Using Multiple Channels to Retain Loyal Customers and Increase Profitability

For several years, analysts and leaders in the retail marketplace have touted the advantages of using multiple channels and a customer-centric approach to drive overall business change. The reality in this competitive world is that being a multi-channel retailer keeps you in the race. Can you imagine consumer reaction to a retailer that has no Web presence today?

The true competitive advantage is awarded to those companies that can harness the valuable customer and product information that comes from a sophisticated, direct-to-consumer business model. It is proven that consumers who shop via multiple channels generate the most profit and represent a large, fast-growing segment. Those same consumers produce significantly higher sales per transaction and a disproportionate share of company profits.

Avoiding the Silo Approach to Multiple Channels

Unfortunately, many retailers have implemented new consumer channels that are outside the brick and mortar model using a silo approach. Separate organizational models, technologies and processes related to direct-to-consumer channels such as Web and catalog, are all too common. Such duplication not only hinders the ability to manage the consumer experience in a seamless manner, but also drives internal costs that dilute any potential revenue increases.

To overcome these obstacles, retailers must build an integrated, multi-channel business model that utilizes common, best-in-class business processes. Additionally, the technology to support direct-to-consumer channels must be seamlessly and tightly integrated back to traditional merchandising, supply chain and financial systems.

To be successful, direct-to-consumer technology must:

Offer sophisticated enterprise application integration to legacy back-office systems and databases
Provide plug-and-play capabilities for components
Be built on open standards
Utilize scalable platforms that can handle millions of transactions per day
Establish a single data store that provides common data shared across the multiple channels
Provide data mining and analysis tools that deliver valuable consumer and product intelligence
Collect consumer data across channels (phone, Web, store, kiosk, mail)
Utilize graphical tools that simplify integration without custom programming
Support customer performance measurement
Allow for integrated customer relationship management across channels
Give access to transactional history

Using BPO to Jump Start the Direct-to-Consumer Environment

Adopting the new integrated multi-channel model requires the successful delivery of integrated and profitable customer experiences across all channels via the integration of both technology and business processes. One way of obtaining this balance is to use the Business Process Outsourcing (BPO) model. BPO solutions can offer very tangible benefits and jump start a retailer's entry into and optimization of direct-to-consumer multi-channel environments.

Some of BPO's benefits include access to extensive, experienced information technology resources and predictable costs without significant capital investment or staff requirements. Additionally, a BPO model can help retailers lower their ongoing total cost of ownership and quickly respond to market and technology changes via a continual, best-in-class upgrade process. With a focus on core operations and leveraging non-core operations to outside providers, retailers can fully integrate tools and information within order to cash processes (order receipt, customer profile/history, order processing, fulfillment, shipping, payment processing, service, etc.). The key to successful seamless multi-channel integration is the ability to lower risk while realizing the cost and growth benefits of the multi-channel model. Through the smart mix of the right technology in combination with sound business processes, retailers can reap the rewards, including:

Capturing lost sales
Improving gross margins
Improving demand forecasting and planning
Improving inventory management
Creating richer customer relationships