Copyright 2007 by Kelley School of Business, Indiana University. For reprints, call HBS Publishing at (800) 545-7685.

BH 246
Business Horizons (2007) 50, 385–394

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www.elsevier.com/locate/bushor

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Multichannel marketing: Mindset and
program development
Bruce D. Weinberg a,⁎, Salvatore Parise b , Patricia J. Guinan b

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a
McCallum Graduate School of Business, Bentley College, 212 Morison Hall, 175 Forest Street, Waltham, MA 02452, USA
b
Babson College, Babson Park, MA 02457-0310, USA

KEYWORDS Abstract Individual consumers have quickly embraced the practice of using a
Multichannel marketing; variety of channels through which to make their purchases, as 65–70% of them are
Channel integration; multichannel shoppers. Indeed, multichannel shoppers (defined as those who utilize a
B2C;
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variety of different purchasing channels, including bricks-and-mortar stores, the
Internet shopping telephone, and the Internet) are now in the majority, and spend significantly more
than single-channel shoppers. Given this reality, it is critical that organizations adopt
a multichannel mindset and effectively employ a multichannel marketing program, as
these can enhance profitability, the customer experience, and customer satisfaction.
It is the aim of this article to provide firms with guidance in developing an effective
multichannel mindset and in designing a multichannel marketing program for serving
end-consumers in business to consumer (B2C) situations.
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© 2007 Kelley School of Business, Indiana University. All rights reserved.

1. Multichannel marketing: Here and of components, processes, and decisions, such as

moving forward those concerning customers, channels for distribu-
tion, sales, and communication. Multichannel mar-
Since the advent of the Internet, organizations keting systems are not only larger than single-channel
No

serving end-consumers in business to consumer systems, but also require integration, coordination,
(B2C) situations have grappled in a variety of ways and the oversight of many components that previ-
with what has become known as multichannel ously functioned in a relatively independent manner.
marketing. Defined as marketing strategies for Today, it is critical that organizations effectively
serving customers who use more than one channel employ a multichannel marketing approach, as
when interacting with an organization (Rangaswamy consumers in B2C contexts now expect it. Studies,
& Van Bruggen, 2005), multichannel marketing such as those by Doubleclick (Multichannel Shopping,
presents firms with a great managerial challenge, as 2004) and Gaffney (2005), confirm that consumers
the systems are highly complex and involve a number have taken quickly to using a variety of channels, as
the incidence of multichannel shopping is in the range
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of 65–70%. McKay (2004) concurs, reporting that

⁎ Corresponding author.
E-mail addresses: celtics@bentley.edu (B.D. Weinberg), multichannel shoppers are now in the majority.
sparise@babson.edu (S. Parise), guinan@babson.edu Further, as highlighted by Kumar and Venkatasan
(P.J. Guinan). (2005), multichannel shoppers spend significantly
0007-6813/$ - see front matter © 2007 Kelley School of Business, Indiana University. All rights reserved.
doi:10.1016/j.bushor.2007.04.002

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386 B.D. Weinberg et al.

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more than single-channel shoppers. While multichan- 2.1. Create a holistic strategy that leverages
nel marketing is here to stay – it is, in fact, further value propositions across channels

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evolving, as additional touchpoints such as wireless
devices and associated services enter the market- While there were organizations in our sample that
place – much more needs to be learned regarding its deliberately planned their channel mix, far more
effective planning and implementation. While Ber- organizations reported that their methods were
ger, Lee, and Weinberg (2006) illustrate how multi- reactive as opposed to proactive. Many companies
channel marketing can improve profitability, it is by took a tactical approach, for example, focusing on

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no means an easy or widespread feat. According to specific advertising and marketing campaigns rather
Rangaswamy and Van Bruggen (2005), heretofore, than viewing holistically how the different channels
“some firms, such as Dell, Lands' End, and Fidelity worked together. We argue that a successful
Investments, have come a long way in meeting the multichannel strategy requires a good understand-
needs of multichannel customers. However, many ing of the value proposition offered by each
other firms are still struggling to find a profitable and channel, including channel strengths and weak-
effective way to serve such customers” (p. 6). nesses, and determining where channel synergies
As Aaronson (2006) reports, multichannel mar- occur. Of course, having multiple channels is not

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keting remains a hot topic that is on everyone's mind cost-free, as substantial, additional IT and coordi-
and is still in its infancy. Many practitioners now nation costs can be associated with multichannel
accept, as opposed to having to be convinced, that marketing. This being the case, there must exist a
multichannel shoppers can be more profitable and balance between human interaction and electronic
loyal. We believe a critical focus in multichannel touchpoints such that there is both a value
marketing program development has shifted from proposition to the customer and a fit with the or-
evaluating whether it can be of value, to under- ganization's cost model.
standing the difference between “being a multi-
channel company and thinking like one,” a topic 2.1.1. The Internet creates the opportunity
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highlighted by the 2006 Shop.org Annual Summit, A critical reality is that the Internet is a, or perhaps
held in New York City. arguably the, key driver in the burgeoning consumer
As the successful development and implementa- demand for, and the organizational strategic opportu-
tion of multichannel marketing systems is so critical nity in, multichannel marketing. Certainly today, it is
in today's business environment, the purpose of this not unusual for companies to host a corporate website
article is to provide guidance in developing an listing information such as a mission statement,
effective multichannel mindset and in designing a executive profiles, and product offerings. Senior
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multichannel marketing program for serving end- executives interviewed for our study, however, high-
consumers in B2C situations. Based primarily on lighted that, beyond consumer search for static
interviews with senior executives and managers (see descriptive information such as corporate facts,
Appendix) from organizations that have placed more activity and interaction between organizations
significant emphasis on, achieved significant success and customers is shifting to online channels. For
in, and are arguably at the forefront of, multichannel example, an advertising agency executive noted that
marketing, this research emphasizes a strategic top- she sees increasing emphasis being placed on Web
level perspective where, we believe and as indicated advertising/communications, while the “traditional
No

by Balasubramanian, Rajagopal, and Mahajan (2005), 30-second spot” is becoming a dinosaur. In addition, a
managerial knowledge is limited. financial services executive stressed that his organi-
Our study uncovered several important principles/ zation's customers want overwhelmingly to communi-
philosophies that are part of the multichannel mind- cate with the company online, “via email and via
set that guided the marketing actions of the organiza- website content.”
tions we analyzed. Next, we discuss them within the Strategically, we believe this amplifies the impor-
context of prescribing three marketing actions for tance of making individual customers a central focus
developing a multichannel marketing program. when designing a multichannel marketing program.
With online traffic/volume exceeding that of some
traditional channels/vehicles (e.g., the telephone)
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2. Multichanneling your actions

and faster growth in direct channels than in indirect
In this section, we detail three cohesive actions for channels, organizations have also shifted their
developing an effective multichannel marketing pro- channel objectives and philosophy more toward
gram: creating a holistic strategy, designing organiza- one-to-one marketing. As a financial services senior
tional structure and incentives, and creating metrics vice president put it, “We moved more toward direct
that measure the impacts and overall performance. touch … closer to one-to-one as we can get.”

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Multichannel marketing: Mindset and program development 387

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It is an established marketing principle that As noted previously, implicit in value is the
consumers are important to the long-term success component of cost. Given that we have observed

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of an organization; however, moving closer to one-to- many (perhaps a majority of) organizations appear
one marketing could result in effective multichannel to try and shift as much activity as possible to the
marketing principles/philosophies that challenge the low-cost Internet channel, it seems important to
status quo of traditional mass-marketing. For exam- comment explicitly on this strategic consideration.
ple, one executive accentuated that “in our multi- First, we acknowledge that if minimizing cost is
channel philosophy, customers do not equal the most important driver for success in an

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channels,” meaning that a channel is no longer organization, then maximizing consumer utiliza-
defined and developed as a conduit for reaching or tion of the low-cost online channel may make
serving a particular segment of consumers. Rather, sense, overall. In fact, we believe this can hold
the diversity of needs that any customer can have when temporary conditions, such as lean times,
over time is used in developing the nature, structure, change priorities from a status quo that does not
and integration of channels. Many respondents emphasize cost. For example, a vice president of
articulated a similar belief; in the words of one: e-marketing for a major airline noted the difficult
economic conditions that airlines faced following
“We should not presuppose where a customer wants

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September 11, 2001. According to this respondent,
to buy … customers do not necessarily behave like for his organization, the Internet served as a sort
we have pegged them in any way, shape, or form … of marketing “life boat” that kept them afloat by
sometimes a customer from one of our defined enabling them to reach, communicate with, sell to
segments shops in a space where we assumed (i.e., acquire revenue!), and serve customers in an
another segment would.” effective way, all while operating under the
economic and market constraints/challenges of
2.1.2. It's the value, not just cost the time. That being said, we do not uniformly
It is important to point out that advocacy for making recommend shifting as much activity as possible to
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channels liberally available to consumers does not the online channels; successful multichannel mar-
suggest that organizations should ignore the various keters, who recognized that shifting activity to
strengths and weaknesses of channels, or fail to online channels can lower costs, emphasized that
encourage and provide for customers in any partic- cost was not necessarily the main driver behind
ular way. Indeed, we recommend just the opposite, their devoting more resources and attention to it.
as organizations believe it is important to consider Rather, it was a single consideration among several
which channel is best for a given consumer and factors, such as marketing objectives and custo-
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situation (e.g., direct response, tactical versus mer preferences.

brand building). This was evidenced by many of the In fact, a specific strategy that we recommend
firms we interviewed, which attempted to coordi- when appropriate and that is, in spirit, counter to
nate and integrate channels and associated process- the low-cost Internet channel strategy, is driving
es such that the “best channel for the job” of customers away from online channels and to
interacting with or serving a consumer was invoked. (higher-cost) offline channels! All the managers
Taking this further, we believe and recommend we interviewed noted the standard importance of
that value, which is a function of both cost and using offline channels to drive customers to the
No

benefits, should be a major factor in how organiza- online channel. These organizations, however,
tions allocate their channel mix resources. This envisioned differentiating themselves from compe-
notion was expressed by many of the firms in our titors by, in suitable cases, purposely driving
study; for example, as a global vice president of customers away from the online channel. This
online marketing for one of the world's largest IT decision was based largely on a desire to provide
organizations stated: more value to, and better serve, customers,
“Part of our strategy is to not force customers to go to a particularly an organization's best clients. As a
particular channel, say the lowest-cost Internet marketing director of a leading technology organi-
channel, as we're agnostic from a channel standpoint zation commented:
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and want to enable consumers to utilize channels that

are most valuable to them, and are, therefore, in turn, “Most companies are trying to shift people from
most valuable to us.” high-cost channels to a lower-cost online channel,
[but] we have almost the opposite problem … we
As another executive summarized straightfor- want to give some of our best customers more of an
wardly, “spend more on the things that work and opportunity to interact in a more personalized and
downplay the things that aren't working.” higher-cost channel.”

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388 B.D. Weinberg et al.

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This philosophy/approach has been helpful in While all aspects of consumer behavior can be
retaining customers and in supporting customer important, we highlight herein elements of consumer/

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lifetime value decisions. human nature that we believe are most valuable in
developing an effective holistic multichannel market-
2.1.3. Focus on the customer experience, journey, ing program strategy. First, it is imperative to
and lifetime value understand critical consumer behaviors and processes
We believe that developing a successful multichannel that have proven durable over time. According to a
strategy requires thinking about the customer experi- vice president of a channel management organization,

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ence holistically, with an emphasis on satisfying this includes the consumer buying decision process
customer needs throughout the product/service life (i.e., what consumers do, and have done for centuries,
cycle; in fact, several of the companies we inter- when engaged in the process of buying); “Recognizing
viewed used the phrase “the lifetime value of a all the steps consumers go through, from awareness to
customer” in this context. When managers make active research, consideration, purchase, and any
decisions regarding marketing programs or initiatives, post-sale support, is critical,” he said. Clearly, an
they all too often neglect the bigger context and think appreciation for enduring consumer processes could
only about a specific campaign or marketing function. help one develop a multichannel strategy for appro-

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One organization in our study indicated a marked priately advancing a customer from one stage in an
awareness of the importance of focusing on the big established process to another, such as from informa-
picture: “We talk quite a bit with our clients, and what tion search to purchase in the consumer buying
resonates is this idea of a customer experience jour- decision process, or from complaint and dissatisfac-
ney, or their relationship life cycle. It is really thinking tion to resolution and satisfaction in the customer
about awareness through engagement and loyalty, all service process.
in one overall process.” We recommend thinking Second, it is important that firms recognize human/
through the various touchpoints with a customer as a consumer characteristics when designing online-relat-
relationship process, rather than as a particular ed experience processes. The executives we consulted
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marketing initiative, as this will help an organization mentioned, in particular, efforts toward making the
develop and convey strategic value propositions for all electronic as humanly appealing as possible, and in
of its channels. using the language of the customer and translating
In order to be able to think strategically about a information properly from one channel to another. For
customer's experience journey, relationship with an example, a managing director of a premier worldwide
organization, and lifetime value, it is important that advertising agency stated that it is critical to
an organization have a strong understanding of, and “interpret or translate what is happening offline and
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appreciation for, consumer behavior and processes; make it relevant in the online setting, but not by
in fact, this is a crucial multichannel mindset simply mirroring what is happening offline into the
principle/philosophy. The executives we inter- online space.” Mirroring one channel's functionality
viewed emphasized their organizations' respect for into another channel could result in implementing
human nature and consumer behavior as being features that do not necessarily work well, or over-
critical in differentiating them from competitors looking features that would work well given a channel's
and in contributing to their success with multichan- properties (e.g., not enabling and providing consumer
nel marketing. Though this might sound strange ratings and reviews at an online retail website/
No

linguistically, these organizations make decisions channel because they do not exist in a brick/physical
consistent with their belief that consumers act, feel, store channel).
and think in a way that, well, consumers act, feel, Third, companies must find an effective balance/
and think! In essence, these organizations listen to blend between technology and human interaction
and try to understand their market (as well as the when serving the customer. For example, one study
organization's resources and capabilities) as best participant identified the annoying, all-too-common
they can, and make decisions that are consistent consumer experience of endlessly “talking to a
with this; we recommend this practice. As one machine and pushing [telephone] buttons” (or, in a
executive characterized the wisdom and benefit of similar vein, emailing and waiting for a reply) in order
this approach: to obtain information or customer service, or as
Do

part of any other consumer buying-related process.

“We've seen first-hand how the difference between Technology used for the purpose of interacting with or
what a bunch of smart [company/corporate] people serving customers can certainly deliver many benefits
sitting in a room think is good to do from an integration to organizations and clients alike. Nonetheless, it
point of view, versus what customers want and will see should be noted that just because technology provides
value in, can, many times, be [like] night and day!” a solution that “works” (indeed, even customers who

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Multichannel marketing: Mindset and program development 389

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endure 15 automated telephone prompts and push 15 brief message in a television advertisement,
buttons in response to menu queries can ultimately expanding upon that message via website or some

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attain information), it does not mean that the solution other electronic setting, and then directing prod-
provides sufficient customer satisfaction. And satis- uct/payment exchange with the consumer to a
factory customer outcomes, such as purchase or physical store. From a relationship marketing
delight, should be the focus when composing and perspective, channel coordination opportunities
providing a solution to consumer needs and problems. continue after an exchange/transaction; for in-
While we understand and appreciate the excitement stance, a customer could email and telephone in

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associated with developing and employing technology, with questions and comments about the product.
we urge providers to utilize technology and/or Multichannel synergy can also keep a customer
automation only if it facilitates delivery of a solution “in play” (i.e., maintain/continue a consumer's
that is satisfactory or better than the status quo. interest in, and consideration for, the organization's
Finally, and closely related to the previous point, goods or services) and help ring the cash register, for
caution should be exercised against pushing Inter- example by addressing the abandoned shopping cart
net applications and adoption too aggressively. The problem. The latter issue was addressed by a vice
organizations in our study emphasized two elements president of e-business for a large financial services

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of human nature as being particularly important in organization, who emphasized the high percentage
this regard: “change is hard” and “incumbent of online consumers who add items to their “basket”
behaviors are very difficult or slow to change.” and leave the website without making a purchase.
When discussing this, managers highlighted efforts As a possible solution, this individual suggests that
by organizations (their own included) to aggressive- firms employ an “integrated value proposition”
ly force Internet applications and adoption on whereby they “pop up and ask, ‘Hey, [would] you
consumers, and, when these efforts did not “work want to talk to somebody right now?’ [Or] ‘Hey,
quickly,” to then take “corrective” actions which would you like us to call you back?’ [Or] ‘Would you
were ineffective. They argued that consumers need like to do a live chat?’” or even push out context-
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to not only learn more about using the Internet and relevant Web pages. All of these methods, the vice
organization-specific electronic applications, but president contends, could help retain a huge
also become more comfortable with the Internet as volume of potential leads and, ultimately, result in
a viable, secure, and superior alternative before more sales.
they will use it. In addition, synergy can be realized post-pur-
chase, after the sale, for example by using an online
2.1.4. Create a super-additive effect channel as a buffer against offline issues such as
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through synergy waiting times or delays with product deliveries.

Organizations that think holistically about the When unforeseen problems like these occur, custo-
customer experience realize they need to under- mers value a phone call, an email, or an instant
stand how the different channels can interact to message notifying them of the problem (and
provide synergy; that is, as one executive defined delivered with an appropriate degree of apology
it, “[when] the sum of the channels' effectiveness is and sincerity).
greater than that of the individual channel parts.”
These organizations look for opportunities to lever- 2.1.5. Communicate one brand and enable a
No

age benefits inherent in each medium or channel for shared experience

the “good” of other media or business situations Finally, multichannel marketing requires a consis-
and, of course, overall performance/profitability. tent message and a shared customer experience
One senior manager we interviewed noted that a across all channels. Many of the firms we studied
“super-additive effect” often occurs from, and can underscored the importance of being consistent
be obtained by, integrating different channels. This across channels, so as to present to the customer a
notion is consistent with studies that have reported single company view and a single brand image. This
that, on average, a multichannel shopper spends is especially critical as regards larger organizations
more than a single-channel shopper. with many channels. For example, if a customer
Synergy can be created through coordinating receives a direct mail piece, the message it conveys
Do

among channels or handing off from one channel to needs to be communicated also via website or
another. Several respondent organizations referred email, in support of the original mailing. Impor-
to situations in which they began a “conversation” tantly, however, the follow-up message should be
or the “telling of a story” (i.e., the selling process) delivered in a manner that is appropriate for each
in one medium or channel, and then continued it in channel. Consider a scenario in which a direct mail
another/others; consider, for example, relaying a piece lists six or seven paragraphs of text. Since

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390 B.D. Weinberg et al.

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customers are unlikely to read an email of the same across multiple channels) and for analyzing, aggre-
length, in order to be most effective at relaying the gating, and publishing the data in report formats.

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supporting message, the email will need to be Having a data warehouse or CRM system is often a
shortened to one or two paragraphs. positive step in implementing a multichannel
In gathering research data, we unfortunately platform, but this is hardly sufficient.
heard many stories about customers having to re- A problem faced by most companies is that their
enter their information or re-tell their experiences IT systems were not designed with multichannel
along different channels. This common theme marketing in mind. This often results in the
practice of having to arbitrarily “glue” together

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highlights the critical nature of companies sharing
customers' experiences across various touchpoints, data from different channels, and human interven-
especially during the course of problem-solving tion is frequently required to create a cross-
events. For example, when a customer calls with a channel view of the data. Moreover, the IT group
complaint regarding a negative website experience, must enable legacy systems to “speak” efficiently
and talks to a live agent, that information should be and effectively with each other to facilitate the
logged as part of the customer database and shared sharing of cross-channel data. In order for multi-
across all customer channels. If this practice is channel marketing to work, IT has to gather data

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adhered to, when that same customer next visits a from all channels (face-to-face interactions with
branch retail store or again shops the website, the customers at retail stores, phone calls, emails,
company can (and should) be aware of his/her etc.), not just from its own website. This can be
previous experience, and be on alert to ensure that challenging, as it's very difficult to track the many
it does not happen again. places where customers can go, and obtain data
that says, for example, “Person X saw this ad,
2.2. Design organizational structures and checked on this website, and went and bought from
incentives to enable multichannel marketing this store.” Though this is the current reality, as
more types of marketing activities move online
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While designing a holistic strategy constitutes a (e.g., full-motion “television” advertisements),
critical first step toward developing an effective and as consumers “do” more online/electronically
multichannel marketing program, many organiza- (e.g., watch “television” shows with embedded
tions then proceed to stumble, due to existing advertisements or acquire information from cor-
structures and incentive systems that inhibit vital porate websites), increasingly use handheld elec-
multichannel practices. Most companies have a tronic devices (e.g., Internet-capable cell phones),
difficult time with multichannel marketing because and carry electronic “identification” items (e.g.,
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“silos” exist within their organizations. This was a credit/loyalty RFID cards that allow tracking of
common theme mentioned by study firms, which items purchased by an individual in a physical
stressed in particular the challenge presented by store), it will become easier to compile informa-
silos between IT and marketing groups. Data and tion regarding a consumer's behavior.
information were not being shared across, and As organizations record more data, security and
between, departments and individuals responsible privacy issues become increasingly important. In
for a particular channel. addition to providing great security, organizations
should ensure that customers believe their personal
No

2.2.1. IT is important in multichannel marketing information is guarded very carefully, and that their
Although data sharing across channels plays a information is shared only to benefit them. Our advice
crucial role in the effective practice of multichan- to companies serious about multichannel marketing:
nel marketing, one leading multichannel company look at the existing IT structure to understand the
with which we spoke discouragingly estimated that amount of investment (human and technological) that
only 25% of companies share data properly across is needed to turn it into a multichannel ITarchitecture.
channels, that another 25% probably share it in their
centralized analytics groups, and that the remaining 2.2.2. Develop cross-channel interaction at
50% do virtually no meaningful sharing at all. all levels
Typically, a firm's technology group owns the The companies most successful at multichannel
Do

organization's systems (e.g., data warehouse sys- marketing are those which establish and maintain
tem, CRM systems), tools, and technology and is connections/interfaces between the channels and
often responsible for data integrity. An organization the product groups. These organizational interfaces
may also have an Analytics or Business Intelligence are facilitated by employees or group representa-
group that is responsible for receiving the data tives, often called “liaisons” or “brokers,” for each
(usually from the central IT group, which collects it channel (e.g., the phone channel, the Web channel,

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Multichannel marketing: Mindset and program development 391

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store channels). While it is critical that there be need to understand the impact that channel conflict
coordination and unification among all these repre- has on multichannel marketing and create incentive

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sentatives, a major friction point often arises: some systems that mitigate this. All too often, channels
channels are more mature and have built up their own hesitate to share data due to existing incentive
siloed organizational structures. This, as a channel schemes. For example, many sales teams have quota
management executive highlighted, “makes it very goals and earn commission based on sales; as such,
difficult to create connections across channels…. It is that's what they drive toward. Keeping this in mind,
not necessarily a political thing … it just becomes very consider a scenario in which 80% of an organization's

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difficult to merge channels that have been around customers would be fine going to a self-service
longer with those that are newer, such as the Web.” website with some customer service on the side (an
As such, and as we heard from many managers, it is option that did not exist a few years ago), as opposed
critical that senior stakeholders ensure these liaison to always needing direct contact with a sales force.
roles exist for each channel and that there is constant As things are currently structured, most sales forces
communication and coordination among liaisons, as face a disincentive in pushing potential customers
well as among liaisons and product managers. toward a self-service website. In such an environ-
In order to achieve maximum effectiveness, com- ment, there is a strong need to change the incentive

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panies need to locate cross-channel coordination at the scheme to reduce channel conflict.
lower, operational levels of the organization. Today, We recommend changing incentives to be more
however, that responsibility tends to be situated at a focused on a multichannel marketing approach. For
high senior level. This being the case, senior executives example, reward salespeople for directing customers
must push the mandate for cross-group coordination to the company website or in-store kiosks and create
down further in the organization, to people who are incentives for driving customers from a website to a
more responsible for doing this work. Many executives physical store, through vehicles such as promotions
we interviewed indicated “best of breed” organiza- for in-store pickup/drop-off and retail discounts. An
tions, which use a matrix or cross-functional structure, example of the latter is Blockbuster's recently
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have an easier time with this coordination than implemented “Total Access” plan, which entails an
organizations that are structured vertically or func- incentive whereby customers receive a free in-store
tionally. In the words of one respondent, these rental when they return an online-ordered DVD rental
preferred systems “[have] some sort of matrix struc- to a bricks-and-mortar location. The store that
ture where you have verticals and horizontals commu- provides the free rental receives a credit from
nicating both ways.” According to another: Blockbuster (e.g., 75% of its rental fee) and the
opportunity for incremental ancillary sales; more-
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“Companies [ultimately] want to get to a world over, the online channel can send out an additional/
where they have a cross-functional, sort of jack-of- next rental faster when the return is logged in at a
all-trades organization that has tie-ins to other Blockbuster store rather than delay the process a day
groups, and is empowered and has the skill set and or two when it is sent through the mail. In facilitating
ability to really function and look at all those multichannel efforts, the key is to create an incentive
channels without having to divide that into sepa- system that is focused on the customer and that
rate people who are located in separate groups.” promotes collaboration across groups that are re-
sponsible for the different marketing channels.
No

Indeed, many organizations have found success

sharing data through the formation of collaborative
teams. As an advertising agency managing director 2.3. Create metrics that measure the impacts
noted: and overall performance of multiple channels
“Everybody tries to come to the table … I've seen a lot After creating a multichannel strategy and designing
of multichannel marketing councils, interactive an organizational structure to support it, organiza-
marketing councils or e-commerce councils, which tions face yet another challenge: how to effectively
are bodies of people that get together regularly and measure multichannel performance. Understanding
come from a variety of functions or verticals … people the return-on-investment (ROI) of multichannel
are trying to be less myopic within their little areas.” marketing is obviously important because of the
Do

enormous potential costs involved. The most signif-

2.2.3. Design incentive systems to make icant challenges to this are (1) deciding what to
multichannel work measure and (2) how to measure it. Most of the
Just as organizational structures, roles, and IT organizations we studied indicated they were best at
systems are important, so too must attention be shorter-term metrics that were associated with
paid to incentive systems. In particular, organizations individual marketing campaigns; conversely, they

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392 B.D. Weinberg et al.

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were less sophisticated as regards the softer, subtler, their business model and their channel value-
or longer-term value analysis of multichannel mar- proposition when defining both specific channels

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keting. It is relatively easier to measure the impacts to measure and the metrics associated with each
of each channel separately, as opposed to all channel. One recommendation is to measure the
channels working simultaneously. Most companies synergistic impact of only two channels taken
we talked to have some metrics, either hard or together. There may be two channels that are very
soft, associated with each channel individually. important if you bind them together well (e.g., a
website and real-time sales support). Understand

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2.3.1. Think holistically across channels and the impact of these two channels working simulta-
choose the right metrics neously and develop metrics that measure that
What is difficult to measure is the return-on- impact. Companies can then expand the number of
investment (ROI) of all channels taken holistically. channels they measure simultaneously by looking at
Few organizations approach measurement from a other pairs of channels, or even more than two
horizontal viewpoint across multiple channels to channels working together.
understand the costs and benefits of supporting
multiple channels in the overall marketing mix. For 2.3.2. Leverage Web-based analytics to help

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example, what is the return for initiatives in which you measure
customers come online, and then go offline to With the recent advancement of Web-based analytics,
complete the purchase? Or, what is the return when organizations have the ability to track metrics such as
the customer calls the store to get some information website traffic, catalog products viewed, number of
and then eventually comes back online to complete page views per visit, customer satisfaction with
the purchase? Or even, as we heard from one retail particular features, and click-thru conversion rates.
manager, what is the return for providing in-store These same analytical approaches can now be applied
customers with direct (in-store) access to the to measuring multichannel effectiveness. Among the
retailer's online shopping website? In a real-life companies involved in our study, one organization
op
application of the latter case, one respondent made available online “chat” (i.e., client ability to
company stated: talk/instant-message with customer service person-
nel in real-time, while visiting/using a website) and
“People were surfing our site mostly to read analyzed its impact on customers' online experiences.
product rating and review information [as gener- Consumer utilization of online chat and subsequent
ated/provided by other customers]. These custo- patterns of behavior were analyzed. The organization
mers were less likely to leave the store without identified chat usage patterns and frequency with
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buying. They were still uncertain after seeing the respect to products (e.g., used more frequently for
products and talking to our store salespeople. particular goods), consumer actions (e.g., chat usage
Reading others' opinions helped close the deal on after search), time (e.g., after a consumer had been
the sale.” online for a certain period, or after visiting a certain
number of webpages), and buying process stages
We suggest that companies start slowly and try to (e.g., advancing from search/browsing, to putting an
measure value as they move along with implement- item in a shopping cart, to purchase/checking out).
ing their multichannel strategy. As recommended by In particular, this retailer was interested in two
No

a financial services vice president: outcome measures: (1) conversion rates from search
“Before you get down the integration path, find to sales and (2) customer satisfaction. Significantly,
ways to do light integration and prove out the value the company observed the following regarding con-
of what you're doing before you invest, because you sumers who used online chat: a marked increase in
can quickly create multi-year, multi-million dollar the conversion rate from the search stage to the
IT projects and never see value, and, at times, purchase stage, a notable decrease in shopping cart
never see delivery.” abandonment, and higher customer satisfaction as
measured by exit surveys. “What was critical,” said a
When deciding which metrics to use, it is manager, “was not just understanding the desired
important to identify those which are most mean- benefit of integrating real-time people in our online
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ingful to business managers, since the number of shopping process, but being able to measure it.” The
metrics that can be captured can be quite large. process of capturing and analyzing Web-generated
Companies repeatedly told us that customer satis- metrics helped this organization determine a return
faction, retention, and loyalty were critical, in on the investment of staff to support online chat on
addition to improved financials as a result of using its website. In addition, by combining website
multiple channels. Organizations should start with behavior with customer profile data, the organization

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Multichannel marketing: Mindset and program development 393

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was able to identify attributes that comprised the marketing. Through adoption of these techniques,
“multichannel customer” (e.g., relating age or firms may come to master usage of this dynamically

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products purchased with chat usage). This practice growing phenomenon.
helps the organization pinpoint who to target for
online chat, a competence that can prove very useful
when it is employed dynamically (for example, when Appendix A
a live customer service agent “pops up” the offer to
chat with a customer). In the Fall of 2005, we directed, and Metropolitan Life
sponsored, a conference on the Multichannel Mindset.

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Web-based analytics also allow for real-time
The participant list was comprised of 30 senior
measurement and experimentation with multichan-
executives and managers (e.g., CEO, CIO, Worldwide
nel marketing. In a true, concrete manner, an
Director of Electronic Marketing), each from organiza-
organization can test a variety of alternatives for
tions that have placed significant emphasis on,
interacting with and serving clients by measuring
achieved significant success in, and are, arguably, at
customer reaction/behavior. For example, an exec-
the forefront of, multichannel marketing. Among
utive respondent highlighted how his organization
used real-time experimentation to test the option these participants, 57% held the level of Vice President
or Chief Officer, 30% held the level of Director, and 13%

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of online shopping with in-store availability and
held the level of Senior Manager or Manager. Their
pick-up. The firm ran tests to determine the best
organizations, many of which are in the Fortune 500
ways to present this option, and the best time to
and are industry leaders, compete and serve clients in
present aspects of this option (e.g., during the
a diverse set of industries, including: financial
checkout process, when putting an item in the
services, pharmaceuticals, airlines, education, em-
shopping cart, when inspecting details about the
ployment services, information technology and ser-
product). Through iterative experiments, it was
able to improve performance and sales. This vices, channel management services, advertising and
integrated communications, furniture and workplace
capability did not exist 10 years ago. Today,
op design, retail, online retailing and e-commerce
however, such experimentation should be a regular
services, and venture capital. For 2005, 30% of the
part of a multichannel marketer's actions.
firms had revenue of less than $1 billion, 37% had
Finally, another recommendation, based on a
revenue between $1 billion and $10 billion, and 33%
channel management executive's application of the
had revenue between $10 billion and $100 billion. As
80/20 rule, is to measure channel impacts on the
regards staffing, 20% of the firms had less than 1000
high value customer base. That is, identify the best
customers with respect to key objective function employees, 50% had between 1000 and 50,000
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employees, and 30% had more than 50,000 employees.

features (e.g., revenue, number of items pur-
In concert with the conference, we conducted
chased, profit) and then answer the following
primary research (in-depth interviews with the execu-
questions: What are their usage patterns across
tives) to enhance understanding and implementation
channels? Which channels did they value most, and
of effective multichannel practice, and to learn about
why? And how does the organization measure these
participants’ perspectives on and experiences with (1)
impacts?
effectively serving multichannel customers and (2) the
potential impact of an integrated multichannel
No

3. Go forth and multichannel approach on performance/profitability.

The practice of multichannel marketing is moving
forward; as such, effectively planning for and
implementing it will become increasingly critical.
References
Having a variety of channels and a means for Aaronson, J. (2006, October 20). Lessons from Shop.org 2006.
“memorizing” customer preferences and other ClickZ Experts. Retrieved November 8, 2006, from http://
important details is becoming a sine qua non for www.clickz.com/showPage.html?page-3623727
delivering high-quality customer experiences, ser- Balasubramanian, S., Rajagopal, R., & Mahajan, V. (2005).
Consumers in a multichannel environment: Product utility,
vice, and value. Herein, we have discussed several process utility, and channel choice. Journal of Interactive
issues central to the success of multichannel
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Marketing, 19(2), 12−30.

marketing, as identified by executives from a Berger, P. D., Lee, J., & Weinberg, B. D. (2006). Optimal
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minimum improve, the usage of multichannel View.aspx?DocID=28740&m=n

Copying or posting is an infringement of copyright. Permissions@hbsp.harvard.edu or 617-783-7860.

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Kumar, V., & Venkatasan, R. (2005). Who are the multichannel Multichannel shopping study – Holiday 2003 (2004). Doubleclick.
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(2), 44−62. channel_holiday_0401.pdf
McKay, N. (2004, December 1). Two-faced & tight-fisted. CIO Rangaswamy, A., & Van Bruggen, G. (2005). Opportunities and
Insight. Retrieved November 8, 2006, from http://www. challenges in multichannel marketing: An introduction to the
cioinsight.com/article2/0,1397,1743133,00.asp special issue. Journal of Interactive Marketing, 19(2), 5−11.

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