Ways to Evaluate Your Cross-Channel Customer Base
Dear Dr. pROfIt: My CEO thinks we're failing with our multichannel initiatives. We recently ran a report that showed that 15 percent of last year’s e-commerce buyers shopped in our stores this year, but only 5 percent of last year’s store customers have shopped with us online this year. Our CEO wants to “ramp up” store to e-commerce conversion. Are we truly failing?
Dr. pROfIt: Maybe. All cross-channel retailers could do a better job at encouraging store customers to shop online. Here’s the problem: Retail is a three-dimensional experience, whereas e-commerce is a two-dimensional process. Consumers shop in stores as part of a sensory and social experience. When you shop your favorite retail store, you have the opportunity to hold merchandise, try merchandise on, ask a sales associate questions about the merchandise and so on. You also have the chance to partake in other activities, like visiting the food court.
With e-commerce, those elements of shopping are stripped out, replaced by tools like comparison shopping engines and reviews. In total, it's fair to say that e-commerce loses “dimensionality” in this trade-off. Brick-and-mortar stores have more physical and sensory elements to the shopping experience than does e-commerce.
As a result, retailers typically will see that they have more e-commerce customers willing to shop in-store than retail store customers who are willing to shop online. I've found in many of my analysis projects that hard-core retail audiences almost always have a disdain for shopping online.
Consider evaluating your cross-channel initiatives among an audience that lives 15 miles to 35 miles from your closest brick-and-mortar store. I've found that customers within this range will shop both in-store and online. Customers living within five miles to 10 miles of a store tend to disproportionately shop in stores, whereas customers living 50 or more miles from a store tend to skew disproportionately to e-commerce.
The 15 mile to 35 mile range segment is likely going to prove to be your multichannel sweet spot. Evaluate the performance of your cross-channel marketing initiatives within this store distance band.