Scenario 1
It is 3:00 PM, two weeks before Christmas, sales for the year are at their peak, your stores are packed with shoppers, sales from your website are up, and all is right with the world. Then your new VP of Sales logs into the corporate vertical database and runs a report that tries to pull sales, cost, product descriptions, and fifteen other fields, for every sale, from every channel, for the last three years. A report of this breadth usually takes fifteen minutes to return data...when you run it in the middle of the night...in April. The database slows to a crawl, your trickle feed of data from your stores stops, the website refuses to show products to potential customers, every minute of down time equates to lost dollars in sales. You know, somewhere, there has to be a better way to get decision makers the information they need.

Scenario 2
Now it's March, you have a different new VP of Sales, you survived the Christmas debacle, and you are planning your strategy for the summer season. Last summer you printed and mailed 500,000 catalogs for your summer campaign. You are not really sure how effective those mailings were. You do not have a good idea of how many purchases were direct results of a catalog mailing. You would like to narrow your target audience, you wish you could send more catalogs to people likely to buy, and fewer catalogs to people that have no interest in your products. You know that somewhere there has to be a way to maximize the effect of your campaigns while minimizing the cost spent on mailings and printings.

The previous hypothetical (or are they?) problems are closely related. Data lies at the core of both situations. Data is being generated today at greater rates than ever before in the history of commerce. Your retail store point-of-sale systems create data, your eCommerce site creates data, your call center creates data, and your ERP software system creates data. So, how do you analyze all this disparate data? Well, disc space is cheap if you just keep all your data stored, backed up, and available, but getting the right information to the right people at the right time in a meaningful format without impacting your transaction processing systems will be a challenge.

If you are struggling with how to systematically provide insightful analytics to your users and management team based on the transactional information in your current systems, it's time for a business intelligence system. However; make sure you do your homework. Many business intelligence systems available today are simply sales reporting tools. A true business intelligence solution should deliver a full suite of marketing analytics including:

1. Historical Sales Analysis
2. Customer Profiling
3. Customer Retention
4. RFM (Recency, Frequency and Monetary) Scoring
5. Inventory Movement
6. Unique Person Identification
7. Direct Marketing List Pull
8. Campaign Matchback
9. Customer Lifetime Value
10. Quick Implementation

And, of course, it should be cost effective.

Why should retailers care about the seamless integration of data between distribution channels? The answer: sales, retention and, ultimately, profitability. Multi-channel customers are excellent targets for up-sell and cross-sell opportunities and are likely to have a high lifetime customer value (LTV).

Much of the growth in multi-channel retailing has come from the use of the web as a marketing channel. An increase in online spending has created a host of data management issues. Without the ability to track purchases and to understand customer buying behavior, marketing efforts can be misdirected and opportunities missed. Many retailers are still using spreadsheets other non-automated methods to track cross-channel purchasing patterns and make important decisions regarding the allocation of marketing dollars.

Many catalog retailers today cannot answer key questions about their business such as what percent of online spending came from catalog sales and which promotional efforts are most profitable. Data integration allows the retailer to analyze the true triggers for purchase and to make an intelligent allocation of marketing dollars across channels. The solution need not be expensive, but the organization must be committed to understanding its customer's purchasing patterns.

A typical catalog retailer is faced with a number of questions. Is the customer purchasing on the web because of a catalog mailing, or is web investment driving purchase patterns? Should investment be made in search engine optimization and web site design versus catalog design and mailing? Which are the best lists to use in promotional efforts, and how can valuable multi-channel shoppers be identified? Are specific promotions within particular channels effective?

Multi-Channel Expectations
Currently, a multi-channel shopper is often the most valuable customer to the company and is most familiar with the company and its products and services. Not only are multi-channel customers most profitable, but customers have come to expect a certain level of seamless purchase and delivery options across channels. The multi-channel shopper expects that all purchases will be counted toward his or her stock and trade with the firm, not just purchases made in one particular channel. Customers expect to be able to purchase in one channel, and return the item in another and be treated the same no matter where the product was purchased. It is no longer acceptable to treat a customer as a new customer because they purchased through a new channel. Customers also want to be able to choose how to interact with the company; inbound call-center activity continues to be brisk because many customers still prefer that purchase channel.

How are retailers expected to meet these particular challenges? Clearly, the ability to service the multi-channel customer and target marketing efforts to them profitably is facilitated through strong data management practices and software that allows for easy manipulation of the underlying customer data.

Next Steps
There are several ways to determine your organization's readiness to operate in this complex and challenging environment. One suggestion is to simply take the time to go through your own company's shopping experience by acting as a customer, or seek the assistance of an independent party to benchmark against competitors.

Multi-Channel Retailing is a term used to describe a retailing strategy that utilizes more than one distinct method of interacting with a customer. Today, many retailers are "multi-channel" but have not yet evolved to the point where their organizational structure, operations, and systems have "merged" together to create efficiencies and key leverage opportunities. A sound merged channel strategy is the key to capitalizing on the internal and external opportunities of multi-channel retailing.

Regardless of multi-channel or merged channel, integration is key, and integration priorities are changing as retailers make the transition from multi-channel to merged channels. The two largest barriers to integrated merged channel retailing is 1) an organizational structure that promotes separation between the channels and 2) non integrated IT systems that prevent the movement of information across channels. There just is simply no way that you can have something like 8 different representations of a SKU and be able operate effectively unless you have spent a lot of time and money using what amounts to programming duct tape to hold it all together.

In order to make the integration a seamless experience, you need a flexible, scalable retail enterprise software solution. Any part of a system that transacts on the customer or SKU level is a good candidate for integration across retail channels. More specifically, things like customer information, customer purchase history, inventory availability, pricing, and item metadata should really be managed in one place.  The concept that escapes many vendors in the retail software industry is that you cannot simply take two disparate software applications under one corporate umbrella and call it integrated; it requires a whole rethinking of core processes that are shared across channels.

Systems-wise, the application footprint of most retailers is fairly typical with a patchwork of non-integrated systems that run on a variety of hardware, operating systems, and database management systems. Since the packaged retail software industry did not offer very many good integrated options in the past, there is still a significant amount of home-grown applications that while seem to "fit", are very people intensive and inflexible. Any mid-sized multi-channel retailer should be looking at any systems improvement initiatives with an eye out for the corporate IT application software platform strategy.

Good retailing is the art of getting the right product in front of the right person at the right price. No matter how much we try to "computerize" everything, it is the truly gifted merchants that have an instinctive feel for who their customers are and what they really want in the context of each channel as well as cross-channel. Having integrated processes, organizational structures, and integrated retail IT systems enable rather than prevent good execution for these merchants, building critical brand value and responsiveness in a frequently changing consumer marketplace. After all, the only thing you can count on in the future is your brand and your ability to quickly change. Everything else is just the past...

Conversational Marketing or "interactive marketing" creates possibilities for up-selling and cross-selling, maximized revenues and profits and loyal customers. That's why all aspects of the organization must be involved in personalization and customization as viable business strategy choices. Top management must be involved and give support to the organization to accomplish these tasks. Selling products and services through multiple channels offers a number of "touch points" where information can be gathered from customers or potential customers. Most people in marketing clearly understand the importance of using this information to personalize communications with customers and, perhaps, even to customize products and offerings for them.

The challenge retailers continually face is how to glean all the valuable information from shoppers successfully without their feeling stalked or needlessly bothered.

Bad Reaction
The clinical term for the practice that causes people to withdraw is "psychological reactance." This reaction could help explain why some retailers will not actively engage in interactive or conversational marketing. Retailers are often unable to differentiate between irrelevant and useful information. This prevents multichannel retailers from fulfilling the promise of an interactive marketing world. They view this as too tight a rope to walk.

How can a retailer successfully get past this clinical reaction? As a technique, conversational marketing is a proxy for an actual discussion about what customers want and what you are able to offer to meet their needs. To get there, retailers must know just enough about their customers to make friendly suggestions about what else the buyer may like to buy without crossing the line where an interaction gets so personal that it makes the shopper uncomfortable.

Getting Personal
Personalization will evolve as marketing moves from mass marketing to conversational marketing, a concept that is not to be confused with Internet marketing. The Internet is a technology that facilitates customer interaction. Interactive or conversational marketing is the ability to take what the customer says, remember that information, and then give it back to the customer in a way that the customer finds meaningful and is then likely to respond.

Personalization is the ability to use unique customer information to communicate with the customer. Conversational marketing requires a customer database and the ability to access this database across all communications channels. To monitor the success of these programs, marketers must be able to access customer information across sales channels in order to get a complete view of the potential buyer before executing marketing programs.

Before a retailer can even consider establishing healthy and productive personal communications with customers, several issues must be addressed. A customer analysis is the first step before building a personalization and customization program. A retailer needs to determine if the customer base can be segmented in such a way as to make personalization and customization viable strategies for the company.

That Special Feeling
Conversational marketing and personalization, when done correctly, makes the shopper feel special. People like being taken care of in this manner. You provide this type of service and people will start having conversations about you. Conversational Marketing creates possibilities for up-selling and cross-selling, maximized revenues and profits and loyal customers. That's why all aspects of the organization must be involved in personalization and customization as viable business strategy choices. Top management must be involved and give support to the organization to accomplish these tasks.