Depending on who you talk to, it’s either the 20th anniversary, the 13th anniversary, or the 12th anniversary of the term ‘omnichannel.’
Omnichannel involves a seamless, personalized customer experience across all channels a consumer might touch. The concept has been, for years now, the point on the horizon that retailers have been moving towards.
But it’s still not clear if they’ll ever be able to deliver on its promise. Why is that?
Over the last two decades, we’ve seen the launch of seemingly endless social channels and digital brand experiences. Consumer behaviour and preferences have shifted along with them. In 2023, brands have far more on-and-offline consumer touchpoints to account for than at any time in history. And the complexity is only going to increase in the future.
Creating a personalized, seamless shopping experience in these conditions is much more difficult than it seems.
According to McKinsey, about 75% of consumers research and buy items in both physical stores and digital channels.
With that in mind, let’s look at the prospective sale of a television.
When a potential customer walks into a brick-and-mortar electronics store in a shopping mall, the salesperson they speak to needs to be up to speed on the customer’s shopping journey and history with the company, which might include dozens, if not hundreds, of data points across multiple departments and digital sites. That customer may have investigated their television purchase options on the company’s website, put one or two in their virtual cart, talked to a sales rep over chat, investigated the products further on third party sites, and on and on.
Suffice it to say, there are a lot of touchpoints. But it goes beyond that.
Imagine another customer at the mall that day. Let’s say they’re sitting in the food court, probably eating a slice from Sbarro. And they decide today is the day to buy that new TV. But rather than go to the physical store, they pull out their phone and start asking questions with the company’s online representative. Maybe they narrow it down to two models of TV they’re curious about.
If that same customer then goes to the physical location in the mall, the in-store salesperson they talk to should — in theory — be able to continue the conversation with the chat representative seamlessly. They should know the two models the customer is interested in, rather than starting the sales process all over again.
It’s a huge technical and collaborative challenge for retailers to make those conversations seamless.
It’s also expensive.
With such an enormous amount of consumer data being created each day, the capital, human resources, and process investments brands required to deliver a personalized customer experience are significant.
According to Incisiv’s 2023 Omnichannel Customer Service Index (via Retail Customer Experience) 91% of customer agents offer in-depth knowledge of products, but only 34% provide a personalized experience.
Some industry leaders even question the value of omnichannel altogether. In an infamous 2019 piece from Forbes, Steve Dennis wrote that:
“I think most of us can agree that if “omni-channel” ever had any real usefulness (debatable), as a concept it is now well past its expiration date… Simply stated, a great customer experience has never been about being everywhere and being all things for all people. What matters is showing up for the right customers, where it really matters, in remarkable ways.”
Dennis calls his vision for customer experience excellence ‘harmonized retail.’ As he explains, this approach is similar to a multi-channel customer experience, where brands strive to deliver great customer experiences across mobile, brick-and-mortar, and all other touchpoints, but not necessarily in the seamless, personalized way that omnichannel has always promised.
So, with all that in mind – is the omnichannel dream dead?
Not even close.
So… long live omnichannel?
Executives remain obsessed with omnichannel delivery — according to Deloitte, 96% of retail executives think customers want seamless, personalized shopping experiences.
There are some indications that a somewhat shifted vision for omnichannel may yet come to pass in the years to come. This revised version effectively says that the customer is the channel.
From management consultants Bain & Company:
“The customer will increasingly shape decisions, not the channel. That’s a key light-bulb moment for tomorrow’s retailers. Knowing how consumers behave in your store or on your website won’t be enough. Retailers will instead need a holistic understanding of how people live, work, shop, and amuse themselves, partly gained through integrating external data from social media and other sources.”
That actually seems even more ambitious than the original vision for omnichannel. Now retailers need to know about a customer’s entire life, not just their digital and shopping data. How is that even going to be possible?
The answer may lie with Web3 technologies. More from Bain:
“Retailers will have to push the boundaries of what’s possible to stand out. That means coming to grips with web3 digital innovations and applications such as blockchains and the metaverse. These promise huge advances, such as full digitalization and transparency of interactions across channels, as well as the seamless integration of payments.”
You could argue that the hype about blockchain technology is overheated. It has been regularly touted as disruptive to almost every industry under the sun, but we still haven’t seen much evidence of it changing the way we live – or shop.
Why? From JP Morgan:
“While the buzz continues to grow, limitations still exist to the widespread adoption, including technical hurdles such as scalability, data privacy, and technological standardization. Moreover, blockchain requires a need for market-wide understanding of technology application against the current existing regulatory framework. Additionally, there are technical challenges related to security. To date, security breaches have related to user and human error, rather than the core technology, but these vulnerabilities need to be addressed.”
Still, the notion of transparency and integration of data across channels could actually be transformative for retailers trying to deliver omnichannel experiences. This might be the key to unlocking real-time personalization.
Maybe not in 2023. But sometime in the future.
What’s next for omnichannel?
So, what should omnichannel aficionados watch for as 2023 unfolds? What signs or trends might indicate that seamless, personalized point on the horizon is finally growing closer?
Here are just a few foundational pieces that still haven’t fully come together:
- Deeper integration of departments that affect the overall consumer experience. That means marketing, sales, communications, and customer service, amongst others. Without effective collaboration and coordination between these functional areas, omnichannel will be challenging, if not impossible, to execute at scale.
- Growth in hyper-personalization across retail companies, even at smaller scales. Almost half of consumers say they will likely become repeat buyers after a personalized shopping experience with a retail brand. If delivering that at enterprise-level is challenging for many brands, targeted experiences can be gateways.
- Consumer data & privacy trends. So much of the omnichannel vision requires brands to understand customer behaviour at a level that a lot of people might find creepy. While many of us now give away our data and allow ourselves to be tracked thoughtlessly, consumers may start to become more judicious about who gets to know everything about them in the years to come.
Where does that leave us?
The most important takeaway here might be that there is never going to be a moment when omnichannel ‘happens.’ Omnichannel will always be in the process of happening.
This means you should get strapped in for ongoing debates about what omnichannel means and how best to deliver it. And very different consumer experiences depending on which retailer you’re shopping at.