Building Omni-channel distribution Strategies

As innovation propels, most of buyers have several internet-connected devices inside arm's
span. Marketers understand that as instead of thinking about a desk top experience, a
portable experience, a tablet experience, and an Apple Watch understanding, they need to
deliver a holistic approach ─ an omni-channel experience that customers can utilize at
whatever point they need.

Traditional supply channel and omni channel distribution netwoek,they compare two
different approaches: the traditional supply network , like parallel water flows that never
combine (the sales channels), in contrast with the omnichannel approach, in which there’s a
total convergence of digital and physical channels, guaranteeing a coordinated and dynamic
shopping experience Coincidentally, shoppers are unconscious of being "omnichannel":
quite simply, their mastery of technological tools leads them to develop high expectations of
the brand, which in turn has to recognize potential customers when they arrive, speaking to
them with a consistent language across all touchpoints, and leading them to purchase at any
time, regardless of the channel.

Someone, pointing the phenomena of showrooming and webrooming, expressed

fear about the prevalence of one channel over another, but in reality omnichannel network
goes deeper than that: the entire organizational structure and business processes are
reviewed, along with the adoption of the necessary technological solutions and the
development of new skills.If we look into important discoveries in technologies of the past
few years in the retail sector, we can see that, together with the innovations at the back-end
and in store customer experience, those that support an all-round approach stand out. At
this point, we can go beyond the concepts of e-commerce and retail and start talking about
Commerce in a global, holistic way.

Characteristics of omni channel distribution system

 a unified distribution planning and management

 interaction, communication and interdependence between channels
 a dynamic approach to the customer, with emphasis on those technological tools
that develop cross-canality
 use of appropriate and integrated performance indicators (KPIs)

The tools enabling Omni-channel Marketing

After an initial phase of careful analysis and planning, an omni-channel strategy can rely on
some operational, often technological, tools.There are different solutions such as responsive
mobile sites and related apps (with mobile growth, shopping on mobile devices grows too),
Click and Collect formulas (online orders and in store pick-ups), geolocation services with
Store Locator, social media integrations (live chat), “smart” stock management improving
order processing and shipping.
Single Customer View(SCV)

Having a global view of your clients or customers, regardless of the channel they use. A
single customer view (also called ‘360’, ‘360 degree’ or ‘unified’ customer view) is a solution
for collecting all the data about your prospects and clients and merging it into a single
record.

By summing up every piece of information about your users in one centralized location, you
get a powerful overview of every action they performed – on their mobiles, on your
website, or even in your offline store (of course, depending what types of data you gather to
create the SCV) to achieve this, it is essential to have uniformity in data collection and
processing.

Data Analysis

Developing the ability to acquire and process cross-channel data, tracking and verifying both
"declared" and "incognito" interactions.
Using data from multiple channels to improve all retail operations while also improving the
customer experience. It’s accomplished through a strong data strategy, analytical
merchandising, intelligent marketing and an open ecosystem for analytics.

Integrated performance indicators (KPIs) & Incentives

Reviewing measurement systems in an omni-channel perspective. With previous business

models, companies have been recommended to build KPIs focusing on sales-based
measurements .These measurments often aligned with the revenue – cost – margin model
with corresponsive KPIs such as: monthly revenue, revenue growth, cost of goods sold, cost
of acquiring customer, marketing cost, gross margin, etc. However, these transaction
records can hardly tell the whole truth about an omni-channel retailing with integrated
channels. For example, Omni-shoppers are unlikely to commit themselves in just one
channel in their buying journeys. In other case, the increase in sales of online channels can
be resulted from a successful grand opening of a new store in a main street. Similarly, there
are many cases that activities of a channel interfere into the transactional records of one
another. It can be deviation from returning goods, the inter-influence of cross-channel
marketing, or re-allocation of inventory between channels. Moreover, if only final
transactional KPIs are taken into consideration, the drivers of customers’ decisions during
the whole process cannot be explained.

For those reasons above, new Omnichannel KPIs must capture performance of the
business on all channels in interdependent relationship with each other.

Customer visit Awareness:

Typical Omnichannel KPIs for this stage are traffic generator and visit rate. Traffic generator
records the numbers of unique visitors to a website, store, social channel, and so on. Visit
rate, on the other hand, calculates how many times one unique visitor views those channels
in a period of time. At the age of multi-channel approach, these key performance indicators
are recorded separately. However, with omni-channel retailing, store owner demands to
know the behavior when a customer visits and revisits touch points before she or he makes
another action.

Customer attraction Engagement:

There are many key performance indicators that can demonstrate how successful a
customer engagement strategy is. As recommended by different studies applying are:
Product recommendations and offers per visit; Conversion rate on product
recommendations; and Length of visit. First, to attract customers to not only one, but many
items in the catalog, suggestions are widely used in today’s ecommerce. Length of visit is
another simple indicator to reflect the level of involvement a customer expresses to a
channel. However, the major factor that omni-channel retailer should strongly concentrated
on is Conversion rate on products recommendations or offers. It shows how suitable and
customized the content is to each individual shopper.

One important feature of this indicator is that it can show the conversion rate from a
channel to another one. For example, a customer received a discount code for a good dress
after finishing a purchase in a webstore. However, he doesn’t buy it immediately but goes to
the nearby store to check if it fits his body. If the retailer in this situation is operating multi-
channel strategy, that boy will be a completely new customer when going to try the dress
on. Conversely, an omni-channel retailer can identify that customer, based on his account.
In this situation, conversation rate among channels is well performed.

Cross-channel conversion Conversion:

Some typical omnichannel KPIs to measure the success of this stage are: Cross-channel
conversion rate; Cross-channel basket size. Conversion rate from visitors to customers is the
most common and consistent indicator for any e-commerce business. However, in omni-
channel marketing, the focus point is on “cross-channel”. With this business model,
omnichannel retailers can track what is the real contributors for final purchasing decisions
and the pattern of their habit.

Advocacy rate Loyalty:

Advocacy is a KPI showing the satisfaction of customers. This can be scored through ratings
of customers via many channels. Lifetime customer value (LTV) is another indicator, showing
the total revenue of a customer in his “life time”.

To simplify, this key performance indicator calculates the sum of all purchases that
he can make. Therefore, higher LTV means that customers re-purchase many times in his
life. While Lifetime value of customers can indicate the loyalty of one customer, customer
retention rate is a KPI showing generally the loyalty of all customers. It is calculated as the
ratio of remained customers after a period.

Retention Rate = ((CE-CN)/CS)) X 100

CE = number of customers at end of period

CN = number of new customers acquired during period

CS = number of customers at start of period

Retention rate is more than just a simple formula. To have an accurate retention among
channels, it needs a solid omni-channel tool and process. There are other domains of KPIs
that an omni-channel business can adopt, including supply chain management, channel
performance, other alternative channels, and pricing. The standard KPIs varies according to
the businesses’ goals and products.

To sum up, the key differences between Omnichannel KPIs and other approaches are:

 Customers centricity
 Qualitative measurement tools
 Consideration of interdependence of many channels
 Differences across industries.