Engaging Multichannel
Consumers
As people interact with companies in more channels—
from websites and mobile apps to traditional shops
with in-store online kiosks—chief information officers
can create value with cross-channel integration.
Engaging Multichannel Consumers
1
A few years ago, it would have seemed pointless to tell chief information officers (CIOs) about
consumer research. Back then, information technology (IT) was like electricity: Business
couldn’t run without it. Then, the primary strategy was how to get more for less. Today, the
game has changed. Leading companies understand that success depends on a seamless
relationship among IT and business functions, in pursuit of the best possible customer
experience. With that, the CIO’s job includes driving companywide collaboration, innovation,
and even revenue. No longer squarely operational, IT is more strategic than ever.
Today, customer engagement is an essential issue for many businesses. Across industries,
companies are threatened by the potential defection of customers to competitors that have
mastered new, more convenient channels. Perhaps these rivals have a great online presence,
or maybe they are thriving with mobile apps or social media marketing. Although some
companies have developed growing, profitable dotcom channels, these are often isolated
from the bricks-and-mortar scene. Few companies have built effective cross-channel
operations—and now, channels are multiplying even further. Consumers have become
multichannel users, and comprehensive strategies are required to engage them within
and across the portfolio of channels.
This landscape presents a tremendous opportunity for IT to create value. With unique expertise
and resources, CIOs can lead the way in understanding how customers interact with companies
in the newer, IT-enabled channels—and correspondingly, how companies can more effectively
please customers.
This brings us to A.T. Kearney’s study of cross-channel shoppers, which explores how
end-consumers engage with companies and what they expect from those companies. In this
report, we summarize this study and outline the implications for IT. First, we present the results of
our research, which reveals that most consumers use multiple channels, often simultaneously,
and that this is creating new opportunities for everybody involved. Next, we outline the major
implications of this research: CIOs must seek greater responsibility for engaging consumers,
must work not only to integrate systems but also to revamp business processes, and must help
build rich analytic capabilities to gain customer insights.
Some companies have begun successfully integrating channels, and we summarize the
benefits they’re seeing. Others, however, have a long way to go. Across industries, long-term
success requires integrating services across the channels that customers use to connect with
companies. CIOs are vital players in addressing that need.
The Study
Our study of cross-channel shoppers examines consumers’ shifts in channel use. We asked
more than 4,000 Americans how they engage with companies, particularly in select retail
sectors and financial institutions, and what they expect from those interactions.
Our first major finding is that most customers across all industries use multiple channels.
Even in historically single-channel sectors such as grocery, more than half of customers now
use two or more (see figure 1 on page 3). And although differences remain across sectors,
customers are building on behaviors developed in highly multichannel sectors and are
beginning to expect similar options in other sectors.
Engaging Multichannel Consumers
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Figure 1
Most shoppers use multiple channels
% of end-consumers
Banking
Electronics
50%
1
28%
2
6%
5
6
39%
1
2%
5
1%
6
14%
3
61%
7%
4
24%
2
15%
3
50%
48%
1
33%
2
14%
3
4
Grocery
4%
5
2%
6
52%
8%
4
5%
2%
Note: Three select sectors are displayed.
Source: A.T. Kearney Multichannel Shoppers Study, 2012
What channels are customers using? Customers say they are using both online and physical
stores more this year over last year—56 percent and 18 percent net gains, respectively—but
other channels have remained stable or are even diminishing. For example, 31 percent of
respondents report that they used catalogs less in the past year, while only 7 percent
increased catalog use. While these results vary by sector and company and only form a view
of usage at one moment in time (in other words, this does not show the transaction value by
channel, the duration of the transaction, or trends over time), the implications are clear:
Companies must scrutinize their channel investments and ensure they are focusing scarce
management attention on the most productive channels.
Our second major finding is that consumers are engaging companies through multiple
channels simultaneously. For example, they might use a store’s mobile app while in a physical
store, or talk to a customer service representative on the phone while browsing related material
online. Figure 2 breaks out the results by age group, showing that as populations age and
behaviors evolve, simultaneous use of multiple channels will become more prevalent. Furthermore, because a significant portion of the population in all age groups uses multiple channels
at the same time, leading organizations must acknowledge this behavior as the new normal.
Figure 2
Many people shop using multiple channels at the same time
How often do you use multiple channels simultaneously?
11%
28%
40%
7%
7%
2%
9%
Often
28%
28%
28%
Occasionally
37%
37%
Rarely
62%
21%
28%
28%
Millenials
Generation X
Baby boomers
Never
Seniors
Note: Millennials include people born since 1980, Generation X between 1964 and 1980, baby boomers between 1946 to 1964, and seniors before 1946.
Source: A.T. Kearney Multichannel Shoppers Study, 2012
Engaging Multichannel Consumers
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An important implication for CIOs is that legacy systems and processes are rarely designed to
recognize that the customer may be interacting on multiple channels simultaneously. Imagine
how a call-center agent might interact differently with a customer if she knew which products
the customer had browsed or purchased online. Or how a store sales clerk might engage
differently with a customer if he knew that customer was using the store’s mobile app. CIOs
have the ability to lead such cross-departmental discussions within their organizations, even
if they are not historically viewed as the champion for the customer.
Our third major finding is about customer frustration with interactions. We asked respondents
the three most frustrating individual issues they experience, regardless of channel. Although
difficulties exist in all channels, 44 percent can be grouped in the broad category of
channel “usability” (see figure 3). Usability frustrations include the following:
• Difficulty comparing products or prices
• Inability to experience or try out products
• Difficulty finding information about product features
• Problems with payment
• Problems returning items
Figure 3
Channel usability is the most common frustration for customers
Categories of frustration
(% of respondents)
Channel usability
8%
Employees are
not knowledgeable
12%
Staff
10%
44%
17%
The top three individual frustrations
Merchandising
Supply chain
Transportation
22%
I am unable to talk with
someone when I want
10%
Product is unavailable
(out of stock)
10%
Note: Study respondents were asked to name their three most common frustrations.
Source: A.T. Kearney Multichannel Shoppers Study, 2012
Difficulties comparing products, prices, and product information are often exacerbated by
channel inconsistencies or difficult and poorly designed online user interfaces. Leading
companies are trying to find solutions to the inability to try products online, with zooms,
virtual models, and liberal return policies becoming more common. To address frustrations
with returning items, retailers must acknowledge that customers increasingly expect to
purchase in one channel and return in another (for example, buy in the store and return via
mail using shipping labels generated from company websites).
Staff interaction is also a major problem. Two of the top three individual frustrations were that
employees were not knowledgeable and were not available when needed. Frustration with
employee knowledge increases with older, higher-income customers. However, a large and
Engaging Multichannel Consumers
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growing number of end-consumer frustrations are likely rooted in technology, according
to our study. CIOs should get ahead of these issues before they land on their doorstep.
So what does this mean for how technology can help solve these problems?
What the Study Means for CIOs
As we discussed our study results with CIOs and other senior executives, three main conclusions
emerged about how CIOs can prepare for the challenges ahead.
Take responsibility for customer engagement. Our study highlights the need for companies
to deliver a consistent customer experience across all channels. Channels might have evolved
as separate silos, but customers don’t think that way—they see each channel as merely
a different way to interact with a company, and they expect consistency. The burden is on the
company to engage customers—consistently, creatively, and productively—across all channels.
Many corporate leaders talk about becoming more customer-centric, but some companies are
organized in limiting ways that actually make them channel-centric. Of course, each channel has
its own segment of customers who pose unique challenges in acquisition, service, and
relationship management. But a genuinely customer-centric approach builds and reinforces
relationships across all touch points, mapping what drives value at all steps in the customer
lifecycle and uses that information to define the optimal customer experience at each touch point.
This sort of intensive customer engagement begins with a deep understanding of customer
needs. What drives their requirements at each touch point? What do they expect from each
product, each stage of the lifecycle, and each channel? And how do these expectations vary
by customer segment?
As a company shifts its objectives toward engaging customers consistently across all
channels, responsibility for that engagement will shift. It will no longer be distributed
by channel but will require a cross-functional team that can use all available resources to
understand and engage customers.
The IT department can clearly play a significant role, but CIOs face two important prerequisites.
First, IT must shift from merely managing information to determining first what information it
has and then how it can use it to enhance customer engagement. This is not necessarily an easy
shift, as we’ll discuss below. Second, IT must actively pursue this shift in responsibility. The CIO
must change the mindset of the IT department to become a champion of the customer, and
then prove that IT can make meaningful contributions to customer satisfaction, and thus
revenues, using techniques and philosophies that we will describe below.
Nobody will bring this issue to the CIO—the CIO must grab it.
Integrate systems and revamp processes. A major roadblock to integrating customer
experiences is siloed systems. Real-time systems that allow both the company and its
customers to engage with each other seamlessly across channels or at any location are rare,
but they are becoming a mandate as more customers use multiple channels at the same time.
Channel inconsistencies can cause confusion. Are prices the same across channels? If the
bricks-and-mortar customer experience is “high touch,” do other channels deliver equally
rewarding experiences? A lousy website doesn’t just hurt online sales: Every touch point speaks
for the company as a whole.
Engaging Multichannel Consumers
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Obviously, systems integration can be expensive. CIOs have been fighting this battle for years,
but now may be a particularly good time to act because of the increasing dangers of poor
integration. Major investments in master data management and supply chain systems may not
get the headlines but are critical. Platforms that allow for cross-channel visibility to customer
actions (such as a call-center agent knowing where on his company’s website a customer
browsed) are enabling cross-channel sales and service like never before.
However, systems alone will not solve the problems of poorly integrated channels. Many
companies also need to revamp their processes. A consistent customer experience is the result
of well-defined, customer-centric objectives. It leads to integrated processes and engages all
corporate functions from merchandising, marketing, and sales to service, fulfillment, and
supply chain, while taking advantage of all supportive resources ranging from technology,
incentives, and organization to governance and culture. This is not an easy step, nor one that
can be taken by IT alone. But it is critical—and CIO involvement is essential.
A lousy website doesn’t just hurt online
sales: Every touch point speaks for the
company as a whole.
Make customer insight a top priority. As noted earlier, customer engagement relies on
customer insight. With e-commerce analytics, you can observe which items your customers
look at, which ones they come back to, how long they dwell on a product, how many purchases
are impulse-driven, and how many are the result of lengthy price comparisons. The value of this
data is not just that you can use it the next time they come to the website, but also that you can
engage them across all channels.
However, some organizations are not set up to do this at all. Some don’t even collect the
metadata that would lead to insight. Others have the data but haven’t fully capitalized
on it through mining, interpretation, reporting, and coordinated actions. As the company
as a whole seeks richer customer insights, the CIO can play a major role in ensuring that the
company uses information to gain insights.
For most companies, then, increased analytic capabilities should be a priority. These capabilities
may or may not be located within the IT department. Regardless of who owns the capabilities
(and it is an important consideration), how they are empowered is the critical issue. Analysts
must be able to take advantage of the full range of the information that the IT department can
unlock and must be able to distribute those insights to customer-facing employees.
The Benefits of Integrated Channels
Companies that effectively integrate their channels benefit in three areas:
Improved customer engagement. When customers have a consistent experience across
channels, they are more satisfied—and more loyal. The companies that best achieve this
regularly lead customer satisfaction ratings; those that implement integrated multichannel
distribution have seen the greatest improvement in customer satisfaction.
Engaging Multichannel Consumers
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Higher growth. Improved customer engagement in turn helps companies grab a greater share
of the customer’s wallet. Retention rates improve, which in turn boosts the lifetime value for
each customer. In addition, integrated channel engagement can also bring new revenue
sources. For example, financial institutions that offer peer-to-peer (P2P) payment systems can
gain more transaction-based revenue as customers transfer money from their bank accounts
to pay bills directly instead of through third-party online providers.
Optimized cost-to-serve. Integrating channels can help optimize product-to-channel
mapping, smooth channel migrations, and benefit from consumers’ self-direction capabilities
(a “win-win” for companies and their customers). Demonstrated results include productivity
improvements of up to 30 percent and transaction cost reductions of close to 70 percent. For
example, increasing channel migration to self-service can reduce average over-the-counter
costs by 68 percent, according to the Tower Group.
The Multichannel Misnomer
To say that integrated channel engagement will create value is not to say that the goal should
simply be to work in whichever channels customers want. They need direction—and in any case
they don’t think in terms of channels.
In fact, the notion of “multichannel” is a bit of a misnomer. Multichannel does not mean all
channels are equally important. It means that as a company transitions to a more fully
customer-centric view, it doesn’t lose focus on any of the growing number of channels—
or on the need for seamless interactions among them.
Integrated channel discussions tend to highlight the end-state, when a company can shed its
channel-based straitjackets and interact seamlessly with customers across channels. Of course,
it will be a challenging transformation. In fact, that’s the point. The systems implications are
enormous, the capital requirements will merit serious debate, and in many cases, a great deal of
operational work must be done. But that’s when the vision of the end-state is important—to get
CIOs and their colleagues through any difficulties they might encounter along the way.
Forward-thinking CIOs who are eager to engage customers can gain immediate impact by
integrating channels and revamping business processes. Those with an eye on capturing
longer-term advantages must build rich analytic capabilities to gain customer insights.
Authors
Todd Huseby, partner, Chicago
todd.huseby@atkearney.com
Shamik Lala, consultant, Chicago
shamik.lala@atkearney.com
Adam Pressman, principal, Chicago
adam.pressman@atkearney.com
Engaging Multichannel Consumers
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