Best practices for multichannel retailing

BEST PRACTICES
December 18, 2006

Best Practices In Multichannel
Retailing
by Tamara Mendelsohn

Helping Business Thrive On Technology Change

B E S T P R AC T I C E S
Includes Consumer Technology Adoption Study data

December 18, 2006
Best Practices In Multichannel Retailing
by Tamara Mendelsohn
with Bruce D. Temkin, Nikki Baird, and Brian Tesch

EXECUT I V E S U M MA RY
Multichannel issues are not new to the retail industry. However, retailers have made little progress over
the last few years; we give the overall industry a grade of C- on its multichannel abilities. While this
mediocre performance may have been okay in the past, consumers will push retailers to improve their
multichannel capabilities. To uncover multichannel best practices, we spoke with leading multichannel
retailers. Our research uncovered best practices in four areas: selling, service, organization and culture,
and measurement and metrics. Not all retailers share the same priorities; store-based retailers need to
focus more on selling, while manufacturers need to focus on organization and culture.

TABLE O F CO N T E N TS N OT E S & R E S O U R C E S
2 The State Of Multichannel Retail: Not So Good Forrester interviewed 10 user companies and
2 Multichannel Retail Best Practices other field experts, including Accenture, Ann
Taylor, Anthropologie, Avenue A | Razorfish, Blast
5 Multichannel Best Practice No. 1: Selling
Radius, Borders, Circuit City, Deloitte, Fry, GSI
7 Multichannel Best Practice No. 2: Service Commerce, Lowe’s, PETCO, REI, and Timberland.
9 Multichannel Best Practice No. 3:
Organization And Culture Related Research Documents
11 Multichannel Best Practice No. 4: Metrics And “Circuit City: A Case Study In Multichannel Selling”
Measurement December 18, 2006, Case Study
12 Multichannel Retail Next Practices “REI: A Case Study In Multichannel Organization”
13 Setting Your Multichannel Priorities December 18, 2006, Case Study
15 Identifying Your Challenges “Understanding US Cross-Channel Shoppers”
15 Case Studies April 19, 2006, Trends

17 Supplemental Material

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2 Best Practices | Best Practices In Multichannel Retailing

TARGET AUDIENCE
eBusiness, channel, and product management professional; marketing leadership professional

THE STATE OF MULTICHANNEL RETAIL: NOT SO GOOD
The rise of online shopping in the mainstream puts pressure on firms to master an increasingly
important skill: multichannel retailing. Supporting consumer interactions across channels like
catalog, call center, Web, and bricks and mortar may seem like a no-brainer at this point, but not all
firms have responded well to this challenge. Our review of today’s retailing environment shows that:

· Consumers increasingly shop across channels. Using the Internet in the purchase process is
no longer just for the technological elite; in fact, 88% of all online consumers use the Internet to
research products.1 Researching online and buying offline, however, is a more complex activity.
But cross-channel shopping is quickly becoming a mainstream activity, with more than half of
online Gen Yers, Gen Xers, and Younger Boomers engaging in this behavior (see Figure 1).

· Retailers fail the multichannel test. We often find that multichannel initiatives lose priority
to other projects with a clearer ROI. While there were some improvements by leading retailers
this year, firms continue to play catch-up to consumer demands, implementing one-off features
like buy online/pickup in store without the foundation of a holistic multichannel strategy. Our
assessment of the overall industry’s multichannel abilities is a C- (see Figure 2). While retailers
get a passing mark for their online selling efforts, they fall well below the mark when it comes to
multichannel organization and culture and measurement.

· Multichannel retailing can no longer be ignored. For the past few years, retail channel
managers have had the luxury of choosing how multichannel they want to be, but they’re about
to lose this privilege. While multichannel retailing has been a nice-to-have capability, consumer
adoption of technology — specifically the Internet — will turn this into a must-have capability
over the next two years.

MULTICHANNEL RETAIL BEST PRACTICES
Forrester has been writing about multichannel retailing for the past five years. Interestingly, we
continue to receive many of the same questions from eCommerce executives, VPs of direct, and
CMOs: What are other retailers doing and how are they doing it? To answer these questions we
spoke with the experts — channel executives from retailers that have taken multichannel strides
over the past few years along with some of the vendors that support their efforts. Our analysis
identified five specific areas of multichannel retailing best practices (see Figure 3):

December 18, 2006 © 2006, Forrester Research, Inc. Reproduction Prohibited

Best Practices | Best Practices In Multichannel Retailing 3

Figure 1 Cross-Channel Shopping Approaches The Mainstream

1-1 More consumers like cross-channel shopping
“I like to research products online and purchase them oﬄine .“
(percentage who responded 4 or 5 on a scale of 1 [strongly disagree] to 5 [strongly agree])
40%
2004 2006*
30%

20%

10%

0%
Gen Yers Gen XersYounger Older Seniors
Boomers Boomers
Base: North American households
Source: Forrester’s Consumer Technographics® 2004 North American Benchmark Study
*Source: Forrester’s NACTAS 2006 Benchmark Survey
1-2 Cross-channel shoppers are more likely to be young males

“Have you ever researched a product online and then purchased it
(actually paid for it) in an oﬄine store?”

68% Male Female
62%
59%
55%
52% 50% 52%

40%

30% 28%

Gen Yers Gen Xers Younger Boomers Older Boomers Seniors

Gap between males and females
20%
16%
12%
10%
5%
3% 2%
0

Base: US online consumers

Source: Forrester’s NACTAS Q2 2006 Survey
39988 Source: Forrester Research, Inc.

© 2006, Forrester Research, Inc. Reproduction Prohibited December 18, 2006


Figure 2 Multichannel Retailing Report Card 2006

Competency Grade Comment
Selling B- The industry has made the most improvement in this area. We’re
beginning to see some innovative Web applications that bridge
channels and more consistency of information across channels.

Servicing C This year, many firms focused on large data integration projects. We
hope that next year retailers will use this data to provide better and
more relevant service.

Marketing C+ Many retailers took this year to get to know their customers. Large
customer data projects kicked-off, and customer-centricity took
center stage.

Organization and D Some retailers have begun to put incentive structures in place to
culture encourage channel cooperation. However, this remains a large barrier
to many multichannel retail organizations and deserves more
attention and effort.
Measurement F Retailers are still struggling to determine what to measure and how
to measure it.

Overall grade C- Multichannel retailing has shown progress but is still
performing below a satisfactory level.


Figure 3 Multichannel Retailing Best Practices

Selling Servicing Marketing Metrics and
measurement

Organization and culture

Selling • Build Web applications that bridge the channels.
• Enable reserving or buying online with pickup in store.
• Offer consistent pricing and promotions.
Service • Offer service choice.
• Provide an extended inventory network.

Marketing Not covered in this report.

Metrics and measurement • Provide incentives for channel cooperation.
• Treat the Web as more than just another store.
• Assign clear executive leadership.
Organization and culture • Create metrics on cross-channel consumer growth and satisfaction.
• Use loyalty programs to track customers across channels.
• Use surveys to gather additional insight.




1. Selling. Multichannel retailers have to support customer buying processes, which often cross
channels. To do so, retailers should create applications and services that help consumers
seamlessly move across channels and establish multichannel strategies for pricing and
promotions.

2. Service. Once a customer decides to make a purchase, retailers still have a lot of work left
to do. They have to establish multichannel processes around fulfillment and integrate order
information to handle customer requests.

3. Marketing. The role of multichannel marketing is to drive consumers to specific channels by
communicating the benefits of each channel. But perhaps the biggest role for marketing is to
understand customers, determining their needs and desires as well as their propensity to shop
across channels, and then communicate with them on their terms.

Note: We decided to not include marketing best practices in this report because multichannel
marketing entails many categories of best practices unto itself.

4. Organization and culture. It can be difficult to get channel organizations that have historically
operated as separate businesses — and even competed against one another — to work together
toward a common goal. Retailers must establish reporting and incentive structures to help foster
collaboration, along with strong leadership and training.

5. Metrics and measurement. For channel managers to understand the impact and success of
their multichannel initiatives, they must define metrics and implement methods for collecting
the data.

MULTICHANNEL BEST PRACTICE NO. 1: SELLING
Of all the multichannel retailing competencies, retailers have made the most progress in supporting
the multichannel buying process: helping consumers find products. This has been an easy place
for retailers to start because it is the most visible area, and it also provides the most tangible
benefits. But there continue to be lost opportunities. Almost half of cross-channel consumers buy
from a different retailer than the one that they used to do research.2 These defections represent a
significant opportunity for retailers to retain customers as they cross channels. That’s why successful
multichannel retailers:

· Build Web applications that bridge the channels. To help prevent consumers from switching
retailers as they switch channels, channel managers at Circuit City, Lowe’s, and IKEA have
deployed configuration applications that let consumers do the research at home but then access
their work in the store. This approach allows consumers to get help from a sales associate to
confirm and augment their selections. Circuit City offers a home theater configurator and



Design Within Reach provides a carpet design tool. Lowe’s and IKEA offer kitchen configurators
(see Figure 4). IKEA even lets consumers download its application and design their kitchen
offline and then upload it back to the IKEA servers when they are ready to come into the store.

· Enable reserving or buying online with pickup in store. Retailers like Ann Taylor, Circuit
City, Coach, and Famous Footwear let consumers check local store inventory on items that they
are interested in buying. Borders and Talbots take it one step further and let consumers reserve
products online to have them ready and waiting in the store. If consumers aren’t confident
about a purchase, these applications help to bring them into the store to complete the process.
Buy online/pickup in store offers consumers a chance to see the product as well as providing
immediacy to online purchases. Circuit City has done a good job with its 24/24 Pickup
Guarantee program; it guarantees that purchases are ready for pickup in the store in 24 minutes.
Retailers shouldn’t rush to offer this service because of competitive pressure — it is dangerously
easy to underestimate the complexities. Like Circuit City, retailers should take the time and
effort to make sure that this type of service runs smoothly before marketing it to customers.3

· Offer consistent pricing and promotions. Most of the retailers that we spoke with try to
keep pricing consistent across channels so as not to frustrate consumers who come into the
store expecting one price and are presented with another. Circuit City specifically calls out its
Web-only prices online, but it honors them in the store if a consumer asks for that price. Ann
Taylor is testing ways to share inventory across channels to maximize inventory productivity,
product pricing, and margin. The push for transparency and consistency doesn’t mean that all
promotions have to be available across all channels. In fact, retailers successfully use promotions
to drive customers to different channels. Borders sends out weekly emails highlighting the
week’s top picks along with in-store promotions to drive weekend store traffic.

Multichannel Selling Pitfalls To Avoid
When looking to help consumers through the buying process and working to keep them loyal as
they cross channels, retailers should avoid:

· Inaccessible or difficult to use Web applications. One of the common pitfalls to multichannel
retailing is also one that stymies online retailing: poor online usability. We’ve found that Web
applications like configurators and design tools are often buried behind confusing menus and
unclear hyperlinks and fly in the face of usability best practices.

· Wait time for pickups in store. Without proper signage, solid processes, and employee training,
what might seem like an easy win can significantly harm customer satisfaction. If purchased
merchandise isn’t held in an organized fashion or if the retailer doesn’t implement processes
and accountability for picking up purchased items in a timely manner, consumers can end up
waiting at the store longer than if they had come in to make an in-store purchase in the first
place.



Figure 4 Lowe’s Configuration Application Helps Consumers Cross Channels


· Inconsistent pricing and promotion policies. Consumers who research online and travel to
the store to make the purchase will be frustrated if a price or promotion that they expected is
not available to them when they arrive in the store. Retailers should avoid frustrating valuable
shoppers with opaque policies or unexpected price changes.

MULTICHANNEL BEST PRACTICE NO. 2: SERVICE
Multichannel retailers can’t just focus on getting the sale. The service experience provides an
opportunity to win — or lose — consumer loyalty. Many retailers now allow online product returns
through the store, but this has become the minimum standard. In speaking with retailers that use
customer service to strengthen their multichannel brand, we found that they:

· Offer service choice and consistency. Retailers like Best Buy, L.L.Bean, and Macy’s offer click-
to-chat or click-to-call options, while other retailers are experimenting with in-store kiosks
that link to live customer service representatives (CSRs). As the number of service points
increases, so do the integration demands. CSRs should have visibility into not only customer
and order data but also into the same cross-sells, upsells, and promotions that the customer
is seeing online (see Figure 5). Self-service is also an important service channel. Many cross-
channel shoppers are tech savvy and prefer to control their experience, so retailers like PETCO,
American Eagle Outfitters, and Famous Footwear ensure that online and offline order and
account information as well as applicable coupons are easily accessible online.



Figure 5 CSRs Should Have Cross-Channel Visibility

CSRs should have visibility
into relevant cross-sells.


· Provide an extended inventory network. Retailers can avoid walkouts because of stock-outs by
providing access to other local store inventories and Web inventory. Ann Taylor arms its sales
associates with an application called Style Finder that lets them order out-of-stock products for
delivery to the consumer’s home straight from another store or from online, whichever has the
most inventory. Over the past year, sales through this application have increased in the high
double digits. Along with other retailers that oﬀer this service like the Gap, J. Crew, and REI,
Ann Taylor rarely has to turn a customer away.

Service Pitfalls To Avoid
When setting up multichannel service options, retailers should avoid mistakes that jeopardize the
customer relationship, such as:

· Inconsistent communication. With more options for escalation and help, the complexity of
consistency increases. Retailers should avoid frustrating consumers by an inability to service
them because information is unavailable or by making customers repeat information.



· Channel wars. Retailers should watch out for policies that discourage employees from
delivering good multichannel service. Stores often don’t like returns of online purchases because
they can jeopardize their sales numbers and leave them with inconsistent merchandise. But if
stores make it difficult for customers to return these products, they risk losing future online
sales because of a frustrating returns process.

MULTICHANNEL BEST PRACTICE NO. 3: ORGANIZATION AND CULTURE
Of all the multichannel competencies that we examined, organization and culture represents the
area with the most need for improvement. Strong channel organizations create silos that get in
the way of cooperation on multichannel initiatives. Retailers that have begun to break down these
barriers:

· Provide incentives for channel cooperation. Multichannel initiatives require multichannel
incentive structures. Many retailers, including Best Buy, Timberland, and Staples, give credit
from in-store kiosk sales to both Web and store groups to provide incentives to store associates
to help consumers use the kiosks when an item that they are looking for isn’t carried or is out of
stock. Best Buy takes it one step further and attributes all Web sales to both its online group and
to individual stores based on their proximity to the shipping address. This helps to eliminate
channel competition and foster collaboration. Incentives often go hand-in-hand with strong
cross-channel training programs. Ross-Simons trains store employees on the value of capturing
customer email addresses and awards gift certificates to the associate who collects the most.

· Treat the Web as more than just another store. While many retailers leverage the efficiencies of
treating the online store like any other store (purchasing power and shared inventory), retailers
shouldn’t force the online channel to share all resources with the stores (see Figure 6). The
value of the Web channel goes far beyond that of just a virtual store; it drives almost as much
offline as online sales, and it is a marketing and brand vehicle as much as another channel.4
Many multichannel retailers that we spoke with allocate dedicated and significant marketing,
merchandising, and customer experience teams and resources to the online channel. These
groups should then collaborate closely with corporate marketing, merchandising, and customer
experience as they do in retailers like PETCO and Timberland.

· Assign clear executive leadership. Many of the best multichannel organizations have
explicitly defined executive champions to oversee the coordination of all channels and ensure
that multichannel initiatives remain a priority. At REI this position is held by the CEO, at
Anthropologie it is the president, at Timberland it is the VP of consumer direct, and at
other retailers, like Circuit City, there is a dedicated position created for this role (see Figure
7). Anthropologie makes sure that multichannel initiatives don’t slip through the cracks by
assigning senior-level managers responsibilities across channels. For example, the general



merchandise manager is responsible for buying for all channels; the creative director oversees
creative for stores, catalog, and Web; and the head of direct is responsible for marketing across
all channels.

Figure 6 Treat The Web As More Than Just Another Store

Activity Treat the Web as a store Treat the Web separately
Buying Gain buying power and
negotiation leverage due to
x
higher volumes

Inventory Capitalize on sales opportunities
where the inventory is not in
x
local stock

Marketing x Can see incremental opportunities
beyond driving immediate sales

Merchandise x Can use the site as a concept store
that spans all geographies to test
new products and services before
rolling them out
Customer data x Realize additional opportunities
to gather customer data and
provide incentives to users who
create a login that can be traced
across channels


Figure 7 REI: Organized For Multichannel Success

CEO

SVP, marketing SVP, sales, store CFO
and merchandising development, and logistics

Merchandising Private label*

Finance IS
Marketing Online

Public aﬀairs Stores Call center

Logistics

*REI branded Gear and Apparel



Organization And Culture Pitfalls To Avoid
When establishing the organization and culture to support multichannel initiatives, retailers should
avoid:

· Dotted line reporting. Matrix organizations can be dangerous if they are not properly
implemented. If the collaboration isn’t appropriately supported, budget holders will ignore
dotted lines and prioritize initiatives based on their own P&L.

· Getting married to one structure. There is no one-size-fits-all organizational structure
for multichannel success. If retailers settle too quickly into one structure, they can easily
miss opportunities for refinements that will better support their goals. After REI’s original
organization structure failed to provide the clear leadership that it was looking for, the retailer
reorganized a few years later to align online, public affairs, and marketing under one leader.

MULTICHANNEL BEST PRACTICE NO. 4: METRICS AND MEASUREMENT
Without the right measurements, multichannel initiatives lack validation — and the wrong metrics
can send retailers on a wild goose chase. In speaking with multichannel retailers, we found that they:

· Create metrics on multichannel consumer growth and satisfaction. Multichannel consumers
are some of a retailer’s most valuable customers. The multichannel customers at Macy’s, for
instance, spend 20% more than the company’s single-channel customers, and PETCO’s
multichannel customers spend almost 30% more than their single-channel counterparts. Many
of the retailers that we spoke with measure and monitor the percentage of their customers who
are multichannel shoppers and strive to grow this over time. That’s why successful retailers
consistently measure loyalty and satisfaction rates of multichannel customers through methods
like Net Promoter.5

Use loyalty programs to track customers across channels. Retailers like REI, Borders, and
PETCO use their loyalty programs to gather information and gain deeper insights into their
consumers’ cross-channel behaviors. Borders captures about 50% of transactions through its
loyalty program, and REI members account for almost 90% of the retailer’s transactions. The
data provides these retailers with strong proof of their customers’ behaviors and its analysis
drives many of their multichannel initiatives. Retailers should refocus their loyalty programs
and use them to get consumers to use their identifiers for all interactions.

· Use surveys to gather additional insight. Many of the retailers that we spoke with use a
combination of online surveys, intercept surveys, and post-sale surveys conducted online or
through a toll-free number. Firms should integrate multichannel topics into these existing
measurement efforts. They should ask questions like whether the customer researched the
product online before coming into the store to buy it and whether they had ever bought a



product from the retailer’s Web site. This customer feedback helps retailers gauge the volume of
cross-channel shoppers, gain insights into the categories that matter most to these customers,
and their current satisfaction level.

Metrics And Measurement Pitfalls To Avoid
We heard retailers describe these common pitfalls to avoid:

· Loyalty program denial. While there is still debate about whether or not loyalty programs
drive loyalty, retailers should recognize that they do provide valuable customer data. If retailers
only look to the loyalty programs to build loyalty, they will miss a valuable opportunity to gain
visibility into their customers’ cross-channel behavior.

· The channel metrics trap. Until retailers get a better handle on which levers ultimately drive
multichannel success, retailers need to stay away from defining metrics that can reinforce
competition between channels. If leaders of multichannel efforts don’t develop and support
measurements and metrics, they will find it difficult to justify increased attention and budget.

· Unproven methods. Using new methods for data capture can be risky because they are easier
to question. If you’ve never used intercept surveys, for instance, don’t use them for the first time
to gather new data because you’ll likely spend more time focusing on the method than on the
results.

MULTICHANNEL RETAIL NEXT PRACTICES
While our research uncovered a number of multichannel retailing best practices, here are some
next practices that firms can focus on once they’ve mastered the basics that we’ve described (see
Figure 8):

· Selling — mobile commerce. Cell phones represent yet another channel to connect with
consumers and are poised to have a significant impact on the retail industry when customer
adoption hits critical mass. Some retailers like Target and Sephora are beginning to experiment
with the channel and are taking some early learnings back to the drawing board.

· Service — right channeling. Today, most retailers push customers to low-cost, self-service
channels like the Web. In the future, retailers will need to develop a more balanced view of
interactions across channels, optimizing for a combination of cost and satisfaction.6 Valuable
customers, for instance, may require different service options than other customers.

· Organization and culture — company P&L. Getting rid of channel-specific P&Ls altogether
will allow multichannel retailers to collaborate more effectively across channels, prioritize
multichannel initiatives, and support decisions that put the customer first.



Figure 8 Multichannel Retailing Next Practices

Selling Mobile commerce represents another channel for retailers to
connect with consumers when adoption hits critical mass.

Service Right channeling can allow retailers to optimize customer satisfaction
and cost by coordinating across channels.

Metrics and measurement Category gross margin is a good indicator of whether or not
channels are working together effectively to drive sales.

Organization and culture Category-specific P&L will encourage cross-channel
collaboration and support customer-first decision-making.


· Metrics and measurement — gross margin by category, not by channel. While channel
measurement will most likely continue, retailers need to shift their focus to total product and
category sales across all channels. Category gross margin is the number that they need to grow
and is a good indicator of whether or not the channels are working more effectively together to
drive sales.

SETTING YOUR MULTICHANNEL PRIORITIES
To help identify which practices to prioritize, we evaluated the needs of three types of retailers: store-
based retailers, catalog-based retailers, and manufacturers (see Figure 9). Our analysis uncovered
that:

· Store-based retailers should focus on selling and organization and culture. Retailers that
have a large store presence need to support their customers as they cross channels through
the buying process. These firms have the biggest risk of losing these customers as they move
from research to buy, so attention to multichannel research tools and services like reserve or
buy online and pickup in store will have the biggest benefit. However, to ensure that customers
receive the most consistent multichannel experience, store-based retailers need to incent the
channels to work together and embrace multichannel cooperation companywide.

· Catalog-based retailers should start with service. Because service is a core value proposition
to many catalog-based retailers, it is a natural fit to focus on servicing the customer more
consistently across channels. Implementing click-to-call or click-to-chat options can help
to make sure that customers feel comfortable with their purchases and provides another
opportunity to build loyalty and deliver on brand value. Catalogers with a large store presence
should also focus on multichannel selling best practices as well as measurement and metrics.



· Manufacturers need to overcome organizational and cultural hurdles. Most manufacturers
were not organized with retail at their core, so their retail divisions are not always understood
throughout the organization. But for manufacturers like Timberland, Nike, and Apple, the direct
retail connection with their consumers was paramount to their success. These ﬁrms need to focus
on changes in organization and culture to enable the shift in strategy. Because brand often rules for
manufacturers, they also need to ensure that consumers have all the information that they need
when researching a product and can easily ﬁnd answers to their post-purchase questions.

Figure 9 Multichannel Priorities Vary By Retailer Type

Low importance Medium importance High importance

Store-based Catalog-based Manufacturers
Focus Marketing Product Brand

Selling

Multichannel
applications
Reserve, buy online/
in-store pickup
Consistent pricing
and promotion

Service

Service choice

Extended inventory

Organization
and culture

Incentives

Leadership
and training

Metrics and
measurement
Margin by category,
not channel
Cross-channel
consumer growth
and satisfaction
Loyalty programs




IDENTIFYING YOUR CHALLENGES
Where should you start? Use this diagnostic tool to assess your current capabilities — and
opportunities for improvement — and see how you stack up against your peers. Scores will be
calculated automatically for online readers. All scores are anonymous (See Figure 10).

CASE STUDIES
We conducted in-depth case studies of two retailers to highlight multichannel selling and
multichannel organization and culture.

Circuit City: A Case Study In Multichannel Selling
Our research shows that multichannel retailers have a significant opportunity with online-
purchase/in-store pickup services. One of the best practices that we found for this was Circuit City’s
24/24 Pickup Guarantee program. We spoke with Circuit City execs and found out how training,
empowering stores, marketing, leadership, and metrics helped the retailer successfully implement
this program.7

REI: A Case Study In Multichannel Organization And Culture
Our research shows that multichannel retailers need to focus on their organization and culture.
REI’s efforts in building a multichannel culture represent best practices for other firms to learn from.
The retailer developed a focus on the customer — that cuts across channels — with a combination of
organizational restructuring, new incentives, training, and flexibility.8



Figure 10 Self-Diagnostic Tool For Multichannel Retailing

Part 1: Selling Yes No
Do you offer a Web application, such as a configuration tool, that bridges
channels?
Do you let consumers reserve or buy online and pickup in store?
Do you provide consistent pricing and promotions across channels? If not,
are your pricing and promotion policies clear and transparent?
Do you let consumers reserve or buy products through their cell phone?

Total
Part 2: Service
Do customers have service choice when browsing online (click to chat, click to call,
prominent call center number)?
Do all service channels have full and real-time visibility into orders and customer
information?
Do call center agents have visibility into relevant cross-sells, upsells,
and promotions?
Do you offer an integrated inventory at the store level to help customers order
out-of-stock items from other stores or the Web?
Do you optimize service options for customer satisfaction and low cost based on
the value of the customer?

Total
Part 3: Organization and culture
Do you provide incentives to help channels coordinate efforts and support
multichannel initiatives?
Are buying groups for stores and online combined?
Do you view the online channel more than just another store?
Do multichannel initiatives have an executive champion?
Do you operate under one company P&L?

Total
Part 4: Measurement and metrics
Do you measure multichannel customer growth?
Do you measure multichannel customer satisfaction?
Do you use your loyalty program or store credit card to track customers
across channels?
Do you use surveys to gather insight on multichannel consumer behavior?
Do you track gross margin by category instead of channel?

Total



SUPPLEMENTAL MATERIAL
Online Resource
The online version of Figure 10 is an interactive self-diagnostic tool that helps clients assess how
their current practices stack up against their peers.

Companies Interviewed For This Document
Accenture Fry
Ann Taylor GSI Commerce
Anthropologie IBM
ATG Lowe’s
Avenue A | Razorfish NearbyNow
Blast Radius PETCO
Borders REI
Circuit City Timberland
Deloitte

ENDNOTES
1
Source: Forrester’s NACTAS Q2 2006 Survey.
2
Although cross-channel shoppers spend big bucks in stores, they’re disloyal when they cross channels: 49%
of cross-channel shoppers report buying their last cross-channel purchase from a different offline retailer
than they used to conduct their online research. This brand crossover not only represents the loss of highly
qualified and high-spending shoppers, but also the loss of a rich opportunity for upselling: $16 billion of
the $126 billion that cross-channel shoppers spent in stores was on products in addition to what they had
researched online. See the April 19, 2006, Trends “Understanding US Cross-Channel Shoppers.”
3
One of the key areas that multichannel retailers need to focus on is selling: supporting the buying process
across channels. During our research, we uncovered a best practice in this area at Circuit City. See the
December 18, 2006, Case Study “Circuit City: A Case Study In Multichannel Selling.”
4
More than $126 billion of offline sales are influenced by online research. See the April 19, 2006, Trends
“Understanding US Cross-Channel Shoppers.”
5
Our research uncovered five levels of voice-of-the-customer activities: relationship marketing, interaction
monitoring, continuous listening, project infusion, and periodic immersion. Companies should create
formalized programs that address these different types of insight. See the December 1, 2006, Trends “Voice
Of The Customer: Five Levels Of Insight.”



6
Companies want to differentiate products and services by improving customer experience. They also
want to cut costs by shifting more customers from human-assisted channels to self-service channels like
Web sites and phone self-service systems. Their dilemma: Even the best-designed automated systems
have weaknesses that make them inappropriate for supporting many types of customer goals. To deliver
effective customer experiences across a portfolio of channels, firms should document their customers’
current behaviors with cross-channel scenario maps and make the most appropriate touchpoints available
at each step of the user’s journey. See the October 12, 2006, Best Practices “Match Channel Capabilities To
Customer Goals.”
7
One of the key areas that multichannel retailers need to focus on is selling: supporting the buying process
across channels. During our research, we uncovered a best practice in this area at Circuit City. See the
December 18, 2006, Case Study “Circuit City: A Case Study In Multichannel Selling.”
8
One of the key areas that multichannel retailers need to focus on is organization and culture. During our
research, we uncovered best practices in this area at REI. See the December 18, 2006, Case Study “REI: A
Case Study In Multichannel Organization.”


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Best practices for multichannel retailing

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