Magazine article CRM Magazine

The True Price of Channel Optimization: Why Meeting Your Customers Where They Prefer Is Key to Your Business Survival

Magazine article CRM Magazine

The True Price of Channel Optimization: Why Meeting Your Customers Where They Prefer Is Key to Your Business Survival

Article excerpt

YOUR CUSTOMERS most likely have very definite preferences in communication channels, but their choices might not be the most profitable for you. What if you could maximize customer profitability by encouraging customers to use the optimal channel(s) based on your cost to serve them? Sound enticing? It should. Channel optimization is the most important area affecting an organization's profitability.

There are two parts to channel optimization. The first concerns achieving a balance between fulfilling customer preferences and lowering the cost to serve each customer.

Do you know which channel(s) your customers prefer to use to engage with your organization? To find out, look at their current preferences and do market research to discover what they may prefer in the future.

Do you know the cost of serving customers via each preferred channel? Can you afford it? Determining cost-to-serve information requires careful analysis of all relevant channel financials for existing and planned channels. While this can be challenging, channel optimization cannot be achieved without it.

The hard part is finding a balance between delivering desired customer channel preferences and driving customers to the lowest cost-to-serve channel acceptable to them. This can be complicated further by even more challenges:

Single or multichannel? While many customers and organizations work in a few channels today, this will not be true in the future. All organizations wishing to survive will have to establish a multichannel strategy, whereby a customer or prospect begins his journey in one channel, travels to another to get answers he could not find on the previous one, and finally moves to a third to make a purchase.

Will preferences change? Consider how customers' preferences have changed as far as purchasing books, music, and travel, and in the retail sector as a whole, over the past decade. If your customers' preferences change within your industry, how will this affect your ability to serve them?

Ease of moving customers to other channels? Years ago I worked with a global footwear and apparel company that sought to put into place a "lowest cost-to-serve" strategy. …

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