In 2003, I used “channabilism” to describe multichannel companies’ fear one channel would steal customers from another. I met a lot of company owners at this year’s Shop.org Summit who still fear this and who aren’t sure how to handle their perceived channel conflict. Today we’ll look at one type of channabilism and ways around it.
Many retailers are still afraid customers will browse items in the store, then buy them online. Similarly, Web sites are often used for research. The final purchases occur at a physical location. Both sides wish they would get credit for the sale. The problem is compounded when the physical store is a franchise or when salespeople work on commission. In either case, there’s a disincentive to allow the online purchase. The store won’t get the credit and the salesperson won’t earn a commission.
On the flip side, companies that still view their sites as a separate channel (and require it to survive based on its P and L sheet) need convincing other channels’ sales actually originated online.
What Channel Conflict Reveals
At Shop.org, several people asked about channel conflicts. They had questions like, “Our customers come in the store, look at furniture, but aren’t ready to make a decision. So they go home, show their husbands the furniture at our online store, then buy it over the computer. Our franchise owners are angry, and so are the sales people who spent all that time with them.”
Here’s what we can learn from this scenario:
- People may not be ready to buy in the store, but that doesn’t mean they aren’t interested in the product.
- They look at the company’s site for the same products, indicating they have some brand loyalty.
- The company knows they’re going online; this seems to be a common action in the furniture industry.
- The company views its channels separately because the actions of a true multichannel consumer (the most loyal kind) anger and scare it.
Follow the Money: Embrace and Enable
The real problem here isn’t user behavior. We want multichannel consumers. The problem is that companies silo channels instead of intertwine them. If you know your consumers use multiple channels, embrace that behavior, even enable it.
Why enable it? If you allow people to use multiple channels, you create a way to track behavior. The furniture store is upset people are online only because it can’t track purchases and credit the right people.
Here’s a best-case scenario for this furniture company:
A woman enters a franchise shop. A commission-based employee helps her for an hour. She finds the furniture she wants but decides not to buy anything yet. She wants to show her family. The salesperson says, “Would you like me to create a wish list for you on our Web site that contains all the furniture we talked about today?”
That way, the woman can go home and show her family the furniture without hunting for it on the site. It ensures she’ll use that company’s site and not look online for a better deal on the same furniture. It even increases her brand loyalty because the company understood her needs. And because the salesperson created the wish list, the site automatically knows what store and what salesperson originated the lead. If the sale occurs online, it can be credited to that store, and the right salesperson can receive the proper commission.
What if the woman instead began her research online? Many people research products online, then buy in stores. Embrace and enable that behavior. Format the shopping cart or wish list so it’s printable, or create a feature called something like “print this list and bring it to the store.” Signal to the customer this behavior is condoned and encouraged. Then, make sure the shopping cart and wish list have a barcode that identifies the sale as originating online.
With newer, more sophisticated POS systems, you should be able to directly attribute the sale to the online channel. With older POS systems, simply set up “online” as a sales person with its own employee ID. When the checkout person scans the barcode printed on the shopping cart, credit goes to the online channel, much as it would have gone to an in-store salesperson. The system will still track the store, so some kind of honorary commission for completing the transaction could be figured out.
It’s not a perfect solution. If someone also helped the consumer in the store, these systems may not be able to enter two different salespeople’s names. The cashier may feel pressured because potential direct commission is being taken from the store. A newer POS system with real multichannel capabilities should be able to separate the commission chain from the sale origin chain.
We can’t track behavior if it happens behind our backs. When we create pathways to enable multichannel behavior, we also create ways to track it. Once we can track it, we can make sure the right people are credited and share profits appropriately. The fear of channabalism is basically a fear about money and credit. Once channels have an incentive to allow multichannel activity, the fear dissipates. Once employees know they’ll get their commissions, regardless of where the transaction was completed, their needs will be met. Once employees and franchise owners are given the power to create wish lists online (ensuring proper credit to the stores), multichannel retailing’s power will finally be realized.
Thoughts, comments, questions? Let me know.
Until next time…