Where are the omnichannel metrics?

Discussion
Photo: RetailWire
Nov 14, 2016
Chris Petersen, PhD.

Through a special arrangement, presented here for discussion is a summary of a current article from the IMS Results Count blog.

Traditionally, retailers have based their core metrics on a legacy of “stores selling things.” Yet over a very short period of time, the definition of “sale” has become very muddy and confused.

If a customer buys online and collects in store, is that an e-commerce or store sale? If a customer searches online but finds a product in-store, or visits the store but buys on their mobile phone and has it shipped home, how is that measured? In most cases the retailers’ systems and the third-party sources only report online vs. store sales — not the purchase dynamics or points of receipt.

In today’s omnichannel marketplace, the customer is now the new POS. They determine where they purchase, how they pay and where they collect. Retailer systems and metrics were not designed to track “flow” to the consumer. Traditional POS systems are no longer enough when trends shift to “click and collect.”

Consumers are choosing and driving their own experience and purchase. Increasingly, retailers should be able to answer the following business questions:

  1. How many consumers search your business on their mobile device?
  2. How many mobile searches ultimately result in sales for your stores/online?
  3. How many customers search your online website from within your stores?
  4. What percent purchase online and collect in-store or at a locker?
  5. What percent of customers purchase at a store but choose to have it delivered?
  6. How many more customers purchase with free or one-day delivery?
  7. Are omnichannel customers more or less profitable? By how much?

The “store” has evolved to become a shopping point, a point of customer experience, and a distribution point. To be able to strategically leverage the omnichannel consumer experience to profitably grow sales, retailers need to know much more than the percent of final tickets sold online versus in stores.

DISCUSSION QUESTIONS: Where are traditional retail metrics falling short in the age of omnichannel retailing? How many of the omnichannel metrics recommended by the author are accessible? What other questions and metrics need to be probed?

Braintrust
"The keys to measuring effectiveness in today's omnichannel world are conversion rates."
"I’m keenly interested in the profitability per customer and the cost of acquisition/retention in a new omnichannel environment."
"The unspoken part of this equation is this: as bricks’ sales transactions move online, a LOT of stores are going to close."

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15 Comments on "Where are the omnichannel metrics?"

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Lyle Bunn (Ph.D. Hon)
BrainTrust

Assessing the impact of a message and attributing value has become the answer to the question, what do you want the statics to say? The perennial measures of message reach (total audience) and frequency (exposures) has been the basis of marketing aimed at gaining retail traffic on the assumption that conversion naturally follows. But traffic has many destinations on the path to purchase and conversion has many messaging and engagement influences. All these use whatever statistics serve their interest. All roads lead to purchase. So the most important statistic is share of consumer spending.

Herb Sorensen
BrainTrust

I like this statement very much: “The perennial measures of message reach (total audience) and frequency (exposures) has been the basis of marketing aimed at gaining retail traffic on the assumption that conversion naturally follows.”

That is exactly the foundation of what MUST happen. Unfortunately, people attempting to contribute to the problem are squeezing their thinking into 100-year-old retail-ese: merchant-warehousemen relying on unpaid stock-pickers (AKA shoppers) to pick their own stock and bring it to checkout for payment. After many trillions of dollars of business very successfully conducted in this way, it is difficult to actually conform your thinking to a new paradigm.

Hammer, hammer, hammer the old paradigm into the new reality, and it simply won’t fit! That doesn’t mean that brick-and-mortar retailing is doomed, even if a lot of brick-and-mortar RETAILERS are doomed. As I have said many times, “As long as people are living in brick-and-mortar houses, the WILL be shopping in brick-and-mortar stores!”

Charles Dimov
BrainTrust

Interesting perspective and I do agree that ultimately all roads lead to the purchase. However, it is important for retailers to treat the omnichannel pursuit like they do marketing conversion rate optimization. Retailers need to start asking consumers who make a purchase what led them to the purchase. The whole idea being that the retailer would like to double-down on the marketing and sales initiatives that led to the sale and scale back on those that are not fruitful.

From that perspective, it is important for retailers to experiment with their marketing and sales methods and start tracking the customer buyer journey — right through to the sale.

Ori Marom
Guest

Chris’ article does a good job at illustrating new business considerations and metrics that retailers have to develop.

While developing some of the new metrics mentioned in the article is certainly useful, I think that even perfect knowledge of these metrics would not change the game for physical retailers. For example, suppose that I knew how many customers searched my business on a mobile device. How would it help me improve my business when I am forced by online competitors to make zero profits (at best) on these well-informed customers?

Gauging the depth of the pool would be nice. Learning to swim would be even nicer.

Herb Sorensen
BrainTrust

Where are the new metrics? I am creating them, and have been for some time. You can read about it in chapter one of my new second edition of “Inside the Mind of the Shopper.” The crux of the issue is “The Webby Store,” described in Chapter 5. And I, and my partner Mark Heckman, am building out the actual details of that in practice, on a month-by-month basis.

Kim Garretson
BrainTrust
11 months 8 days ago

I would add to the questions retailers should be able to answer:

  1. What percentage of viewers at websites where your media dollars are going are not seeing your advertising because of ad blocking?
  2. Are you able to determine how much of your marketing dollars you are wasting by showing online shoppers pictures and ads of products (especially at Facebook) they’ve already purchased or found out-of-stock on your website?
  3. What trends are you seeing in the percentage of your email subscribers who are unsubscribing?
Liz Crawford
BrainTrust

The keys to measuring effectiveness in today’s omnichannel world are conversion rates. The reason is that shoppers are coming into the retail space through a variety of doors — so conversion rates through each door will vary no doubt, but that is the name of the game. Establishing those benchmarks is the next task of each retailer.

Mark Ryski
BrainTrust

In our experience, almost every retailer has some insight gap around onmichannel activity. As a company that analyzes retailer data, it can be a challenge to provide meaningful insights around some of the omnichannel behaviors that Chris raises in his article. Though not insurmountable, one of the key issues is connecting the consumers’ online behaviors with in-store. While Wi-Fi tracking attempted to close this gap by tracking unique MAC numbers that all smartphones have, this changed when Apple began to scramble these unique identifiers to protect users’ privacy. I think Chris’ list of questions is a very good starting point and one that should be within reach for most retailers. Much of this data exists, but retailers need to make it a priority and invest the time/resources required to extract and operationalize the insights.

Lee Kent
BrainTrust

Although I am a numbers person, I prefer numbers that I can actually take action on. Simply knowing that customers are on my mobile vs. online website, really doesn’t change any of my actions, IMHO. It just tells me to keep my content fresh or perhaps there is something wrong with my website.

How the customer buys is a completely different story. This impacts how much merchandise I need in my store, what my supply chain needs to look like and how many employees I need and where.

That’s my 2 cents.

Dave Wendland
BrainTrust

Yes, the entire ballgame is changing before our eyes. And Chris’ questions are an excellent starting point toward framing a new conversation. Ultimately, I agree with my BrainTrust colleagues that sales growth remains a metric. However, I’m keenly interested in the profitability per customer and the cost of acquisition/retention in a new omnichannel environment. I’d also want to measure loyalty and basket size per customer.

The list of metrics is being defined as we go. And, paraphrasing Yogi Berra, “The future is definitely not what it used to be!”

Martin Mehalchin
BrainTrust

The point of measurement should be to answer questions, like the ones posed by Chris, about your customers: how they are shopping and what motivates them to shop. One of the more difficult aspects of retail measurement is the anonymous customer, especially in-store where they can be harder to identify than online visitors. The quest to gain more customer knowledge is one reason for the growth in loyalty and retail membership programs which incentivize customers to identify themselves each time they shop.

Lee Peterson
BrainTrust

What’s interesting is Amazon’s fairly public stance (Bezos statements) that they’re using stores to “gather more information” from customers on what they like and don’t like and even the best way to depict retail in this age of e-com. Given that they’re tipped to online, that’s a pretty smart way to measure stores’ performance, IMO.

Physical retailers obviously don’t have the same luxury as Amazon, but they should take note. Foot traffic, brand touches, BOPIS hits and reviews are all going to have to weigh more heavily when it comes to measuring store performance. The days of simple $ ROI are looking more and more old school as business travels to ecom vs store.

The unspoken part of this equation is this: as bricks’ sales transactions move online, a LOT of stores are going to close. So converting how we measure their performance is going to become much more important given the difficult decisions that are obviously on the horizon.

Mark Price
BrainTrust

The greatest challenges for omnichannel metrics is the difficulty that retailers face in identifying customers who are engaging them digitally, but not purchasing using ecommerce. Those customers often lack IDs that can be connected to the customer who is making purchases in-store.

As a result, retailers often fall back on “personas” of an online behavior pattern as the best they can do.

Ralph Jacobson
BrainTrust

It also helps to identify metrics by business function, and to determine how they interoperate across the lines of business. For instance, marketing ROI has omnichannel components in terms of the targeted audience participation, etc. You need to see how merchandisers can leverage some of those same metrics to drive assortment planning, allocation, etc. We are not seeing near enough collaboration across the lines of business to optimize even the “old” metrics still in place, let alone the emerging ones.

Adam Simon
Guest

In old retail the key metric was what was sold and when — this is what POS systems tell you — logistics was a backroom operation. In new retail the where sold, where originated and the how is as important as the what and when. The drama of the change which Chris talks about is that in most retailers, the POS and logistics systems do not speak to each other. So now retailers are having to think how to link their systems together, and this involves expense and time which they cannot afford in the race to become omnichannel. In the meantime analytics capabilities will be a key support for retailers to achieve the tracking of these vital new omnichannel indicators.

wpDiscuz
Braintrust
"The keys to measuring effectiveness in today's omnichannel world are conversion rates."
"I’m keenly interested in the profitability per customer and the cost of acquisition/retention in a new omnichannel environment."
"The unspoken part of this equation is this: as bricks’ sales transactions move online, a LOT of stores are going to close."

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