Multichannel delivery and customer loyalty

Yes, we have all heard how important multichannel delivery is too many organisations these days.  This is the ability to be able to deliver your goods and/or services via a variety of mechanisms (face to face, via the telephone, online etc) and to do so consistently.  It is something that has been discussed ad infinitum which makes it even more frustrating when companies still get it wrong.  Here's my ancedote from last week.....

My car insurance was due for renewal.  I took out a policy many moons ago with DirectLine.  The intial insurance was taken out online and each year they send me a renewal notice in the post before it expires.  This year's renewal notice arrived a couple of weeks ago.  All I have to do is ring up and agree the renewal, provide payment details and I am all done.  So far, so good.  However, this year I thought I would check the renewal amount (the one in the letter they sent me) with their website. Just for fun. Guess what!  The online quote was over a £100 cheaper than the renewal notice.  This can't be right, I thought.

When I rang up to point this out, I was put through to the customer loyalty department and they matched the online price.  Apparently, there is an online "discount".

How can this possibly make sense? This episode really underlines how important it is to get multichannel delivery right.  This episode was not about MONEY, it was about TRUST (my trust in DirectLine) and customer loyalty.  As a loyal customer (yes, I have been with them for many years), my reward was an over inflated insurance premium (one that was higher than the online equivalent).  Surely as a loyal cusomter, I deserve the best quote not just one that they think they can get away with.  I can't help feeling let down.  It is almost as if the company is spending all of it's time trying to attract new customers while failing to look after it's existing customers.

All I want is to be treated as a loyal customer.  If you give me your best deal, I will give you my business.  If you give your best deals to your least loyal customers (i.e. those who give their business to others currently), your most loyal customers will reward you - by moving their business elsewhere!

Trends in online retailing

So here's some recent articles that I came across (in no particular order):

• This one covers the position that TV production companies find themselves in. There is increasing interest in online video from consumers. There have been some successes with user generated content, but there are a bit hit and miss. While consumers are interested in original material, there simply isn't enough advertising revenue to pay TV production companies to produce the content. This interesting given my previous blog about advertising revenues. http://www.netimperative.com/news/2008/september/01/guest-comment-does-commercial-programming-have-a-1
• Some interesting data here on the trends in online shopping. No surprise that customer's expectations are increasing when it comes to Internet retailing. One of the major expectation is around the provision of easy to access product information. http://www.emarketer.com/Article.aspx?id=1006568
• Continuing the riff around the power of consumer recommendations, this article contains some interesting data on the trend. When surveyed, 80% of consumers stated that reviews/recommendations played a significant part in their buying decisions. Plus sites with recommendations report 45% more traffic than those that don't. http://www.turnerinvestments.com/index.cfm/fuseaction/commentary.latest/commentary_section/Sector+Focus/CSID/387

Software as a Service

I was in a Skateboard shop at the weekend (yeah, I know I am 46!) and they had a till that was running as a web app over a VPN. I could see it was running in browser - the guy (or should that be dude?) on the till was using FaceBook until interrupted him to buy something!
I quizzed him about the till and how it worked and although it isn’t as integrated as it could be (the Card machine was separate), it was still pretty impressive. I asked about the business model behind the device, but I think I lost him at this point and he said he didn’t own the shop (man)!

However, I did ascertain that the software (or rather Service) is from an English company called Cybertill (http://www.cybertill.co.uk/). The other part of their business is eCommerce sites which uses the same data being used by the Cybertill. Cool!

This is a very clear example of the sort of thing to come. I can imagine that this works exceptionally well for small independent Retailers (like Bath's only independent owned skateboard shop!), but it also demonstrates the way for lots of other Retailers. I can imagine that it will be the smaller retailers and the emerging markets (i.e. India, China, etc) that first adopt this technology - it will be a while before the rather conservative High Street Retailers are confident enough to go this route. But the smaller Retailers will drive this change.

What's more important here are the business models that can be used to underpin this technology. For example, it would be very straightforward to bill Retailers on a transaction basis - thus the Retailer's costs would increase in line with their sales and the technology provider can scale out the technology as and when it is required. What a change from the current situation!

Advertising on Social Networking Sites

I blogged on this previously. Purely because I was intrigued.

Today, I came across this quote from Martin Sorrell that goes part way to explaining what is going on here:

“Social networking is really recommendation between people about the things that they are interested in and they like… this has stimulated people’s attention in terms of the importance of PR. The people who are going on these sites didn’t want to be monetised, they didn’t want to be advertised to, so again editorial communication is so powerful, they would rather be communities that can exchange views that are untarnished.”

So what is being said here is that Social Networking sites are a mechanism for end users to provide each other with recommendations. We shouldn't underestimate this. There was a presentation at NRF (National Retail Federation) that reinforced this point. According to WSL Strategic Research, 74% of shoppers trusted the recommendations of friends or relatives. Furthermore, 40% of shoppers trusted reviews written by people who had used the product. This compares to 22% of shoppers who trusted the sales person in the store. But thank your lucky stars you are not a celebrity, only 10% of shoppers trusted their recommendations!

In similar research, Immediate Future found that 62% of shoppers trusted and used online reviews from fellow shoppers.

So, why does all this matter? Well, as social networking sites are increasing dramatically, it would appear that traditional online advertising does NOT work. If you don't believe me, take a look at these estimates from Technology Review.

Yet, ironically, 34% of bloggers admit to writing about products and brands in their blogs (according to the same report). And we know that shoppers behaviour is influenced by these views. Interesting.

The Immediate Future report on top brands in social media makes interesting reading.

Retail innovation

Here’s a business that it is intriguing. It sells T-shirts. Ok, so what’s so new about that I hear you ask! What makes it unique is that the T-shirts are designed by customers. The T-shirt designs are then voted on by customers and the winning designs are printed up. Customers then buy the T-shirts. They can even photograph themselves wearing the T-shirt and send it into the website for inclusion on their pages.

If you are really interested, you can even browse the designs by designer. The designer page contains a profile of the designer as well as links to his other designs. Thus, promoting browsing across the site and building an added dimension to the interaction. I think this appeals to the “story” aspect of the product.

And when you get your T-shirt, the label is printed onto the shirt itself with it’s title and the name of the designer. Again, promoting a depth to the product that would otherwise be missing. Does this count as user generated content? MMmmm

Here’s another cool idea that I liked. Little Miss Matched sells 3 single mismatched socks in a box. Yep, that’s right, 3 socks in a box. In fact, they have branched out and sell all sorts of mismatched stuff. Nothing for blokes though. They have franchises in the UK and have just won a big deal with Macy’s in the US as well as raising $17M in funding. I thought the mismatched tights were funny – although you could make up your own mismatched socks (just take one from two separate pairs), this was going to be hard to do with tights (unless they were made that way!).

And here’s another example... Nike has launched a service to enable consumers to design their own trainers based on pictures taken using a camera phone. The PhotoiD service encourages consumers to take a picture of any subject using their camera phone, which is then sent via MMS to a short code. A personalised picture of a trainer is sent back which features the predominant colours of the photo. The message comes with a unique code which can be entered into the Nike website to buy a...you guessed it – a pair of trainers.

PC World: Have you ever heard of Multichannel Retailing?

I know they have, but I think they missed the point.

So what am I talking about? Well, love them or hate them, PC World is one of the most successful computer retailers in the UK. They even have a website.

Now one of the problems with selling on the web as a high street retailer, is how do you compete with the web pricing which is generally lower because of reduced overheads? PC World's solution is straightforward, offer web based prices online and allow customers to pick up the products in the store. Fantastic!

Now consider this, I needed to purchase an ADSL2+ router. By reserving it online and picking it up in the store I could save £30 on a £200 router. Not bad. Process works pretty well too and I reserved it and went into the store to pick it up. Well, while I was there I thought I would browse around and see what was new. Then, I realised that I could do with putting some extra RAM into one of my machines. They had it in stock and it was on the shelf. I was just about to pick it up and I thought "But I wonder how much cheaper this would be if I reserved it online and picked it up in the store?"

Mmm....using the browser on my mobile phone, I could see it was £5 cheaper (a 25% saving!). Quite a few keystrokes later, I managed to reserve it. Using such a small screen is a real challenge. As I stood in the store (still browsing memory), I was tapped on the shoulder and sales assistant said "Excuse me, can I just pick up one of these?". He reached over and picked up the memory card that I was interested in. Eh? What's going on here? I followed him back to his "Customer Service" counter. "Has a customer reserved that memory?" I asked. He nodded. "So, let me guess the customer's name!"

He was almost as impressed as me. And I saved £5 too!

Now, "Collect in Store" is a a great ideato drive customers from online world into the Store. It is great for transactional based sales, but absolutely hopeless for in-store browsing. In fact, the process which encourages customers into the Store, then actively disincentives them to browse when they are there!