Multi-Channel, Omnichannel or Personalization – What is that?

How retailers must adapt to new sales channels

Trade has undergone many changes in recent years. Digitalization has created new ways of communicating with customers and selling products and services through different channels. There are various possibilities, which we explain here.

With the digital change, other channels have emerged through which a retailer can sell or promote its products. For many retailers, marketing strategies that serve multiple sales channels, such as Omnichannel, are becoming increasingly important. Changing customer behavior also means that this change is affecting more and more retailers and poses major challenges for them.

Development from Single-Channel to Omnichannel

Development from Single Channel to Multichannel and Omnichannel
Source: Direct Marketing Association

The figure shows the different business models that have developed over time. With the classic single-channel approach, the retailer has only one physical sales point where he sells his products. The multi-channel approach goes one step further by trying to sell products not only in the store but also through other sales channels such as catalogs or online stores. The cross-channel approach also has several sales channels, but these are already linked to each other. For example, the customer can order a product online and then pick it up in a stationery store.

The last stage and thus the “highest form” of exploiting all sales and information channels is the omnichannel approach. This approach goes one step further in the communication with the customer, in that all channels such as social media, apps, online stores, stationary retail, or print products have a uniform appearance. By using all information channels, it is possible to offer the customer a target group-oriented shopping experience, no matter where they are and when they want to shop.

An important aspect of Omnichannel Marketing is the so-called “Single-Source-of-Data”. This means that it is important that all channels have access to all the information of the other channels and that uniform data, as well as product maintenance, prevails in the company. Such coordinated handling of data and marketing activities enables dealers to respond to changing customer behavior. After all, most customers today are already Omnichannel customers by themselves. It has become natural to move freely between the different channels. For example, people look for recommendations on social media platforms, then look up information on the website, visit the stationery store in their city, buy the product via an app and finally have it conveniently delivered to their home.

This mobile and networked customer behavior also lead to the problem that the customer is less loyal and may switch to the competition immediately if they offer better conditions. This is particularly damaging for stationary retail, especially in connection with the show-rooming effect.

Personalization as the next step

Personalization tries to address each customer and their needs directly. This is intended to increase customer loyalty and satisfaction in addition to sales figures. A consumer survey by IDC and RichRelevance has shown that product recommendations and testimonials from other customers can increase the probability of a purchase decision. A personalized approach offers customers added value by showing them advertisements and content that are relevant to them. This also makes it easier to get to know new products. According to the study by IDC and RichRelevance, one in four would even shop in the same store again if the customer were to make personalized suggestions.

Improved personalization through better data

The personalized approach is constantly improving. Targeted analyses not only allow past trends to be analyzed but also future trends to be identified. This enables personalized recommendations and offers based on the customer’s preference as well as the preferences of similar customers. The aim is to combine customer data together with data from other customers, to find recommendations and personalized offers, and to make these available to the customer. This should make it possible to provide the customer with targeted rather than random offers, which according to Steinbrenner leads to higher sales figures and happier customers. Thus, the evaluation of customer data can be used to identify behavioral patterns and to use the predictable buying behavior for customer loyalty programs.

The danger of personalization

However, caution is also required when handling personal data. There is a risk that the customer will feel “glassy” if a company supposedly knows more about him than he himself. At present, data protection is therefore also flourishing again. In its work on the use of data for personalization, A. C. Klöckner argues that it is important to be transparent and to inform the user where the data comes from and what it is used for. The customer must be informed about how his data is protected and whether other parties have access to it.

Despite data protection concerns, it is important for companies to evaluate the data for personalized marketing and to divide the market into relevant customer groups in order to meet customer needs.

CEO & Founder of MoreThanDigital. Serial entrepreneur since he successfully founded his first companies at the age of 13. He has always questioned the "status quo" and is committed to innovation, disruption and new ideas. As International keynote speaker, consultant for companies and governments & states, lecturer and published digital transformation expert, Benjamin tries to advance the topics of digitalization, digital transformation and innovation internationally.

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