Innovate 2016: Not All Channels are Created Equal

Walt Disney Mind Map - Omni-Channel

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By Beth Dembia, Director, Client Success

For the last few years, one concept has dominated the world of retail: omni-channel. Omni-channel, or the idea that retailers need to provide customers with a seamless shopping experience regardless of shopping channel, has gone from being touted as the “next big thing” in retail to being declared “dead” before it even had a real chance to live. So, what’s up with omni-channel – is it still where retailers should be focusing their attention? There may be a better approach, according to CashStar Innovate speaker Kirthi Kalyanam.

Kalyanam, the JCPenney Research Professor and Director of the Retail Management Institute at the Leavey School of Business at Santa Clara University, addressed this issue during his breakout session, Not All Channels are Created Equal: The Dedicated Channel as the New Frontier in Multi-Channel Management. He noted the explosion of new channels – from Google Glass and the Apple Watch to Amazon’s drones and Dash Buttons – and how retailers should not keep adding new channels without thinking more deeply about each of them and their function, as each is designed to address specific activities and behaviors.

The idea map above is the creation of Walt Disney Productions circa 1957. It illustrates this idea of dedicated channels quite well. The map, which Kalyanam used during his presentation, depicts how all of the Disney properties were planned to support one another. So, while the idea of dedicated channels isn’t necessarily new, most retailers have not viewed their own business in such a way. But we can look at successful companies, including Disney and Apple, to learn how this strategy can be applied to retail.

Kalyanam discussed Apple’s device design strategy in which all products are a continuum. You don’t use your Apple Watch the same way you use your laptop or your iPad. Each device does different things well. You may get an alert on your watch that prompts you to get more information on your mobile device, but ultimately make a purchase on your MacBook. While each channel supports one another, the experience with each channel is vastly different.

The Amazon Dash button is a great example of a dedicated channel – it does one thing and does that one thing well. It is part of Amazon’s dedicated channel “map” if you will, a micro-channel that provides shoppers with the convenience of one-click ecommerce ordering without having to log into their Amazon account and manually order the item.

Consider a multi-channel player like JCPenney (JCP). The company announced in January 2015 that, after banishing its beloved print catalog five years prior, they would be resurrecting the catalog. Why? Because it drives web sales! The catalog channel was the number one source of inspiration for JCP shoppers. That channel now does exactly what it’s intended to do – provide inspiration to push people to JCP’s website, a channel designed for ordering. Two separate channels, two separate objectives.

Chances are, you probably have many different channels in which you interact with your customers. And your marketing strategy is likely moving from a multichannel approach, in which you use multiple channels to engage customers, to a more omni-channel approach, in which you are focused on delivering a seamless, personalized experience across multiple touchpoints. Kalyanam’s theory of dedicated channels complements omni-channel strategies, with an emphasis on better understanding what each channel should be designed to achieve, and leveraging customer data and insights across the channels to enrich the overall experience, drive more engagement, sales and loyalty.

Do you have a map of your consumer activity? According to Kalyanam, most retailers don’t. He encouraged attendees to examine the emerging perspective of dedicated channels – an approach that has worked well for retailers like Williams-Sonoma, a company that executed the dedicated channel approach as far back as the 1990s! Take a look at your customer journeys and optimize each channel to make them profitable.

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