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

www.elsevier.com/locate/bushor

Multichannel marketing: Mindset and

program development
Bruce D. Weinberg a,⁎, Salvatore Parise b , Patricia J. Guinan b

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; 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.
© 2007 Kelley School of Business, Indiana University. All rights reserved.

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

moving forward
Since the advent of the Internet, organizations
serving end-consumers in business to consumer
(B2C) situations have grappled in a variety of ways
with what has become known as multichannel
marketing. Defined as marketing strategies for
serving customers who use more than one channel
when interacting with an organization (Rangaswamy
& Van Bruggen, 2005), multichannel marketing
presents firms with a great managerial challenge, as
the systems are highly complex and involve a number
⁎ Corresponding author.
E-mail addresses: celtics@bentley.edu (B.D. Weinberg),
sparise@babson.edu (S. Parise), guinan@babson.edu
(P.J. Guinan).
0007-6813/$ - see front matter © 2007 Kelley School of Business, Indiana University. All rights reserved.
doi:10.1016/j.bushor.2007.04.002
those concerning customers, channels for distribu-
tion, sales, and communication. Multichannel mar-
keting systems are not only larger than single-channel
systems, but also require integration, coordination,
and the oversight of many components that previ-
ously functioned in a relatively independent manner.
Today, it is critical that organizations effectively
employ a multichannel marketing approach, as
consumers in B2C contexts now expect it. Studies,
such as those by Doubleclick (Multichannel Shopping,
2004) and Gaffney (2005), confirm that consumers
have taken quickly to using a variety of channels, as
the incidence of multichannel shopping is in the range
of 65–70%. McKay (2004) concurs, reporting that
multichannel shoppers are now in the majority.
Further, as highlighted by Kumar and Venkatasan
(2005), multichannel shoppers spend significantly

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 386
more than single-channel shoppers. While multichan-
nel marketing is here to stay – it is, in fact, further
evolving, as additional touchpoints such as wireless
devices and associated services enter the market-
place – much more needs to be learned regarding its
effective planning and implementation. While Ber-
ger, Lee, and Weinberg (2006) illustrate how multi-
channel marketing can improve profitability, it is by
no means an easy or widespread feat. According to
Rangaswamy and Van Bruggen (2005), heretofore,
“some firms, such as Dell, Lands' End, and Fidelity
Investments, have come a long way in meeting the
needs of multichannel customers. However, many
other firms are still struggling to find a profitable and
effective way to serve such customers” (p. 6).
As Aaronson (2006) reports, multichannel mar-
keting remains a hot topic that is on everyone's mind
and is still in its infancy. Many practitioners now
accept, as opposed to having to be convinced, that
multichannel shoppers can be more profitable and
loyal. We believe a critical focus in multichannel
marketing program development has shifted from
evaluating whether it can be of value, to under-
standing the difference between “being a multi-
channel company and thinking like one,” a topic
highlighted by the 2006 Shop.org Annual Summit,
held in New York City.
As the successful development and implementa-
tion of multichannel marketing systems is so critical
in today's business environment, the purpose of this
article is to provide guidance in developing an
effective multichannel mindset and in designing a
multichannel marketing program for serving end-
consumers in B2C situations. Based primarily on
interviews with senior executives and managers (see
Appendix) from organizations that have placed
significant emphasis on, achieved significant success
in, and are arguably at the forefront of, multichannel
marketing, this research emphasizes a strategic top-
level perspective where, we believe and as indicated
by Balasubramanian, Rajagopal, and Mahajan (2005),
managerial knowledge is limited.
Our study uncovered several important principles/
philosophies that are part of the multichannel mind-
set that guided the marketing actions of the organiza-
tions we analyzed. Next, we discuss them within the
context of prescribing three marketing actions for
developing a multichannel marketing program.
2. Multichanneling your actions
In this section, we detail three cohesive actions for
developing an effective multichannel marketing pro-
gram: creating a holistic strategy, designing organiza-
tional structure and incentives, and creating metrics
that measure the impacts and overall performance.
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B.D. Weinberg et al.
2.1. Create a holistic strategy that leverages
value propositions across channels
While there were organizations in our sample that
deliberately planned their channel mix, far more
organizations reported that their methods were
reactive as opposed to proactive. Many companies
took a tactical approach, for example, focusing on
specific advertising and marketing campaigns rather
than viewing holistically how the different channels
worked together. We argue that a successful
multichannel strategy requires a good understand-
ing of the value proposition offered by each
channel, including channel strengths and weak-
nesses, and determining where channel synergies
occur. Of course, having multiple channels is not
cost-free, as substantial, additional IT and coordi-
nation costs can be associated with multichannel
marketing. This being the case, there must exist a
balance between human interaction and electronic
touchpoints such that there is both a value
proposition to the customer and a fit with the or-
ganization's cost model.
2.1.1. The Internet creates the opportunity
A critical reality is that the Internet is a, or perhaps
arguably the, key driver in the burgeoning consumer
demand for, and the organizational strategic opportu-
nity in, multichannel marketing. Certainly today, it is
not unusual for companies to host a corporate website
listing information such as a mission statement,
executive profiles, and product offerings. Senior
executives interviewed for our study, however, high-
lighted that, beyond consumer search for static
descriptive information such as corporate facts,
more activity and interaction between organizations
and customers is shifting to online channels. For
example, an advertising agency executive noted that
she sees increasing emphasis being placed on Web
advertising/communications, while the “traditional
30-second spot” is becoming a dinosaur. In addition, a
financial services executive stressed that his organi-
zation's customers want overwhelmingly to communi-
cate with the company online, “via email and via
website content.”
Strategically, we believe this amplifies the impor-
tance of making individual customers a central focus
when designing a multichannel marketing program.
With online traffic/volume exceeding that of some
traditional channels/vehicles (e.g., the telephone)
and faster growth in direct channels than in indirect
channels, organizations have also shifted their
channel objectives and philosophy more toward
one-to-one marketing. As a financial services senior
vice president put it, “We moved more toward direct
touch … closer to one-to-one as we can get.”
 Multichannel marketing: Mindset and program development
It is an established marketing principle that
consumers are important to the long-term success
of an organization; however, moving closer to one-to-
one marketing could result in effective multichannel
marketing principles/philosophies that challenge the
status quo of traditional mass-marketing. For exam-
ple, one executive accentuated that “in our multi-
channel philosophy, customers do not equal
channels,” meaning that a channel is no longer
defined and developed as a conduit for reaching or
serving a particular segment of consumers. Rather,
the diversity of needs that any customer can have
over time is used in developing the nature, structure,
and integration of channels. Many respondents
articulated a similar belief; in the words of one:
“We should not presuppose where a customer wants
to buy … customers do not necessarily behave like
we have pegged them in any way, shape, or form …
sometimes a customer from one of our defined
segments shops in a space where we assumed
another segment would.”
2.1.2. It's the value, not just cost
It is important to point out that advocacy for making
channels liberally available to consumers does not
suggest that organizations should ignore the various
strengths and weaknesses of channels, or fail to
encourage and provide for customers in any partic-
ular way. Indeed, we recommend just the opposite,
as organizations believe it is important to consider
which channel is best for a given consumer and
situation (e.g., direct response, tactical versus
brand building). This was evidenced by many of the
firms we interviewed, which attempted to coordi-
nate and integrate channels and associated process-
es such that the “best channel for the job” of
interacting with or serving a consumer was invoked.
Taking this further, we believe and recommend
that value, which is a function of both cost and
benefits, should be a major factor in how organiza-
tions allocate their channel mix resources. This
notion was expressed by many of the firms in our
study; for example, as a global vice president of
online marketing for one of the world's largest IT
organizations stated:
“Part of our strategy is to not force customers to go to a
particular channel, say the lowest-cost Internet
channel, as we're agnostic from a channel standpoint
and want to enable consumers to utilize channels that
are most valuable to them, and are, therefore, in turn,
most valuable to us.”
As another executive summarized straightfor-
wardly, “spend more on the things that work and
downplay the things that aren't working.”
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387
As noted previously, implicit in value is the
component of cost. Given that we have observed
many (perhaps a majority of) organizations appear
to try and shift as much activity as possible to the
low-cost Internet channel, it seems important to
comment explicitly on this strategic consideration.
First, we acknowledge that if minimizing cost is
the most important driver for success in an
organization, then maximizing consumer utiliza-
tion of the low-cost online channel may make
sense, overall. In fact, we believe this can hold
when temporary conditions, such as lean times,
change priorities from a status quo that does not
emphasize cost. For example, a vice president of
e-marketing for a major airline noted the difficult
economic conditions that airlines faced following
September 11, 2001. According to this respondent,
for his organization, the Internet served as a sort
of marketing “life boat” that kept them afloat by
enabling them to reach, communicate with, sell to
(i.e., acquire revenue!), and serve customers in an
effective way, all while operating under the
economic and market constraints/challenges of
the time. That being said, we do not uniformly
recommend shifting as much activity as possible to
the online channels; successful multichannel mar-
keters, who recognized that shifting activity to
online channels can lower costs, emphasized that
cost was not necessarily the main driver behind
their devoting more resources and attention to it.
Rather, it was a single consideration among several
factors, such as marketing objectives and custo-
mer preferences.
In fact, a specific strategy that we recommend
when appropriate and that is, in spirit, counter to
the low-cost Internet channel strategy, is driving
customers away from online channels and to
(higher-cost) offline channels! All the managers
we interviewed noted the standard importance of
using offline channels to drive customers to the
online channel. These organizations, however,
envisioned differentiating themselves from compe-
titors by, in suitable cases, purposely driving
customers away from the online channel. This
decision was based largely on a desire to provide
more value to, and better serve, customers,
particularly an organization's best clients. As a
marketing director of a leading technology organi-
zation commented:
“Most companies are trying to shift people from
high-cost channels to a lower-cost online channel,
[but] we have almost the opposite problem … we
want to give some of our best customers more of an
opportunity to interact in a more personalized and
higher-cost channel.”
 388
This philosophy/approach has been helpful in
retaining customers and in supporting customer
lifetime value decisions.
2.1.3. Focus on the customer experience, journey,
and lifetime value
We believe that developing a successful multichannel
strategy requires thinking about the customer experi-
ence holistically, with an emphasis on satisfying
customer needs throughout the product/service life
cycle; in fact, several of the companies we inter-
viewed used the phrase “the lifetime value of a
customer” in this context. When managers make
decisions regarding marketing programs or initiatives,
they all too often neglect the bigger context and think
only about a specific campaign or marketing function.
One organization in our study indicated a marked
awareness of the importance of focusing on the big
picture: “We talk quite a bit with our clients, and what
resonates is this idea of a customer experience jour-
ney, or their relationship life cycle. It is really thinking
about awareness through engagement and loyalty, all
in one overall process.” We recommend thinking
through the various touchpoints with a customer as a
relationship process, rather than as a particular
marketing initiative, as this will help an organization
develop and convey strategic value propositions for all
of its channels.
In order to be able to think strategically about a
customer's experience journey, relationship with an
organization, and lifetime value, it is important that
an organization have a strong understanding of, and
appreciation for, consumer behavior and processes;
in fact, this is a crucial multichannel mindset
principle/philosophy. The executives we inter-
viewed emphasized their organizations' respect for
human nature and consumer behavior as being
critical in differentiating them from competitors
and in contributing to their success with multichan-
nel marketing. Though this might sound strange
linguistically, these organizations make decisions
consistent with their belief that consumers act, feel,
and think in a way that, well, consumers act, feel,
and think! In essence, these organizations listen to
and try to understand their market (as well as the
organization's resources and capabilities) as best
they can, and make decisions that are consistent
with this; we recommend this practice. As one
executive characterized the wisdom and benefit of
this approach:
“We've seen first-hand how the difference between
what a bunch of smart [company/corporate] people
sitting in a room think is good to do from an integration
point of view, versus what customers want and will see
value in, can, many times, be [like] night and day!”
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B.D. Weinberg et al.
While all aspects of consumer behavior can be
important, we highlight herein elements of consumer/
human nature that we believe are most valuable in
developing an effective holistic multichannel market-
ing program strategy. First, it is imperative to
understand critical consumer behaviors and processes
that have proven durable over time. According to a
vice president of a channel management organization,
this includes the consumer buying decision process
(i.e., what consumers do, and have done for centuries,
when engaged in the process of buying); “Recognizing
all the steps consumers go through, from awareness to
active research, consideration, purchase, and any
post-sale support, is critical,” he said. Clearly, an
appreciation for enduring consumer processes could
help one develop a multichannel strategy for appro-
priately advancing a customer from one stage in an
established process to another, such as from informa-
tion search to purchase in the consumer buying
decision process, or from complaint and dissatisfac-
tion to resolution and satisfaction in the customer
service process.
Second, it is important that firms recognize human/
consumer characteristics when designing online-relat-
ed experience processes. The executives we consulted
mentioned, in particular, efforts toward making the
electronic as humanly appealing as possible, and in
using the language of the customer and translating
information properly from one channel to another. For
example, a managing director of a premier worldwide
advertising agency stated that it is critical to
“interpret or translate what is happening offline and
make it relevant in the online setting, but not by
simply mirroring what is happening offline into the
online space.” Mirroring one channel's functionality
into another channel could result in implementing
features that do not necessarily work well, or over-
looking features that would work well given a channel's
properties (e.g., not enabling and providing consumer
ratings and reviews at an online retail website/
channel because they do not exist in a brick/physical
store channel).
Third, companies must find an effective balance/
blend between technology and human interaction
when serving the customer. For example, one study
participant identified the annoying, all-too-common
consumer experience of endlessly “talking to a
machine and pushing [telephone] buttons” (or, in a
similar vein, emailing and waiting for a reply) in order
to obtain information or customer service, or as
part of any other consumer buying-related process.
Technology used for the purpose of interacting with or
serving customers can certainly deliver many benefits
to organizations and clients alike. Nonetheless, it
should be noted that just because technology provides
a solution that “works” (indeed, even customers who
 Multichannel marketing: Mindset and program development
endure 15 automated telephone prompts and push 15
buttons in response to menu queries can ultimately
attain information), it does not mean that the solution
provides sufficient customer satisfaction. And satis-
factory customer outcomes, such as purchase or
delight, should be the focus when composing and
providing a solution to consumer needs and problems.
While we understand and appreciate the excitement
associated with developing and employing technology,
we urge providers to utilize technology and/or
automation only if it facilitates delivery of a solution
that is satisfactory or better than the status quo.
Finally, and closely related to the previous point,
caution should be exercised against pushing Inter-
net applications and adoption too aggressively. The
organizations in our study emphasized two elements
of human nature as being particularly important in
this regard: “change is hard” and “incumbent
behaviors are very difficult or slow to change.”
When discussing this, managers highlighted efforts
by organizations (their own included) to aggressive-
ly force Internet applications and adoption on
consumers, and, when these efforts did not “work
quickly,” to then take “corrective” actions which
were ineffective. They argued that consumers need
to not only learn more about using the Internet and
organization-specific electronic applications, but
also become more comfortable with the Internet as
a viable, secure, and superior alternative before
they will use it.
2.1.4. Create a super-additive effect
through synergy
Organizations that think holistically about the
customer experience realize they need to under-
stand how the different channels can interact to
provide synergy; that is, as one executive defined
it, “[when] the sum of the channels' effectiveness is
greater than that of the individual channel parts.”
These organizations look for opportunities to lever-
age benefits inherent in each medium or channel for
the “good” of other media or business situations
and, of course, overall performance/profitability.
One senior manager we interviewed noted that a
“super-additive effect” often occurs from, and can
be obtained by, integrating different channels. This
notion is consistent with studies that have reported
that, on average, a multichannel shopper spends
more than a single-channel shopper.
Synergy can be created through coordinating
among channels or handing off from one channel to
another. Several respondent organizations referred
to situations in which they began a “conversation”
or the “telling of a story” (i.e., the selling process)
in one medium or channel, and then continued it in
another/others; consider, for example, relaying a
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389
brief message in a television advertisement,
expanding upon that message via website or some
other electronic setting, and then directing prod-
uct/payment exchange with the consumer to a
physical store. From a relationship marketing
perspective, channel coordination opportunities
continue after an exchange/transaction; for in-
stance, a customer could email and telephone in
with questions and comments about the product.
Multichannel synergy can also keep a customer
“in play” (i.e., maintain/continue a consumer's
interest in, and consideration for, the organization's
goods or services) and help ring the cash register, for
example by addressing the abandoned shopping cart
problem. The latter issue was addressed by a vice
president of e-business for a large financial services
organization, who emphasized the high percentage
of online consumers who add items to their “basket”
and leave the website without making a purchase.
As a possible solution, this individual suggests that
firms employ an “integrated value proposition”
whereby they “pop up and ask, ‘Hey, [would] you
want to talk to somebody right now?’ [Or] ‘Hey,
would you like us to call you back?’ [Or] ‘Would you
like to do a live chat?’” or even push out context-
relevant Web pages. All of these methods, the vice
president contends, could help retain a huge
volume of potential leads and, ultimately, result in
more sales.
In addition, synergy can be realized post-pur-
chase, after the sale, for example by using an online
channel as a buffer against offline issues such as
waiting times or delays with product deliveries.
When unforeseen problems like these occur, custo-
mers value a phone call, an email, or an instant
message notifying them of the problem (and
delivered with an appropriate degree of apology
and sincerity).
2.1.5. Communicate one brand and enable a
shared experience
Finally, multichannel marketing requires a consis-
tent message and a shared customer experience
across all channels. Many of the firms we studied
underscored the importance of being consistent
across channels, so as to present to the customer a
single company view and a single brand image. This
is especially critical as regards larger organizations
with many channels. For example, if a customer
receives a direct mail piece, the message it conveys
needs to be communicated also via website or
email, in support of the original mailing. Impor-
tantly, however, the follow-up message should be
delivered in a manner that is appropriate for each
channel. Consider a scenario in which a direct mail
piece lists six or seven paragraphs of text. Since
 390
customers are unlikely to read an email of the same
length, in order to be most effective at relaying the
supporting message, the email will need to be
shortened to one or two paragraphs.
In gathering research data, we unfortunately
heard many stories about customers having to re-
enter their information or re-tell their experiences
along different channels. This common theme
highlights the critical nature of companies sharing
customers' experiences across various touchpoints,
especially during the course of problem-solving
events. For example, when a customer calls with a
complaint regarding a negative website experience,
and talks to a live agent, that information should be
logged as part of the customer database and shared
across all customer channels. If this practice is
adhered to, when that same customer next visits a
branch retail store or again shops the website, the
company can (and should) be aware of his/her
previous experience, and be on alert to ensure that
it does not happen again.
2.2. Design organizational structures and
incentives to enable multichannel marketing
While designing a holistic strategy constitutes a
critical first step toward developing an effective
multichannel marketing program, many organiza-
tions then proceed to stumble, due to existing
structures and incentive systems that inhibit vital
multichannel practices. Most companies have a
difficult time with multichannel marketing because
“silos” exist within their organizations. This was a
common theme mentioned by study firms, which
stressed in particular the challenge presented by
silos between IT and marketing groups. Data and
information were not being shared across, and
between, departments and individuals responsible
for a particular channel.
2.2.1. IT is important in multichannel marketing
Although data sharing across channels plays a
crucial role in the effective practice of multichan-
nel marketing, one leading multichannel company
with which we spoke discouragingly estimated that
only 25% of companies share data properly across
channels, that another 25% probably share it in their
centralized analytics groups, and that the remaining
50% do virtually no meaningful sharing at all.
Typically, a firm's technology group owns the
organization's systems (e.g., data warehouse sys-
tem, CRM systems), tools, and technology and is
often responsible for data integrity. An organization
may also have an Analytics or Business Intelligence
group that is responsible for receiving the data
(usually from the central IT group, which collects it
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B.D. Weinberg et al.
across multiple channels) and for analyzing, aggre-
gating, and publishing the data in report formats.
Having a data warehouse or CRM system is often a
positive step in implementing a multichannel
platform, but this is hardly sufficient.
A problem faced by most companies is that their
IT systems were not designed with multichannel
marketing in mind. This often results in the
practice of having to arbitrarily “glue” together
data from different channels, and human interven-
tion is frequently required to create a cross-
channel view of the data. Moreover, the IT group
must enable legacy systems to “speak” efficiently
and effectively with each other to facilitate the
sharing of cross-channel data. In order for multi-
channel marketing to work, IT has to gather data
from all channels (face-to-face interactions with
customers at retail stores, phone calls, emails,
etc.), not just from its own website. This can be
challenging, as it's very difficult to track the many
places where customers can go, and obtain data
that says, for example, “Person X saw this ad,
checked on this website, and went and bought from
this store.” Though this is the current reality, as
more types of marketing activities move online
(e.g., full-motion “television” advertisements),
and as consumers “do” more online/electronically
(e.g., watch “television” shows with embedded
advertisements or acquire information from cor-
porate websites), increasingly use handheld elec-
tronic devices (e.g., Internet-capable cell phones),
and carry electronic “identification” items (e.g.,
credit/loyalty RFID cards that allow tracking of
items purchased by an individual in a physical
store), it will become easier to compile informa-
tion regarding a consumer's behavior.
As organizations record more data, security and
privacy issues become increasingly important. In
addition to providing great security, organizations
should ensure that customers believe their personal
information is guarded very carefully, and that their
information is shared only to benefit them. Our advice
to companies serious about multichannel marketing:
look at the existing IT structure to understand the
amount of investment (human and technological) that
is needed to turn it into a multichannel ITarchitecture.
2.2.2. Develop cross-channel interaction at
all levels
The companies most successful at multichannel
marketing are those which establish and maintain
connections/interfaces between the channels and
the product groups. These organizational interfaces
are facilitated by employees or group representa-
tives, often called “liaisons” or “brokers,” for each
channel (e.g., the phone channel, the Web channel,
 Multichannel marketing: Mindset and program development
store channels). While it is critical that there be
coordination and unification among all these repre-
sentatives, a major friction point often arises: some
channels are more mature and have built up their own
siloed organizational structures. This, as a channel
management executive highlighted, “makes it very
difficult to create connections across channels…. It is
not necessarily a political thing … it just becomes very
difficult to merge channels that have been around
longer with those that are newer, such as the Web.”
As such, and as we heard from many managers, it is
critical that senior stakeholders ensure these liaison
roles exist for each channel and that there is constant
communication and coordination among liaisons, as
well as among liaisons and product managers.
In order to achieve maximum effectiveness, com-
panies need to locate cross-channel coordination at the
lower, operational levels of the organization. Today,
however, that responsibility tends to be situated at a
high senior level. This being the case, senior executives
must push the mandate for cross-group coordination
down further in the organization, to people who are
more responsible for doing this work. Many executives
we interviewed indicated “best of breed” organiza-
tions, which use a matrix or cross-functional structure,
have an easier time with this coordination than
organizations that are structured vertically or func-
tionally. In the words of one respondent, these
preferred systems “[have] some sort of matrix struc-
ture where you have verticals and horizontals commu-
nicating both ways.” According to another:
“Companies [ultimately] want to get to a world
where they have a cross-functional, sort of jack-of-
all-trades organization that has tie-ins to other
groups, and is empowered and has the skill set and
ability to really function and look at all those
channels without having to divide that into sepa-
rate people who are located in separate groups.”
Indeed, many organizations have found success
sharing data through the formation of collaborative
teams. As an advertising agency managing director
noted:
“Everybody tries to come to the table … I've seen a lot
of multichannel marketing councils, interactive
marketing councils or e-commerce councils, which
are bodies of people that get together regularly and
come from a variety of functions or verticals … people
are trying to be less myopic within their little areas.”
2.2.3. Design incentive systems to make
multichannel work
Just as organizational structures, roles, and IT
systems are important, so too must attention be
paid to incentive systems. In particular, organizations
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2022.
391
need to understand the impact that channel conflict
has on multichannel marketing and create incentive
systems that mitigate this. All too often, channels
hesitate to share data due to existing incentive
schemes. For example, many sales teams have quota
goals and earn commission based on sales; as such,
that's what they drive toward. Keeping this in mind,
consider a scenario in which 80% of an organization's
customers would be fine going to a self-service
website with some customer service on the side (an
option that did not exist a few years ago), as opposed
to always needing direct contact with a sales force.
As things are currently structured, most sales forces
face a disincentive in pushing potential customers
toward a self-service website. In such an environ-
ment, there is a strong need to change the incentive
scheme to reduce channel conflict.
We recommend changing incentives to be more
focused on a multichannel marketing approach. For
example, reward salespeople for directing customers
to the company website or in-store kiosks and create
incentives for driving customers from a website to a
physical store, through vehicles such as promotions
for in-store pickup/drop-off and retail discounts. An
example of the latter is Blockbuster's recently
implemented “Total Access” plan, which entails an
incentive whereby customers receive a free in-store
rental when they return an online-ordered DVD rental
to a bricks-and-mortar location. The store that
provides the free rental receives a credit from
Blockbuster (e.g., 75% of its rental fee) and the
opportunity for incremental ancillary sales; more-
over, the online channel can send out an additional/
next rental faster when the return is logged in at a
Blockbuster store rather than delay the process a day
or two when it is sent through the mail. In facilitating
multichannel efforts, the key is to create an incentive
system that is focused on the customer and that
promotes collaboration across groups that are re-
sponsible for the different marketing channels.
2.3. Create metrics that measure the impacts
and overall performance of multiple channels
After creating a multichannel strategy and designing
an organizational structure to support it, organiza-
tions face yet another challenge: how to effectively
measure multichannel performance. Understanding
the return-on-investment (ROI) of multichannel
marketing is obviously important because of the
enormous potential costs involved. The most signif-
icant challenges to this are (1) deciding what to
measure and (2) how to measure it. Most of the
organizations we studied indicated they were best at
shorter-term metrics that were associated with
individual marketing campaigns; conversely, they
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were less sophisticated as regards the softer, subtler,
or longer-term value analysis of multichannel mar-
keting. It is relatively easier to measure the impacts
of each channel separately, as opposed to all
channels working simultaneously. Most companies
we talked to have some metrics, either hard or
soft, associated with each channel individually.
2.3.1. Think holistically across channels and
choose the right metrics
What is difficult to measure is the return-on-
investment (ROI) of all channels taken holistically.
Few organizations approach measurement from a
horizontal viewpoint across multiple channels to
understand the costs and benefits of supporting
multiple channels in the overall marketing mix. For
example, what is the return for initiatives in which
customers come online, and then go offline to
complete the purchase? Or, what is the return when
the customer calls the store to get some information
and then eventually comes back online to complete
the purchase? Or even, as we heard from one retail
manager, what is the return for providing in-store
customers with direct (in-store) access to the
retailer's online shopping website? In a real-life
application of the latter case, one respondent
company stated:
“People were surfing our site mostly to read
product rating and review information [as gener-
ated/provided by other customers]. These custo-
mers were less likely to leave the store without
buying. They were still uncertain after seeing the
products and talking to our store salespeople.
Reading others' opinions helped close the deal on
the sale.”
We suggest that companies start slowly and try to
measure value as they move along with implement-
ing their multichannel strategy. As recommended by
a financial services vice president:
“Before you get down the integration path, find
ways to do light integration and prove out the value
of what you're doing before you invest, because you
can quickly create multi-year, multi-million dollar
IT projects and never see value, and, at times,
never see delivery.”
When deciding which metrics to use, it is
important to identify those which are most mean-
ingful to business managers, since the number of
metrics that can be captured can be quite large.
Companies repeatedly told us that customer satis-
faction, retention, and loyalty were critical, in
addition to improved financials as a result of using
multiple channels. Organizations should start with
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2022.
B.D. Weinberg et al.
their business model and their channel value-
proposition when defining both specific channels
to measure and the metrics associated with each
channel. One recommendation is to measure the
synergistic impact of only two channels taken
together. There may be two channels that are very
important if you bind them together well (e.g., a
website and real-time sales support). Understand
the impact of these two channels working simulta-
neously and develop metrics that measure that
impact. Companies can then expand the number of
channels they measure simultaneously by looking at
other pairs of channels, or even more than two
channels working together.
2.3.2. Leverage Web-based analytics to help
you measure
With the recent advancement of Web-based analytics,
organizations have the ability to track metrics such as
website traffic, catalog products viewed, number of
page views per visit, customer satisfaction with
particular features, and click-thru conversion rates.
These same analytical approaches can now be applied
to measuring multichannel effectiveness. Among the
companies involved in our study, one organization
made available online “chat” (i.e., client ability to
talk/instant-message with customer service person-
nel in real-time, while visiting/using a website) and
analyzed its impact on customers' online experiences.
Consumer utilization of online chat and subsequent
patterns of behavior were analyzed. The organization
identified chat usage patterns and frequency with
respect to products (e.g., used more frequently for
particular goods), consumer actions (e.g., chat usage
after search), time (e.g., after a consumer had been
online for a certain period, or after visiting a certain
number of webpages), and buying process stages
(e.g., advancing from search/browsing, to putting an
item in a shopping cart, to purchase/checking out).
In particular, this retailer was interested in two
outcome measures: (1) conversion rates from search
to sales and (2) customer satisfaction. Significantly,
the company observed the following regarding con-
sumers who used online chat: a marked increase in
the conversion rate from the search stage to the
purchase stage, a notable decrease in shopping cart
abandonment, and higher customer satisfaction as
measured by exit surveys. “What was critical,” said a
manager, “was not just understanding the desired
benefit of integrating real-time people in our online
shopping process, but being able to measure it.” The
process of capturing and analyzing Web-generated
metrics helped this organization determine a return
on the investment of staff to support online chat on
its website. In addition, by combining website
behavior with customer profile data, the organization
 Multichannel marketing: Mindset and program development
was able to identify attributes that comprised the
“multichannel customer” (e.g., relating age or
products purchased with chat usage). This practice
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
a live customer service agent “pops up” the offer to
chat with a customer).
Web-based analytics also allow for real-time
measurement and experimentation with multichan-
nel marketing. In a true, concrete manner, an
organization can test a variety of alternatives for
interacting with and serving clients by measuring
customer reaction/behavior. For example, an exec-
utive respondent highlighted how his organization
used real-time experimentation to test the option
of online shopping with in-store availability and
pick-up. The firm ran tests to determine the best
ways to present this option, and the best time to
present aspects of this option (e.g., during the
checkout process, when putting an item in the
shopping cart, when inspecting details about the
product). Through iterative experiments, it was
able to improve performance and sales. This
capability did not exist 10 years ago. Today,
however, such experimentation should be a regular
part of a multichannel marketer's actions.
Finally, another recommendation, based on a
channel management executive's application of the
80/20 rule, is to measure channel impacts on the
high value customer base. That is, identify the best
customers with respect to key objective function
features (e.g., revenue, number of items pur-
chased, profit) and then answer the following
questions: What are their usage patterns across
channels? Which channels did they value most, and
why? And how does the organization measure these
impacts?
3. Go forth and multichannel
The practice of multichannel marketing is moving
forward; as such, effectively planning for and
implementing it will become increasingly critical.
Having a variety of channels and a means for
“memorizing” customer preferences and other
important details is becoming a sine qua non for
delivering high-quality customer experiences, ser-
vice, and value. Herein, we have discussed several
issues central to the success of multichannel
marketing, as identified by executives from a
variety of organizations that are perceived as
being “further down the path” in testing and
effectively implementing the method. Additionally,
this article has detailed suggestions to solve, or at a
minimum improve, the usage of multichannel
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2022.
393
marketing. Through adoption of these techniques,
firms may come to master usage of this dynamically
growing phenomenon.
Appendix A
In the Fall of 2005, we directed, and Metropolitan Life
sponsored, a conference on the Multichannel Mindset.
The participant list was comprised of 30 senior
executives and managers (e.g., CEO, CIO, Worldwide
Director of Electronic Marketing), each from organiza-
tions that have placed significant emphasis on,
achieved significant success in, and are, arguably, at
the forefront of, multichannel marketing. Among
these participants, 57% held the level of Vice President
or Chief Officer, 30% held the level of Director, and 13%
held the level of Senior Manager or Manager. Their
organizations, many of which are in the Fortune 500
and are industry leaders, compete and serve clients in
a diverse set of industries, including: financial
services, pharmaceuticals, airlines, education, em-
ployment services, information technology and ser-
vices, channel management services, advertising and
integrated communications, furniture and workplace
design, retail, online retailing and e-commerce
services, and venture capital. For 2005, 30% of the
firms had revenue of less than $1 billion, 37% had
revenue between $1 billion and $10 billion, and 33%
had revenue between $10 billion and $100 billion. As
regards staffing, 20% of the firms had less than 1000
employees, 50% had between 1000 and 50,000
employees, and 30% had more than 50,000 employees.
In concert with the conference, we conducted
primary research (in-depth interviews with the execu-
tives) to enhance understanding and implementation
of effective multichannel practice, and to learn about
participants’ perspectives on and experiences with (1)
effectively serving multichannel customers and (2) the
potential impact of an integrated multichannel
approach on performance/profitability.
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