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By Jupiter! Can it be true that multi-channel customers aren’t worth it?
A new report from Jupiter Research says e-retailers should look carefully at all the costs behind serving multi-channel customers, taking into account that such customers may be more demanding and have higher expectations that others.
In a recently published and controversial report, Jupiter Research challenges what has quickly become the conventional wisdom that customers who shop across all channels are more valuable to retailers than other online buyers and suggests that such shoppers could actually be a liability. “While they account for a disproportionately high share of web-related purchase volume overall, this group is more deal-driven, more aware of price in every channel and consumes more in terms of costly site features such as live help,” says Jupiter associate analyst Juliana Deeks.
While it’s true that promotions, discounts, and stepped-up customer service come at a cost to retailers, Jupiter doesn’t say how much. While the report, this year’s findings from Jupiter’s ongoing consumer survey, does supply data showing that active multi-channel shoppers are three times as likely as single channel shoppers to have printed a coupon from the Internet to use in a store, for example, it doesn’t attempt to quantify the cost in dollars.
The absence of such data could make the notion of multi-channel shopper as liability a tough sell to retailers who’ve collected hard data on dollars proving that customers who shop across multiple channels do spend more, shop more frequently and have larger order sizes than customers who don’t. “The report has interesting premises and interesting data, but I didn’t think the data supported some of their conclusions,” says Elaine Rubin, chairman of Shop.org, which has been one of the leading organizations touting the value of the multi-channel customer.
Deeks doesn’t deny that multi-channel customers spend more. “It’s not that multi-channel customers are not worth pursuing -they may be a huge asset to some retailers,” she says. “We’re simply saying do the math first. It’s important to evaluate costs of multi-channel behavior before spending to encourage it. People are subscribing to the idea that they should do whatever it takes to encourage multi-channel buying behavior, and that’s a dangerous mentality.”
Deeks adds that cost-benefit ratio of pursuing and servicing multi-channel shoppers will require detailed customer segmentation analysis, which she grants is still beyond the capacities of many retailers. “This a forward-looking report and the role of Jupiter in all of this is to encourage debate around these questions,” she says. “We are raising the idea that retailers need to look beyond the sales lift they get from these customers to some of the costs of pursuing and servicing them. The conclusion reached after doing this sort of analysis is going to vary from retailer to retailer based on the retailer’s business goals.”
This is not the first time Jupiter has stepped outside current thinking while gazing into a crystal ball. Almost two years ago, the research company was among the first to advance the merits of multi-channel integration and the now widely accepted idea that online retailers should look beyond sales transactions to judge the value of their web sites.