Multichannel Marketing: Adapt With Multichannel’s Evolution

Reflecting on his past experiences as a database marketing executive with the Lands’ End, Eddie Bauer and Nordstrom catalogs, Kevin Hillstrom, president of Seattle-based MineThatData, discussed ways he learned to adapt company business models to maximize multiple channels during a presentation at last week’s NEMOA conference, held in Cambridge, Mass.

While with Nordstrom and Eddie Bauer, “we brought their channels together to come up with a single solution,” he said, noting how Nordstom “basically ended” the old business model of having the catalog function as a viable sales contributor. Instead, it would serve to promote store and Web traffic.

“We saw customers were behaving differently, so we killed the catalog business” at Nordstrom, he said. “We had our online and store customers, which were driving the business, so we managed that transition. We looked at how customers were behaving with other marketers, such as Amazon.com.”

This is indicative of how the catalog/multichannel business model has changed over the past 20 years. “At Lands’ End,” Hillstrom said, reflecting on his 1990-1995 tenure there, “it was catalog/mail order. I had control over it. But things shifted over time, taking control away from the executive team. We went more into database marketing, customer relationship management and compiled lists. I got to know more about the business and executives had to trust I knew what I was doing.”

Moving on to Eddie Bauer during the early evolution evolution of the Web from 1995-2000, “I had a real sense of control,” he said. “I knew how big that business would be and I was driving it.”

Handing Off Control to 3d Party

After serving as vice president of database marketing at Nordstrom from 2001 until just a few weeks ago, Hillstrom left to start MineThatData. He reflected on the position he’s now in to see how the catalog/multichannel business has transformed itself. “Today, as the business shifts from the catalog to online, Google has more to do with how your business is going to be,” he said. “You’re handling control of your business to a third party now. And you have less control over your business. More pieces are being offloaded to these fractionalized areas.”

He offered a number of pointers to attendees about what’s ahead for the business. “About six or seven years from now,” he said, “the Internet will be in its ‘second life,’ where the experience will be more about entertainment and information. For now, it’s difficult when you’re trying to absorb postal increases while investing in your site to see where that’s heading. Things like online marketing and search will become more old-school techniques and there will be new tools that’ll shape how your customers interact with you. Google will inevitably have a competitor and that’ll change search.”

Today, the key missing piece in the multichannel puzzle is a framework on how to make sense of this. And what will be necessary for catalogers and other marketers is what he terms multichannel forensics, an analytical study of how customers interact with products, brands and channels.

Hillstrom defines multichannel forensics as a means of learning whether a retention or acquisition strategy is needed. The process classifies customer behavior into four migration modes: isolation, equilibrium, transfer and oscillation. This way, marketers are able to find out whether a product, brand or channel can grow independent of others or whether it fuels the growth of other products, brands or channels. Or even still, marketers can determine whether a product is the beneficiary of these other factors. For more information on multichannel forensics, go to www.minethatdata.com .