Due
to the arrival of complex distribution systems for various industries
and sectors, and the growth of web-based sales, firms are spreading
themselves across various channels in order to appeal to diverse
customer segments. For example, customers can make a purchase
in some retail stores like Macy’s and J C Penny through
brick and mortar stores, through the internet, or through mail-order
catalogs. Each of these channels service a different set of customers
and provide varying levels of service. This leads to reduction
in service cost, resulting in an increase in profitability.
The study referred
in this section demonstrated that in a B2B setting multi-channel
shoppers are more profitable than single-channel shoppers. Specifically,
multi-channel shoppers differ from single-channel shoppers in
providing higher revenues, having a deeper relationship, a higher
share -of -wallet and having a higher likelihood of being active.
By implementing this strategy in the B2B firm, it was found that
customers who shopped through all the three channels generated
three times the revenue when compared to single channel shoppers.
Also, it was found that the likelihood of staying active for those
who shop through three channels was about four times more when
compared to single channel shoppers. Multi-channel shoppers initiate
more contacts with the firm, have longer tenure, purchase more
frequently, and are more receptive to contacts through multiple
communication channels. Further, the study shows that there exists
a non-linear relationship between returns and multi-channel shopping,
and that there is a positive synergy towards multi-channel shopping
when customers are contacted through various communication channels.
Understanding customer
behavior in each channel can help managers to migrate low-value
customers to low cost channels and thus reduce cost. For example,
if a customer who predominantly buys by ordering from the catalog
over the telephone can be migrated to buying from the firm’s
website, it could lead to significant reduction in the cost of
servicing the customer. This strategy identifies the drivers of
multi-channel shopping and how it influences channel adoption.
Further, a conceptual framework, which identifies the customer
level characteristics and supplier factors that could influence
purchase behavior across multiple channels, is provided.
These results show
that by effectively managing the purchase pattern of customers
across various channels, firms stand to gain from the cost reduction
and customer retention. This strategy illustrates how firms can
harvest these benefits by managing multi-channel shopping.
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