I got a lot of calls and questions about multi channel, or what some refer to as Omnichannel routes to market. I really don't like this term Omnichannel, which some colleagues of Mine and Morton came up with. The idea is to have multiple touch points in channel formats feel like one. But the word always makes me think of only one route to market. Sorry, it's not you, it's me. So instead, I like to refer to this issue as multi channel management. And I'm going to share some best in class examples as well as some of the tools that academics like myself are working on to support firms in this area. It's no secret that we live in a multichannel world. For decades, brick and mortar firms have been talking about going online. Should we do it, or should we not? Is it cannibalistic or is it synergistic? And the debates go on and on? But the reality is almost inevitably, yes, we have to have an online presence. Another way to think about this is when we observe online firms adding a bricks and mortar channel. So Warby Parker, which was a big online hit and I wear has many stores. Bonobos has done the same thing. These stores generally don't carry inventory. Aside from what's available to touch and feel. Even Amazon is becoming increasingly offline not just with drop off lockers but with stores such as this one that opened at Purdue last year. So when online retailers feel like they need a physical presence, it all suggests that most firms probably do need to do both channel formats to be successful. But of course, this means that there is a strategic need for firms to understand how to manage the two very different routes simultaneously. And this is the challenge that we face today, which is how to combine an inter combine these things to create synergies. And this is where understanding channel benefits and how to organize the corresponding functions is critical. In fact, this is the best means by which this will be done. So how do you begin to think systematically about the possible inter combinations? Well, let's take a page out of Delta's playbook. About five or six years ago, Delta came upon this factoid. It is that 72% of customers would replace a traditional channel with the mobile app if the capacity was available. Now, the challenge for Delta is how do you get from this to a capable mobile app platform? They didn't have a lot of resources for this. This was a bit of an experiment, so it meant that they had to prioritize what the app could offer. If you were an early adopter at that time, you might have noticed that when the app was first introduced. You did not have the ability to book tickets through the app. And this was a developmental costs that they purposefully chose to forego early on. So think about this because it's counterintuitive. You're an airline and you make money by selling tickets. Why do you introduce a mobile app that does not enable customers to purchase the ticket from you? It's seemingly illogical, but to their credit they did what was essentially a channel benefit analysis. And they realized that the ticket was only one aspect of a larger process. That consumers are going through, the process and task is to go on a trip. So Delta thought a bit about how consumers make the decision to go on the trip. They realize that there are different steps. First there was inspiration. Consumers had to have the idea to go on the trip then, having had this idea and having chosen a destination, then came the planning and the booking. Then the preparation to go on the trip, the packing, the checking, the weather, things like that. And then there's the consumers time in the airport and the consumers time on the flight. After that, the consumer goes through a process once they get back, where they deplane, they get to their destination and then they return to the airport for the return trip home. They are again in flight for a period of time and then when they land. So what do you do after you take the dream vacation of your lifetime? Yes, you get on social media and you tell all your friends and family that you just took that trip. So Delta understood this larger process and then they asked themselves. Now which channel format best supports this process and their conclusion was something like this. They thought about each channel format, whether it would be the website, a mobile app, a tablet or the kiosk and social media. And they asked themselves which of these different tasks, whether it's the need for service, the need to book the need to explore or to be entertained is best works on each of these different channel formats. And so they figured out well. Service was worked best at a kiosk or on a mobile app. Booking at that time was mostly done at the website, which is why they didn't offer it in the mobile app immediately. The mobile app is also useful for entertainment on the plane. The tablet is probably what's relied on most for entertainment, and the mobile app is probably useful for feedback, social media, things like that as a consumer is getting off the plane. So based on this process, they realized that it wasn't a priority to enable customers to purchase through the mobile app. And in fact, years later, after the APP was a runaway success that they then make the investment to allow consumers to purchase tickets through the app. The key thing to take away here is that it was a channel benefit analysis that drove through investment priorities. Let's consider another example. So one of the most popular apps today is the cartwheel app from Target. Now Target has a very strong following. People who shop there love it, and I'm one of those people. I look forward to going there. It's bright, it's clean. My favorite color is red, and I always find good sale deals or clearance rack deals. So I rarely pay retail price there. But if I must, then I use my target credit card, which gives me a 5% discount. So the target app is built for people like me. Target did a lot of research to understand what their customer liked most about the store. And came up with an app that not only builds engagement and excitement among users but also supports their in store experience. Check this out. The way Target's Cartwheel apps works is that you can save up to 75% without ever having to clip a single coupon. You can stack various cartwheel offers through the app with the 5% red card discount the credit card that I have a manufacturer coupon, a target coupon and a rebate offer. There's no limit here. Then every Sunday you can see what the new offers are on a Cartwheel. So and if you don't get the newspaper anymore, you can basically look at the circular on your app. Then all of these reductions are taken off sequentially from Target. Before you manufacturer coupon even gets applied. You can also, while you're in the store, check to see if a product has an offer that you might be unaware of by using the built in barcode scanner. You can use the free guest WiFi in the store when you have a poor signal from your mobile company. And Target also gamified this process so you can redeem more offers by unlocking badges and earning more rewards. You can use an offer up to four times within a transaction. You can use a barcode up to six times per day, so the usual limits have been raised. You can find the biggest discounts at Target and the weekly add. You can also look at a section called Hot Deals for options there, and finally, you can use Cartwheel at the self checkout to speed your exit from the store. So all of this takes us back to our previous key learning point, which is that understanding channel benefits is how firms can begin to solve this multi channel offering challenge. A channel audit is going to tell you what to prioritize and what to offer to get a response. This leads us to a key insight, which is that the goal of your channel benefit analysis should be to create a frictionless experience for customers. And this is why people use the term omnichannel. The idea is that customers don't distinguish between online and in store. Purchases are just one ingredient in a larger process or narrative, so our channel strategy must align to support how customers want to buy.
