To begin with, it's important to define the four main types of distribution strategies.
A single distribution channel:
Monochannel
Multiple distribution channels:
Multichannel
Cross-channel
Omnichannel
Those last three are what we are going to be focusing on, so let's delve into more detail on them:
Identify the Characteristics of a Multichannel Strategy
Multichannel is a distribution strategy using multiple physical and/or digital channels.
A multichannel strategy helps businesses take advantage of these different distribution channels. These channels may operate independently of one another for several reasons:
For example, you might have different regions or customer profiles you want to target.
Or you might want to keep them separate to prevent customers from switching to channels that are more costly for the company.
Advantages | Disadvantages |
You can maintain a simple and cost-effective organizational structure, since each channel is managed autonomously. | In general, each distribution channel targets only one specific segment of consumers. |
The channels act as silos, each independent from the others, which helps avoid cannibalization. | In a world where consumers choose how they want to consume, it no longer makes sense to keep channels separate from each other. |
Multichannel isn’t a new concept. When supermarkets used to print sales catalogs, they were actually practicing multichannel marketing! However, nowadays, multichannel marketing looks slightly different.
One of the companies that do multichannel customer experience very well is Apple. A while ago, they realized that most of their sales were coming from their website or third-party sellers, but people weren’t really purchasing anything in-store. So they’ve completely changed their in-store customer experience and started focusing it more on testing out products and technical support.
Understand the Cross-Channel Strategy
Cross-channel is the logical response to the limitations of the multichannel model. Consumers now want each channel to offer them a unique experience that's specially adapted to their buying habits.
Click and collect (or curbside pickup) is a great example of cross-channel strategy. It uses the features of one channel, e-commerce, to boost performance in another channel, in-store purchasing.
Your customer bought a speaker online, but your store has some advantages over the website—you can offer your customers a "real-life" experience. For instance, your sales associate could play the customer music on their brand-new speaker, introduce them to a new artist, and most importantly, give them advice on how to make the most of their new equipment.
You can also give your customer a memorable experience. As soon as the customer enters your store, your sales associate asks for their first and last name and opens their customer file on a tablet. Seeing that they've been a customer for six years, the sales associate offers the customer a 6% discount. This coupon is then sent automatically to the customer's phone.
Not too complicated to pull off, and the result is one very impressed customer!
You can see how this example shows the benefit of having multiple channels that interact with each other, right?
The cross-channel strategy aims to create a unique customer experience on every channel the customer uses during the buying process.
So it's important to keep the brand image, the product, and the customer relationship in focus when developing a commercial strategy.
The company's message should be consistent across all media and sales channels.
Advantages | Disadvantages |
Gives the customer journey a better flow. | Some channels may compete with each other—mobile app versus website, for example. |
Increases turnover: Multiple studies have shown that a cross-channel consumer is more profitable (in volume and value) than the average consumer, since a cross-channel consumer consumes 30% more on average than a single-channel customer. | Requires more human and financial resources to implement and manage. |
Example of a Successful Cross-Channel Strategy: Starbucks
Starbucks is one of the top cross-channel marketing brands out there. Starbucks’ integrated loyalty program lets customers fund and redeem their rewards cards not only in-store, but also across mobile, web and in-app. Any changes customers make to their accounts also gets updated on all channels. And of course, to get their coffee all customers, no matter which channel they use to order, have to go into their local Starbucks to pick up their coffee.
On average, Starbucks Rewards members visit a shop once a week, and are five times more likely to visit a Starbucks branch every day.
Starbucks’ Rewards program not only benefits customer loyalty but also collects valuable customer information, which the company can use to improve their customer experience.
This is a concrete example of the “customer-centric” approach. Starbucks’ cross-channel strategy provided a new way of putting the customer at the center of the company’s business. We’ll discuss that concept in more detail later on in the course.
Discover the Omnichannel Strategy
The term first appeared in 2003, when Best Buy, the big-box electronics store, started offering its customers an in-store and online experience.
Omnichannel is the perfect strategy for improving your customer relations. Thanks to the increasing availability of these powerful new technologies, along with our ability to collect and process massive quantities of data in real time, you can develop your distribution strategy around just one channel: your customer.
That way, no matter where your customer is, what they want or when they want it, you'll always have an experience to offer them.
Do your customers like to buy things from their phones? Or would they rather go to the store and pick up something they added to their cart on their tablet the night before?
They're both totally doable! Plus, when they come into the store, the salesperson could offer to show them a new, augmented-reality experience.
In this strategy, the customer is the channel, and your company adapts to their preferences and buying habits. An omnichannel strategy means having distribution channels that complement one another, thus eliminating silos. It gives you a 360-degree view of the customer and lets you offer them a unique buying experience, one that's completely immersed in your brand's DNA.
With the omnichannel strategy, your customer touchpoints are multiplied, so you'll also improve your data collection. You'll get to know your customer base that much better, and then you can leverage that information to optimize your customer journey. It's a virtuous circle!
Another goal of the omnichannel strategy is to get your customers to buy more, more often.
Advantages | Disadvantages |
Offers two-way interaction, since the company can communicate with its customers and vice versa. | Implementing a digital transformation and omnichannel strategy can be a long and difficult process, since it impacts all areas of the company. |
Provides a better customer experience. | May generate strong competition between channels. |
Sell more and more often. |
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Examples of Omnichannel Strategies
Let's take a look at two notable examples of successful omnichannel strategy: Netflix and DIOR.
First, Netflix.
I'm guessing you have personally experienced Netflix's omnichannel approach.
The TV and movie streaming platform owes its incredible success to the synchronized navigation it offers across all distribution channels.
Have you ever started watching a film or series on your phone, then continued on another device (such as your computer, tablet or TV), picking up exactly where you left off?
This omnichannel approach provides users with a smooth experience and allows Netflix to collect vast amounts of information on its users, their preferences, and more. These data can then be used to suggest personalized content to users via their personal account or email.
With this approach, Netflix lets the user stay in control over the platform throughout the day and across all its digital channels.
Another example of a brand with a successful omnichannel strategy: DIOR.
DIOR knows how tricky it is to buy makeup without trying it first. That's the biggest roadblock for customers making online purchases, since they won't know if they've made the right choice until they receive the product.
So, DIOR developed an app to remedy the problem. DIOR Makeup lets customers upload photos of themselves so they can see a virtual rendering of how the makeup looks on them before they buy.
The app also lets users share their favorite products with friends and create wish lists for future purchases from the website or store.
The DIOR website also offers virtual makeup try-on.
And just like that, DIOR made the "web-to-store" customer experience a reality. 😉
Let’s Recap!
The omnichannel strategy offers your customers a better experience by making the buying journey smoother and more memorable.
Each type of strategy offers a different experience to customers:
In the multichannel strategy, channels operate in silos, independently of one another.
The cross-channel strategy makes the customer journey flow better and yields increased turnover compared to the multichannel strategy.
The omnichannel strategy is the best-performing strategy used today.
The omnichannel strategy is the best at meeting customer needs and expectations. In this strategy, the customer becomes the channel, and the company adapts to their buying habits and preferences.
Now that you know more about different distribution strategies, you should be able to identify which strategy your own company is currently using. In the next chapter, we're going to take a closer look at today's consumers.
