Multichannel vs omnichannel
The term omnichannel is all around us. It is often seen as the only way to survive for retailers as is seconded by Gino Van Ossel, Marketing Professor at Vlerick Business School in his book ‘Omnichannel in Retail’. Möbius is a partner of Vlerick Business School and in this blog, we’d like to elaborate on the article of Gino Van Ossel and discuss the importance of omnichannel.
In many news articles and blogs, the terms ‘multichannel’ and ‘omnichannel’ are used interchangeably. However, they differ from each other greatly. Often, when an author makes the distinction, omnichannel is termed as ‘multichannel 2.0’ and while one can understand the reasoning behind this terminology, it wrongly suggests that both omnichannel and multichannel are fundamentally based on the same principles. In this article, we explain the difference between the two and explain how they are fundamentally different both with regards to the organization (internally) and to the customer (externally). The difference explains the main reason why omnichannel is necessary to survive, according to Gino Van Ossel.
Now, what is the difference?
Over the last couple of years and decades, the different steps that a consumer takes before the actual purchase of a product changed dramatically. In the old days, consumers went to a shop, received information from the shop assistant, chose a product and took it home. Now, consumers can shop using many different channels (physical shop, app, website, etc.) and they receive information via all sorts of ways such as recommendations from their friends on social media, ‘independent’ customer reviews, newsletters, in-app advertisements, etc. The customer journey nowadays puts spider webs to the blush.
How the different channels, available to the customer to interact with your company, relate to each other explains the difference between omnichannel and multichannel. Multichannel refers to the availability of multiple channels, hence multichannel. These channels, for example physical stores and a web shop, are installed by the company and are at the disposal of the consumer. However, in multichannel, these different channels operate separately from each other (often engraved in the company by separate reporting structures and revenue goals). In a sense, a multichannel offering is passive since one channel exist freely and independently next to another.
The term omnichannel, on the other hand, indicates that all different channels are completely consistent with each other and form, so to say, one ‘omni-channel’. As such, the different channels are aligned in an active way. In omnichannel, the different channels that are available to the customer function much more as simply different ways of addressing the company, without being different content-wise.
Although the difference seems small, the impact for both the customer (external) and the company (internal) is large. We will elaborate on this impact in the following paragraphs.
Consistency – the external omnichannel
Let us illustrate the external difference between omnichannel and multichannel by an example. A customer in the USA wanted to buy a treadmill online at Target. However, the price of the treadmill in the eBay store of Target was much lower than the price of the treadmill in the Target web shop. The customer bought the treadmill via eBay, but at the moment of delivery, the trucker could not unload the package since he did not know the package was heavy. When the customer ordered a new delivery date, his treadmill seemed to have moved to a warehouse of Target. After some calls with the contact center of both the shipment company and Target, no one could tell exactly what went wrong. Frustrated, the customer sent out a tweet and to his surprise he got a quick and helpful response. He was asked to send some documentation but after doing so, he received an answer from Target that they could not help him since he bought the treadmill in the Target store on eBay and not in the Target web shop.
There’s no doubt that the customer experience could have been better in this example. But most importantly, each time the customer contacted Target via a different channel (normal web shop, eBay store, shipment company, Twitter, customer contact center…) he felt like he was interacting with a different company. The most striking example, but which is seen quite often, is a difference in price between different channels. Offering an optimal customer experience would require having a consistent approach towards the customer via each channel. This is exactly what omnichannel aims to achieve.
Customer centricity – the internal omnichannel
Defining omnichannel and explaining the added value of consistency is easy, but implementing it is another task. The inconsistent multichannel offering is the consequence of the internal organization of the company. Traditionally, companies tend to maximize the performance of each channel separately. The company is likely to be organized in ‘swim lanes’, according to Stacy Schwartz, a digital marketing expert, consultant, and adjunct professor at Rutgers Business School. In a sense, this internal structure is pushed out to and reflected in the customer experience (this is sometimes termed ‘inside-out’). This results in the consumer interacting with different departments of the company when using a different channel.
According to Gino Van Ossel, having such silos for each new channels is not a problem per se, but it is an intermediate stage towards an omnichannel offering1: “Typically, a small team starts selling via a new channel and only the project leader is focusing on the new channel fulltime. When the channel is gaining importance, it becomes a separate silo, parallel to other silos in the organization. This prevents the initiative from being overruled by the interests of the existing business.”
As a result, implementing an omnichannel offering is fundamentally different from a multichannel offering. Being a truly omnichannel company might well be the perfect example of customer centricity since this involves putting the customer first and building the company around his or her specific needs or journey, not the other way around. As Rik Vera, CEO of nexxworks, puts it: “As a company, you used to be the flower and you needed to attract as much bees as possible. What we see know is the customer saying “I’m not a bee, I’m the flower, I’m in the center”. As a consequence, companies can no longer define or map a customer journey. At best, they can monitor it.”
Transforming the company in a customer-centric way is often termed ‘breaking down the silos’. Indeed, companies remain to be organized in silos that ‘throw data over the wall’ from one silo to another. Breaking down these walls (both technical and organizational) is far from easy and will take a significant amount of time. It is, however, the only way to go. In the end, how could a customer experience a truly seamless experience if the involved teams in the company cannot work together seamlessly?
Holacracy – customer centricity as an organizational structure
Implementing an omnichannel offering will require companies to invest in technology, infrastructure, marketing and almost all other aspects of their business. In recent years, a new management and organizational system was invented to make a company truly customer-centric: Holacracy. In literature, the online clothing store Zappos is often given as an example. To continue the metaphor of Rik Vera, CEO of nexxworks: “Zappos tries to be a swarm of bees and to see each of their clients as a flower. ‘Try’ is very important since they do a couple of things, learn from it and adjust constantly.” They realized that if you want to put the customer centrally, you cannot force them into customer processes. Therefore, the employees of Zappos are not forced into specific processes either. Zappos provided some key values and gave a lot of empowerment to their employees. This new organization system decentralized decision power and distributed power in the company in such a way that employees can perform their jobs the way they want as long as they put the customer centrally and keep focused on the company values.
At Möbius, we believe Holacracy has many benefits and is a great tool to organize a company in such a way that it can react very agile to a changing environment. One year ago, a part of our company started to adopt the Holacracy. The benefits of this organization structure became clear, which is why some of our employees became certified trainers to implement Holacracy. Currently, we started to organize our entire company via the principles of Holacracy. Therefore, we defined clear company values and our organizational structure is changing in such a way that all of our employees are empowered in their jobs. In this way, we are much more customer-centric and we believe that we can assist companies better in making a similar transformation as a part of their road to an omnichannel offering