“Omnichannel” and “Multi-channel” retailing; if you work in marketing, you may hear these terms frequently. Without context, they seem like the same thing. But in fact, they are different from each other and are both viable approaches to sales and service.
That’s why we’ve put this guide together. We’ll explain the main differences between the two strategies. We’ll then cover when you should use each type and the pros and cons of each action plan for your business.
What is a Multi-Channel Approach?
A multi-channel marketing strategy uses two or more channels to interact with customers. Often, those channels have specific independent sales strategies. In some cases, even the support teams for each channel are different. Customer Data does not flow between channels. A customer who contacts the business by phone might have a different experience from one who goes through the online option.
This allows for a very focused approach to marketing in each channel. Your marketing team will be able to use that channel’s strengths in their campaigns.
It also enables the business to concentrate on a specific area of sales. For example, if you want to drive customers toward your online store, you might offer exclusive online discounts.
What is an Omnichannel Approach?
An omnichannel approach also uses multiple channels. The main difference is that the customer experience across these channels is consistent. That means that customer data gets integrated across physical retail, online stores, mobile apps, etc.
For example, if a customer fills their cart in your online store, that basket will be waiting for them if they log into your mobile app later. Omnichannel strategies often make use of more channels than the multi-channel approach.
You can manage this using integrated software like a CRM system to keep track of customer data. An omnichannel strategy will need a lot of data collection — as well as the technology required to process and categorize it.
Omnichannel vs. Multi-Channel: Key Differences
Both approaches make similar use of online and physical retail channels. It’s the focus and breadth of their channel coverage that differs.
Explained below are the main differences between multi-channel and omnichannel retail.
As we mentioned above, multi-channel retail puts a strong focus on each channel. They’ll approach a limited number of channels to avoid spreading resources too thin.
For example, your business might have an online and a physical store. Take customer data from those locations and look at available market research. Utilize this to concentrate on the social media channels where your core customers are most active.
You could then devise targeted marketing strategies for those platforms. In a multi-channel system, you might choose to separate the online and physical portions of the business. This way, you can focus resources in each area as needed.
In an omnichannel strategy, the focus is broader. You can still target the same number of channels or go for a more blanket-coverage approach. The key is that the messaging, branding, tone, and customer experience must be consistent across all the channels.
It requires more investment and resources. However, it also allows a business to respond to customer needs and desires quickly. If your customers all move to the hot new social media platform of the month, then so can your business.
The unified strategy of an omnichannel retail approach has its advantages. It is harder to make changes to the strategy, as they need to be appropriate for each platform, but it’s easier to install the strategy across new channels and media.
It can also lead to higher customer satisfaction. When customers receive a positive experience across your channels, they’ll be more satisfied and likelier to recommend your business. This Walker study suggests that customer experience is now the key brand differentiator.
On top of that, Adobe research recently found that businesses who pursue customer engagement with a unified omnichannel strategy enjoy greater success. They also experience 10% higher year-on-year growth, 10% higher Customer Lifetime Value, and 25% higher close rates.
The latest research demonstrates that a good customer experience is now more important than price for most customers. 86% of buyers said they would pay more for a better experience in this recent survey.
Both of our approaches can provide a good customer experience. Multi-channel can focus in-depth on each channel, and omnichannel can deliver a consistent level of service. Focusing on the individual experience of the customer is critical.
It doesn't matter which strategy your business is pursuing. Providing a good customer experience will help support your sales and marketing efforts.
Is Omnichannel Retail Better Than Multi-Channel?
On the face of it, it seems like having an integrated approach to customer service and retail would be superior. In practice, this is not always the case. The main barrier to omnichannel for many retailers is budget.
Setting up an integrated Customer Records Management (CRM system) can be a costly investment. Even going with a managed option incurs ongoing costs. If you are a startup or a new business, there are also hardware costs to consider. In these cases, it’s almost always better to focus on a few key channels and provide the best experience in each. But as your business grows, the omnichannel approach would become more appropriate.
When you’re collecting large amounts of customer data, it is sensible to put that data to use. An omnichannel business deals with a lot more data, but they can use this to understand their customers better.
Using integration to personalize the customer experience is becoming a key brand differentiator. You can do this by analyzing customer data and personalizing deals. Base it on their preferences, and you’ll see conversion rates rise.
A business looking at an omnichannel approach should also consider personalization. Look for more information on personalizing websites. Recent studies reported in Forbes showed that 74% of customers get frustrated by sites that don’t offer personalization.
Which Businesses Should Use an Omnichannel Approach?
You would have seen by now that these strategies don’t have a one-size-fits-all option. Below we will look at which type of businesses should focus on omnichannel retail and which should pursue multi-channel.
High Revenue & Luxuries
The omnichannel approach requires a lot of capital investment. High revenue earners should consider reinvesting in integrated systems. This also applies to high-end businesses with large profit margins. Customer experience is even more critical for these luxury businesses.
Loyalty-Based & Subscription
Subscription model customers want their package to apply to all channels. For loyalty programs, rewards should carry over across channels. Then, customers will show higher engagement.
Local Businesses with an Online Presence
This might seem to contradict what was said before. However, a small business with only two channels (physical and eCommerce) can integrate those channels at a lower cost. This can be effective for local businesses that also rely on eCommerce revenue.
Which Businesses Should Use a Multi-Channel Approach?
Now that you know which businesses should use an omnichannel approach, let’s look at the alternative and determine who a multi-channel approach is right for.
Prohibitive ROI Costs (Established Systems)
This means your business already uses a customized software system or a hardware system for POS transactions. In this case, the cost of switching to a new system can make the potential ROI prohibitive to an omnichannel approach.
Perhaps your niche is offering the lowest price for your service or product. In this case, pursuing integrated systems can be too costly to consider. When providing budget options, customer experience remains important but should be less of an investment focus.
Commission-Based Sales Teams
If you have sales representatives or account managers that work on commission, integrated systems are more complex to implement. The commission structure will need to be re-examined.
Where customers can take their transaction online to complete after dealing with a representative in person, commissions should still reflect the representative's work. Failing to account for this will negatively impact your representatives' motivation and results.
How to Prepare for an Omnichannel Retail Strategy
Besides technology considerations like integrating your CRM system with your call center IVR, an omnichannel strategy also needs a shift in company culture. This can take time to implement as change must happen across the whole business.
The tips below are designed to help you focus on key areas for improvement. Develop your omnichannel strategy in line with your departmental changes. Don’t implement your strategy before the necessary changes are in place or you could be setting yourself up for failure.
Departmental Focus Shifting
There are several areas of your business that need to synergize to establish omnichannel retail. First, your supply chain needs to be robust enough to respond to demands from many different sources.
Agile logistics will be essential. Also, your customer support team should be able to access customer communications from all channels in one place. This is where your CRM system comes in.
You can integrate chatbot AI for online channels and have that information available for your human agents as well. This makes for a seamless customer experience across all channels.
Next, this must integrate with your sales and marketing teams’ efforts.
Ensure your campaigns, offers, and sales call planning template are consistent in tone, message, and branding. Also, if sales agents are the first point of contact for your customers, make sure the information they collect is recorded.
This should work in reverse, too. If a representative is working off of a warm lead from another source, like an online contact form, then they should have easy access to that information as well.
Tech Upgrades & Integration
Centralized data storage and integrated systems are essential to an omnichannel strategy. You will need to have a CRM system in place and be able to integrate any new tech into its data collection stream.
If that sounds a little confusing, think about it like this. Any software you have that interacts with customers collects data. If you want to integrate all platforms, that data needs to be stored and organized from a central record.
As long as your systems can ‘talk’ to each other, then the data can be shared and accessed at any point in your customer’s journey. This also extends to your customer-facing staff. They need to be trained in the systems and able to access that data when they deal with customers.
This is the first step towards a fully integrated omnichannel strategy. Once you are able to integrate back-end aspects of your business, like your supply chain and logistics, then you will have a full-fledged omnichannel approach.
Final Thoughts: Work to Your Strengths
The choice of an omnichannel or multi-channel approach will depend on your business’s unique identity. More large businesses are moving toward integrated systems. This will keep their brands consistent across all platforms.
For others, transformation costs mean that integration simply isn’t viable. If you’re going into Internet of Things app development, for example, then integrating from the outset would be sensible. Other small businesses may prefer to focus solely on their eCommerce channel as they grow.
Whichever suits your business, customer experience should always be a key focus of your retail strategy.
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