New York Based CitiXsys CEO Kamal Karmakar discusses the perils and perks of omnichannel sales and says there’s a fine line between giving and gimmick when it comes to generating revenue and customer loyalty.
By Kamal Karmakar
Reward, and Retain Loyal Customers; the triumvirate of goals that every sales organisation aims to achieve. Of course it is easier said than done. Customer conversions are expensive. Choosing which rewards to give is difficult. Retaining the ideal customer is arduous and ongoing. However, it doesn’t have to be this way. Taking an omnichannel approach has given companies and executives better insights and capabilities to raise brand awareness while and increase business optimisation.
Omnichannel is, simply put, a type of sales which integrates the different methods of selling available to consumers (e.g. online, in a physical shop, or by phone). Omnichannel is both the present and the future of sales: With access to multiple touchpoints, the ability to craft seamless experiences, and creating opportunities for top-of-mind awareness, this approach is a major driving force in global adoption.
Omnichannel identifies the right customers and deepens brand loyalty
Customer retention is critical for omnichannel success. Research shows that a 5% increase in customer retention can translate to profit growth between 25% to 95%. But not all existing customers are the right customers. Winning new customers is expensive, acquisition can cost up to five times more than retaining the right customer.
Companies need to identify the right customers with their omnichannel approach and give them a reason to stay. Some might look at the lifetime value of a customer to justify a high acquisition rate and customer churn rate, Customers are more than just numbers; what makes sense on a spreadsheet might not balance out in the long run.
There are benefits and ramifications that go beyond the sale to show that in some cases, it is cheaper to not acquire customers than acquiring them without keeping them loyal to you.
Customers should not be limited by their payment options either. Omnichannel payments are key for a frictionless experience, and can make or break the customer experience. As part of that frictionless experience, recommendation or ‘clienteling’ solutions are prevalent in many omnichannel experiences and provide insight into customer behaviour and opportunities to increase retention.
Loyalty programs have traditionally been closed-loop, granted, with successful omnichannel integration, that loop enjoys unprecedented reach. However, all actions in that loop are designed to lead customers down further engagement within the brand. Companies should leverage their integrated payments, and recommender systems as a gateway to synergise with relevant partners outside of their brand.
For example, a promotion for sunglasses and swimwear can be tied in with a trip to a beach resort, giving the customer a chance to enjoy savings on both.
Brands need to go beyond interactions where customers view the interactions as a service or product. With omnichannel, brands can position themselves to be the springboard and a key extension of their customers’ lifestyle.
Keep your cool, stay relevant
Most companies adopt their omnichannel approach by building upon existing resources, where brick and mortar retail build an online presence, and digital native vertical brands (DNVB) occupy a physical presence. Companies must not give in to the pressure to funnel customers to onto multiple channels just to force value out of their new supporting arm.
A recent study by Harvard Business Review suggests that not all promotions are equal across the board. Respondents reported losses when online discounts were introduced to customers who were primarily offline, and profits when online shoppers were incentivised to shop in store.
There should not be any part of the experience that feels tacked on. Keep it relevant to the customer. Companies need to find the line between innovative value-adds and troublesome gimmick. The use of multiple touchpoints should be engaging, not intrusive.
Make it fun
Gamification is a powerful tool for loyalty programs, customers are rewarded for their actions with either points, additional perks, or collectibles/collateral. An interesting study claims that effective loyalty programs engage customers through consistency where every action is rewarded gradually, rather than rewarding after a long, protracted effort.
Companies should keep in mind that every customer has a different pace, and customers who are slower to engage should not be penalised.
As companies refine and improve upon their loyalty programs, the mentality of the loyalty program should shift from win-or-lose, to win-or-win-more, where the mileage may vary, and everyone’s mileage counts for something, at any step in their journey with your brand.
(Ed. Kamal Karmakar is the Founder and CEO of CitiXsys, a specialist provider of software products in Retail and Hospitality. CitiXsys is a B2B startup which recently closed USD 20 million in Series B funding. A graduate of Harvard Business School, Karmakar is on the board of various companies globally and is a member of SAP Advisory Council for Business One in Germany.)