In today’s maturing consumer markets, emphasis is shifting from straightforward sales to a more holistic approach to customer life-cycle management, with a stronger emphasis on how sales are generated and service provided all along the customer journey. Effectively managing these different marketing, sales, and service channels poses a significant challenge. Companies need new strategies, structures, processes, and tools to deliver customer value across all channels. A multi-channel, integrative customer model that delivers customer value and significant return on investment (ROI) requires both a strong understanding of customer preferences and behaviors and a robust IT architecture that supports the overarching customer relationship management (CRM) strategy. Even those organizations that have embraced the need for sophisticated multi-channel orchestration often still fall short in their execution. This “Perspective” Viewpoint offers strategic guidelines in four areas to ensure success with multi-channel orchestration.

1. Perspective Dr. Michael Peterson
Dr. Florian Gröne
Dr. Karsten Kammer
Julius Kirscheneder
Multi-Channel
Customer Management
Delighting Consumers,
Driving Efficiency

2. Contact Information
Berlin London/Munich São Paolo
Dr. Florian Gröne Dr. Michael Peterson Ivan de Souza
Principal Partner Partner
+49-30-88705-844 +44-20-7393-3310 +55-11-5501-6368
florian.groene@booz.com michael.peterson@booz.com ivan.de.souza@booz.com
Dubai Munich Sydney
Karim Sabbagh Dr. Karsten Kammer Vanessa Wallace
Partner Principal Partner
+971-4-390-0260 +49-89-54525-558 +61-2-9321-1906
karim.sabbagh@booz.com karsten.kammer@booz.com vanessa.wallace@booz.com
Frankfurt Julius Kirscheneder
Olaf Acker Senior Associate
Partner +49-89-54525-576
+49-69-97167-453 julius.kirscheneder@booz.com
olaf.acker@booz.com
New York
Hong Kong Christopher Vollmer
Dr. Edward C. Tse Partner
Partner +1-212-551-6794
+852-3650-6100 christopher.vollmer@booz.com
edward.tse@booz.com
This Perspective is one in a series of four articles written to accompany The Four-Pillars of Profit-Driven Marketing, a book by
Booz & Company partners Leslie H. Moeller and Edward C. Landry.
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3. EXECUTIVE In today’s maturing consumer markets, emphasis is shifting
from straightforward sales to a more holistic approach to
SUMMARY
customer life-cycle management, with a stronger emphasis
on how sales are generated and service provided all along
the customer journey. Effectively managing these different
marketing, sales, and service channels poses a significant
challenge. Companies need new strategies, structures,
processes, and tools to deliver customer value across all
channels. A multi-channel, integrative customer model that
delivers customer value and significant return on investment
(ROI) requires both a strong understanding of customer
preferences and behaviors and a robust IT architecture that
supports the overarching customer relationship management
(CRM) strategy. Even those organizations that have embraced
the need for sophisticated multi-channel orchestration often
still fall short in their execution.
We offer strategic guidelines in four the company or to find store locations
areas to ensure success with multi- or telephone numbers.
channel orchestration. First, mar-
keting operations need to explicitly Third, companies need to build an
define a channel strategy with respect IT foundation that underpins their
to customer segmentation, the channel CRM strategy. This CRM IT archi-
journey (how and where sales and tecture needs to enable the transfor-
service are delivered), and targeted mation from vertical, single-channel
incentives that reward multi-channel operations to true horizontal business
sales and service support. processes that deliver cross-channel
integration.
Second, marketers need to optimize
the online channel, which is fast Fourth, marketers can learn by exam-
becoming the primary platform for ple. Companies across the consumer
accessing product and service infor- products spectrum are experimenting
mation, and completing an ever- with the multi-channel experience.
growing number of transactions. It Marketers should broadly consider
is also the entry hub to other touch best practices that they could adapt to
points; customers go online to contact their own industry.
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4. Key Highlights
THE NEW But in an era when customers are
increasingly well-informed and
• Multi-channel orchestration of
customer processes delivers
MULTI-CHANNEL communications savvy, this channel-
a seamless experience across CUSTOMER by-channel approach is not enough:
Today, businesses need a multi-
all interaction points along the
customer journey, adding value
INTERACTION channel strategy that offers consumers
and maximizing ROI by optimizing MODEL a seamless experience across all touch
points, or they’ll miss an opportunity
sales and service opportunities.
for customer value generation. A
• Building and applying in-depth recent survey found that in Germany
customer understanding across alone, businesses wasted more than
channels allows companies to €1 billion (US$1.5 billion) a year in
match offers, messages, and unproductive marketing—often due to
communication channels to Today’s marketing executives under- a narrow focus on single channels.
customer preferences, and to stand the need to develop new
align interaction costs with customer interaction strategies, When effectively executed, a multi-
customer value. structures, processes, and tools—what channel approach will smooth the
Booz & Company defines as the four relationship between customer and
• To master multi-channel pillars of profit-driven marketing. company and give management the
orchestration, companies need They are working hard to apply and capability to leverage all customer
a defined channel strategy and a optimize these pillars within their touch points to boost revenues,
robust IT architecture to support individual customer channels. reinforce customer satisfaction, and
the overall customer relationship streamline sales and service costs.
strategy and deliver customer value
at each touch point.
•The online channel is increasingly
becoming the hub for a successful
multi-channel marketing strategy.
Businesses must reassess their
current online strategy with this
in mind.
In Germany alone, businesses
wasted more than €1 billion (US$1.5
billion) a year in unproductive
marketing—often due to a narrow
focus on single channels.
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5. FOLLOW Cross-channel customer management
starts with better customer under-
customers initially indicate interest,
through the time they spend gathering
THE BUYING standing. The more data points there information, to when they complete a
JOURNEY are, the more opportunities marketing
has to tailor a sales pitch and service
transaction and seek post-sale support
(see Exhibit 1).
proposition to delight the customer.
This means companies need to com- The process that leads to a purchase
pile and maintain a comprehensive usually combines multiple channels.
customer profile along the buying Customers should receive consistent
journey, starting from the moment information and offers across all
Exhibit 1
The Customer Buying Journey
Compare/Select Compare/Select
Locate Sellers Price Level Product Purchase Delivery
Visit
shops to Carry
Purchase
compare home
and at shop
Online select
Techno- Online Home
comparison/
Advanced shopping delivery
selection
Compare
and Purchase Delivery at
select online nearest shop
online
Compare
Visit online
shops
Visit
Visit shop for Purchase Carry
Traditional shops to
information at shop home
compare
Call
customer Call for
service information
Source: Booz & Company
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6. channels. In a true multi-channel about returning a product and then ments. Clearly, cost-per-contact varies
environment, marketing departments drop off that product at the nearest across channels (see Exhibit 2).
know customer preferences, interests, retail location with a store clerk who
and interaction history, whether cus- has full visibility into the history of Interconnected marketing, sales, and
tomers are shopping in a store, calling that customer’s previous interactions. service touch points will invariably
the company, or visiting its website. produce positive customer experi-
Developing multi-channel capa- ences; customers will feel valued
Post-sale service should similarly offer bilities also allows marketers to more and understood and will be more
seamless interactions via the custom- efficiently steer customer interaction likely to remain loyal and to respond
er’s preferred interaction platform. For costs—from acquisition to service to positively to cross-selling or up-selling
example, a customer should be able to retention—based on the value to the approaches.
speak with a call center representative company of different customer seg-
Exhibit 2
Cost and Value Creation Potential of Service Channels
High
Retail shops
In-house call center
Potential for Website
Cross-/ Outsourced call center
Up-Selling
per Channel Offshore call center
Interactive voice response Written
Low
0 2 4 6 8 10 12
Cost per Service Channel
(euros per contact)
Source: Booz & Company
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7. BUILDING Marketers can follow a four-step
process to successfully integrate and
sales advice may warrant an extra
outbound phone call or personalized
MULTI-CHANNEL orchestrate all customer channels. written invitation to a product launch
CAPABILITY 1. Define the Multi-Channel Strategy
at the nearest retail outlet. Staff at any
touch point should have easy access to
The first step to optimizing a multi- this knowledge about their customers,
channel strategy is to explicitly define coupled with the tools necessary to
three key components: delight individual customers with
any communication. This knowledge
• Customer segmentation should similarly be embedded in
• The “channel journey” electronic platforms that serve
• Multi-channel incentive programs customers, whether online, in stores,
or via interactive voice response
Marketers need to know their systems in call centers.
customers, including their preferences
and spend potential, in order to Second, companies need a detailed
tailor a differentiated multi-channel understanding of the “channel
experience for each customer journey” for each customer segment
segment. A “digital native” teenager in order to identify what works most
with a limited budget may be most effectively (for generating sales and
efficiently served by an online-only, serving the customer) and efficiently
no-touch channel, while a middle- (for controlling interaction costs).
aged, old-school shopper with deeper Pinpointing the most appropriate
pockets and a preference for personal channel for each segment helps reduce
Companies need a detailed
understanding of the “channel
journey” for each customer segment
in order to identify what works most
effectively and efficiently.
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8. costs, speed up the sales cycle, 2. Optimize Online that starts as an in-store promotion—
and promote retention. Recent The online channel has matured collecting a coupon for an online
Booz & Company research shows into much more than simply the competition—becomes a multi-
that when customers are offered e-commerce website. A company’s channel experience when customers
product and service options they want online presence is not just another register online, and it affords
via the channel they prefer, they are stand-alone channel or brand booster marketing departments a valuable
more likely to be repeat buyers and platform: It is the linchpin of any opportunity to capture and use key
less likely to perceive the interaction multi-channel operation. The online customer data.
as intrusive. channel is the sales and service hub,
the tool that collects and disseminates 3. Build an IT Foundation
Third, senior management needs the information that enables and For most companies, building a
to define a clear incentive program facilitates the customer experience highly automated, high-performance
with targets and rewards that reflect across all other channels. It acts as CRM IT architecture that integrates
and support the company’s channel an umbrella that connects retail, all customer touch points will be
orchestration objectives. Only then e-commerce, search engine marketing, an evolutionary process, given the
will staff deliver customer value using and search engine optimization. presence of already functioning single-
an optimized channel mix, while It funnels customers from social channel operations that typically
management will have a lever to steer networking sites to sales and service consist of inflexible, historically
the customer’s journey. touch points on and off the Web. grown, more or less hardwired vertical
silos.
Clearly, there are trade-offs. A multi- Online channel capabilities can close
channel solution will involve conflicts gaps in the customer experience and The remedy lies not in adding yet
and channel cannibalization. Some facilitate sophisticated customer another channel tool but in developing
business areas will lose out; the key is segmentation based on clickstream an open and flexible IT backbone that
identifying the channels with the best transparency and rich Web analytics. facilitates information flow across
ROI to ensure a positive net effect. For instance, a marketing strategy channels. Investment in business
Online channel capabilities can
close gaps in the customer experience
and facilitate sophisticated
customer segmentation.
6 Booz & Company

9. process management and integration can learn much from looking at of new opportunities to cross-sell and
technology may be painful in the strategies being employed in industries up-sell to those customers.
short term and yield few visible “same beyond their own. From banking and
year” benefits. But if multi-channel insurance to telecommunications, Much can be learned from the
capability is the goal, such a backbone travel, and automotive, companies are nimblest airlines as well. Some have
is key to ensuring that the business exploring the opportunities that come mastered cross-channel integration
rules that govern customer- and from creating a cutting-edge, cross- to the point where a call center agent
segment-specific channel experiences channel customer experience. can retrieve and complete a booking
can be applied and extended that a customer started online but
seamlessly across an ever-growing Successful retailers are leveraging abandoned (for whatever reason) and
range of customer touch points. Only multiple touch points simultaneously then called for personalized support
then can marketing, sales, and service to offer customers more choices along to finish.
organizations use predictive models the buying journey. For example, one
or “next best activity” engines, which mobile operator installed interactive These and other best practices can
provide sales and service agents with terminals in its retail outlets so that be found in many retail industries,
analytically grounded suggestions of customers can preorder products and from banking, insurance, and travel,
what will meet individual consumer services. In this scenario, in-store to fashion, furniture, and interior
needs, to most effectively tailor offers personnel help build online customer design. Identifying and applying them
and messages. profiles. Over time, shifting customers can help businesses avoid unnecessary
to online channels may cannibalize duplication of efforts. Business
4. Learn by Example in-store sales, but it will help reduce ambitions should not be held back by
When it comes to making the most of overall customer interaction costs a not-invented-here bias.
multichannel integration, companies (since online interactions are less
need not reinvent the wheel and expensive) while providing a wealth
Successful retailers are leveraging
multiple touch points simultaneously
to offer customers more choices along
the buying journey.
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10. MAXIMIZING Customers today have more buying
and service channel choices than ever
choice and better service. Businesses
reduce the cost of sales by accurate,
ROI before. Linking and leveraging these targeted marketing that has greater
customer touch points not only makes up- and cross-selling potential, and
sense but is fast becoming a strategic they can streamline cost-to-serve by
necessity. This requires a coordinated better mapping different channels to
effort among marketing, sales, service, customer segments.
and IT executives, first to define who
the customers are, second to collect With the results feeding directly to the
information about them across bottom line, the question should be
all channels, and third to perform how quickly a company can roll out
the analytics to match relevant multi-channel customer management,
products and services to customers’ not whether it is necessary.
needs. The customer benefits from
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11. Resources
“The E-Commerce Imperative for Traditional Retailers: Letting Go “Performance-Based Advertising Models: Extending the Principles
of Old Conventions,” by Harald Dutzler, Coen de Vuijst, Robbert of Profit-Driven Marketing,” by Michael Peterson, Florian Gröne,
Huisman, and Michal Bohanes (Booz & Company, 2011). www. Karsten Kammer, and Julius Kirscheneder (Booz & Company,
booz.com/media/uploads/BoozCo-E-Commerce-Imperative- 2010). www.booz.com/media/uploads/Performance_Based_
Traditional-Retailers.pdf Advertising_Models.pdf
The Four Pillars of Profit-Driven Marketing: How to Maximize “Shoppers on the Go: Winning Strategies in Mobile Commerce,”
Creativity, Profitability, and ROI, by Leslie H. Moeller and by Matt Anderson, Stefan Eikelmann, Fabian Seelbach, and
Edward C. Landry, with Theodore Kinni (McGraw-Hill, 2009). Nick Buckner (Booz & Company, 2010). www.booz.com/media/
uploads/BoozCo-Shopper-Strategies-Mobile-Commerce.pdf
“Online Customers, Digital Marketing: The CMO–CIO
Connection,” by Michael Peterson, Volkmar Koch, Florian Gröne, “Social CRM: How Companies Can Link into the Social Web of
and Kiet Vo (Booz & Company, 2009). www.booz.com/media/ Consumers,” by Olaf Acker, Florian Gröne, Rami Yazbek, and
uploads/Online_Customer_Digital_Marketing.pdf Fares Akkad (Booz & Company, 2010). www.booz.com/media/
uploads/BoozCo-Social-CRM.pdf
About the Authors
Dr. Michael Peterson is a Dr. Karsten Kammer is a
partner with Booz & Company principal with Booz & Company
in London and Munich and a in Munich. He primarily works
member of the communications, with telecommunications and
media, and technology practice. high-tech clients. His focus areas
He focuses on mobile markets include sales effectiveness,
and convergence services growth, and innovation, as well
across Europe. His areas of as organizational design.
expertise include strategy
development, specifically related Julius Kirscheneder is a
to marketing, customer service, senior associate with
and sales, with a focus on online Booz & Company in Munich
and new Internet business and a member of the
models. communications, media,
and technology practice. He
Dr. Florian Gröne is a principal supports mobile and Internet-
with Booz & Company in Berlin. related service providers in their
He supports telecommunications strategic road map and focuses
companies and information on customer-centric functions
and communications from product innovation to sales
technology (ICT) service and service.
providers in developing their
market positioning strategies
and improving IT operations
efficiency. He also works on
CRM strategy and architecture
across industries.
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