Organizational Issues
Multi-channel integration requires a new organizational
model: one that adapts people, processes and technology to meet this coordinated
approach to channel management. Redefining the organization, and processes and
technology that support it, to meet the multi-channel challenge, requires strong
support of the CEO and his or her management team. They need a clear vision of
how channel integration will generate business value for the organization and
where the main changes need to be in the organization. Decisions will need to be
taken on the size of team and skills to ensure the necessary resources and
flexibility. Employees must have the right skills to understand increasingly
sophisticated customers, analyse customer preferences, and create value from
these customer relationships, while organizations must train their employees to
develop the right skills. Organizational processes must be redefined to overcome
organizational barriers, reduce operational costs, increase efficiency and
improve the cross-channel customer's experience.
Organizational structures can be a barrier to multi-channel
integration when a company is product or function-focused rather than
customer-focused, so organizations need to consider whether to establish a
separate company to exploit a new channel. This may be suitable where a
single-channel strategy is appropriate to one or more customer segments, but a
hybrid organizational strategy might be appropriate to meet the different
channel needs of the company's target customer groups.
While developing a new organizational model for multi-channel
integration, organizations should consider cross-channel opportunities generated
through channel cooperation: 'Retailer-manufacturer relationships based on
shared data, technology, and investments ... to create coordinated efforts that
leverage discrete assets to better focus on the customer'. [11] Thus, research showed that
online cooperation of retailers with their manufacturers could enhance sales
through referrals. Fifty per cent of retailers and manufactures surveyed by
Forrester said that their online sales increased by collaborating, for some by
as much as 25 per cent. While online cooperation between retailers and
manufacturers allows channel-hopping Internet customers a fuller product
selection, it also minimizes channel conflict between retailers and
manufacturers. Both the manufacturer and the retailer benefit, as they give each
other the opportunity to increase online and offline sales by providing each
other with customer referrals. 'Manufacturers will close US $50 billion in
online sales ... but influence US $235 billion in other sales. The power of
manufacturers online lies in their ability to affect retailers' sales, both
online and offline. Consumers will take what they've learned while visiting
manufacturer sites and spend almost US $90 billion online and US $147 billion in
brick and mortar stores and catalogues.' [12]