Measuring the efficiency of a multichannel strategy
A truly multichannel strategy implies a seamless integration of all business areas within a given brand ecosystem. So which metrics are the most relevant to multichannel success? By Maria Morais.
By Maria Morais
The customer should be at the centre of everything so it is essential that this be reflected in the measurement approach. It may seem to be a statement of the obvious, but it is easy to get overcomplicated when setting key performance indicators.
Establishing Key Performance Indicators
To establish the right KPI’s (Key Performance Indicators) the business first needs to define objectives without pre-assumptions. Then a group of tactics needs to be put in place, enabling an adequate extraction of data, which later will allow the analyst to explain trends and patterns. Since it is multichannel, more than one source is going to be considered, so the final outcome must be consolidated into a single report presenting a coherent angle of analysis. For instance, results should be compared throughout the different quarters so that standardisation can be achieved and a results forecast produced.
Multiple metrics may be considered when measuring the multichannel success of a brand but the most relevant ones are actually the simplest and this article focuses on those.
Metrics based on sales
In a multichannel strategy a brand is present over several touch-points but when it comes to measuring multichannel efficiency, the only thing that should matter is the bottom line, i.e. sales. If the total sales are increasing even with some channels performing less effectively the overall positive outcome is what matters. Sales can be separated by channel, but then measurement is not related to multichannel performance anymore. Some channels are not sales effective but may be contributing to the bottom line because they are relevant during the customer journey for the brand.
Some channels are simply not made to sell but to communicate and help conversion on other channels. Switching off one of these apparently non-profitable touch-points may end up contributing to a decrease in sales.
Metrics based on customer satisfaction
Customer satisfaction is entirely related to the service a brand offers and not to sales performance. Any attempt to relate these two aspects, or assuming they are the same, can lead to incorrect conclusions.
The service level offered by a brand depends on three factors: technology, human resources and communication. If the technology helps human resources communicate more accurately, then customer satisfaction may be increased. This means that technology needs to go beyond software and represent a way of achieving better communication between people, regardless of them being the customer or brand employees.
Customer service plays an extremely important role in customer satisfaction especially during any cognitive dissonance process http://en.wikipedia.org/wiki/Cognitive_dissonance that may occur after buying a product. Customer satisfaction is directly related to rational factors whereas emotional factors lead to impulse purchases. If the brand leads to impulse buying but then fails in terms of customer service, it’s highly probable that over time sales may decrease and the costs of acquiring new customers rises. There will come a time when this will reach a tipping point and consequently will damage the brand.
Customer acquisition and customer retention metrics
To measure the efficiency of a multichannel strategy one should segment data from all channels into two main categories: The first category relating to customer acquisition metrics and the second category to customer retention metrics.
Some simple examples of metrics are shown in the table below:
Customer acquisition metrics will allow analysts to explain the total sales on a specific day; how much was the contribution from each individual channel and how much was generated from new customers.
Customer retention metrics will tell us how much was generated from established customers; the contribution of each segment towards the total and the total complaints received on any given day.
In order to improve the customer service, each complaint should receive a score ranging from 1 to 5 where different mechanisms are put in place to help solve the problem.
Any automation program or campaign based on all of the above types of metrics is going to be more effective and, in the end, so will the overall multichannel strategy.
About the author
Maria Morais is Marketing Manager at Neoworks.