
- Less touchpoints = Less complexity – The insights help to understand the customer journey better and all departments have to be constantly aligned to deliver personalized solutions at the first touchpoint.
- Time & resources – When the FCR is improved you are able to solve more queries by improving the average response time. You can manage resources accordingly across business functions.
5. Boost your customer retention
An omnichannel strategy connects all the channels and helps to gain a better understanding of customer behavior by analyzing their journey to deliver consistent support. Omnichannel customers are 30% more valuable to your business over the course of their lifetime.
Brands that make the effort to engage their audience with an omnichannel avoid attrition and act as one of the customer retention strategies of your business. Omnichannel communication strategy empowers customers to connect with the brand through their preferred channel and also make a smooth transition in the same interaction.
When businesses open all the gateways for the customers to connect with time, customers find it most convenient and tend to retain your business for a longer time.
6. Deliver a unified customer experience
Users choose online and offline channels like live chat, Facebook messenger, kiosks, or visiting storefronts or service centers to engage with businesses. Creating consistency among every channel improves the experience as well as the brand image.
The omnichannel customer service strategy focuses on delivering a seamless experience across all the channels. It means the channels are centralized under one platform to bring stability, ensuring consistency across the board. The experience is the same regardless of the touchpoints used by the customer.
Here are the key benefits of consistent omnichannel experience:
- Connects with the customers in real time across their preferred channels and reduces the average response time.
- Improves customer satisfaction by using insights to provide effective solutions in the first go and improves first contact resolution (FCR) rate.
- Provide valuable insights about the customer profiles analyzing their journey to get a better understanding of customer needs and interests.
Checklist for going omnichannel
Adopting an omnichannel approach to marketing and sales is an intensive and complex process (just as making the jump from single- to multichannel operations is). Before diving into all things omnichannel, there are a few prerequisite actions you’ll need to take:
1. Know thy customer
Understand your customers’ wants, needs, and preferences. Invite customer feedback, use analytical data and social listening tools, and examine your customers’ behaviors online and offline.
2. Ramp up your tech
Smart tech is a critical component of successful omnichannel implementation. For an experience to be streamlined, intuitive and personalized, your sales and customer management systems need to have the capacity to adapt the experience to the customer’s preferences and other contextual aspects of their journey.
3. Enable smart data collection
The Holy Grail of advanced omnichannel is the ability to leverage data effectively. Combining data from multiple systems, including inventory management, CRM, POS, eCommerce sites, etc. gives you a competitive advantage — so it’s crucial to ensure these systems work together seamlessly.
4. Rethink your organizational structure
In an omnichannel business, sales, marketing, warehousing, product development, and customer service teams need to be willing and able to work collaboratively at every turn. Achieving this comes down to utilizing the right technology to enable cross-team workflows and educating team members on new processes.
5. Invest in sophisticated software
Choosing a system that enables streamlined workflows is essential to putting omnichannel commerce into practice.
Wrap up
An omnichannel retail strategy links brick-and-mortar locations with online channels to deliver an integrated multichannel experience for customers. The goal is to increase customer convenience and personalize the customer journey to spur greater engagement and customer retention.
An omnichannel strategy centers the customer and ensures that each touchpoint provides an opportunity for consumers to purchase products, reach customer service, receive useful information, and save time. To achieve this, customer data and product data must be synced across channels, which requires an investment in the right technology.
A multichannel retail strategy uses multiple channels to put a brand’s products in front of as many valuable shoppers as possible. There is minimal integration between channels, so the product data on each channel should be synced with the central data source to ensure that product listings are consistently up-to-date. This still requires an investment in the right technology to make expansion manageable and scalable, and ensure that the channels don’t become a liability to the brand’s overall reputation.
Both omnichannel and multichannel approaches offer the potential for increased customer satisfaction compared to the single channel approach, but they are more complex as well. With the proper planning and the right technology, moving beyond a single-channel model can be highly rewarding for a business.