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Sep 26, 2006
How To

5 Tips to Avoid Cross-Channel Conflict From General Nutrition Centers' Ecommerce Director

SUMMARY: Internal political battles and headaches are a built in part of the job for ecommerce marketers at multichannel companies.

Get five specific tips to win over brick and mortar retail store managers to the ecommerce cause from MarketingSherpa's exclusive interview with GNC's Rod Kight.

His top advice -- don't measure Web success on ecommerce profits. Here's why:
"Far too often, a Web site is analyzed by profit, and I don't think that's the way to do it," says Rod Kight, Director DM and eCommerce for General Nutrition Centers Inc. "Cannibalization is not really growth."

GNC, the largest global specialty retailer of nutritional supplements, has more than 4,800 retail outlets in the US alone. The sheer size and scope of this brick-and-mortar presence was one of the factors that kept GNC from launching ecommerce operations until 2005. (The site was live since 1997 but only started accepting orders last year.)

Going multichannel was a giant undertaking, as much organizationally as it was technically. But, the customers were there so GNC had to be there, too.

As Kight says, "consumers don't think of things the way companies do. They're not thinking, 'I bought it online,' or 'I bought it at retail.' They're simply thinking, "I bought it from this store."

How do you handle organizational challenges when you add a new channel to the mix, one that might be seen as more of a threat than a welcomed sibling by existing brick and mortars? Here's Kight's advice:

5 Tips to Market the Change Internally:

"You get people running the retail at the corporate level to buy in, to believe in what's right for the customer and they filter it down," Kight says. When the retail outlets know cross-channel marketing is backed by those at the top, they give the new channel a bit of breathing space at launch.

Executives with direct marketing backgrounds need to be the change agents here, he advises. Five specific tips:

Tip #1. Evaluate growth based on all possible channels

Only by changing the metrics a company tracks can channel conflict be truly eliminated. Otherwise, "I see the end of the month and I need to make my number," says Kight. "Do I send an email that's just Web because I want to make my number?"

At the retail level, "what if I'm really close to my number and a customer wants something we don't have? Do I direct them to a kiosk and have them buy online or direct them to something a little bit different and have them buy in the store?"

If this isn't possible, at least the growth of the online channel should be evaluated by additional metrics rather than just sales. For example, Kight suggests looking at the percentage of the list that is transacting, at how many customers have been reactivated and at the number of entirely new customers.

Tip #2. Merge data

If your retail channels and Internet might be in conflict, merge point-of-sale data for loyalty card, branded credit card and gift card programs. For example, GNC's Gold Card and Gift Card programs are both accepted -- and offered --- both online and off.

If your Web and catalog channels are in conflict, roll the two operations into one. This way you can treat each customer as a single entity, with a single view of their purchase behavior and can better target them in your marketing efforts.

Tip #3. Lower initial growth forecasts

This is a toughie for marketers who've had to promote the golden future of the Web to justify ecommerce build-out expenses. However, Kight suggests downplaying the initial growth to be expected from ecommerce offerings or major site revamps.

Consider being satisfied with a slower rate of growth to make sure that your customers are being allowed to choose where they shop and that the other channels are made happy. "You can think, 'We're going to grow 20%,' or you can think, 'We can grow 15% but let people choose where they purchase,'" Kight says.

Tip #4. Conduct online promotions to help stores

Along with store locators and gift card sales online, Kight knew it was critical to retailers' success that customers were able to return ecommerce items back to brick-and-mortar locations. Why? Because for real-world retail, it's all about the foot traffic.

GNC retailers have marketing savvy and tools to be able to turn a consumer venturing into the store to make a return into a repeat customer or even to upsell/resell them on the spot.

In addition, Kight turned his team into an in-house email agency to fulfill ad hoc campaign requests from retailers. "If a store is doing an event, we give them an email campaign and push it out at a small store level, only 1,500 or 2,000 names. We know economically it's not going to do a lot," but it lets the stores know that direct is committed to growing all channels.

Tip #5. Ask the stores to add kiosks carefully

Although best practices in multichannel integration is to make all channels publicized and available via all other channels, Kight advises against rolling out kiosks in retail locations too quickly.

Wait until retailers are comfortable with online and no longer view it as a significant threat. Then begin adding online order kiosks to the store locations. To that end, Kight's team are only now about to roll out kiosks offering online ordering from stores in the US.

Key: the store must be credited with all the kiosk sales made from its location. This way, Kight says, store managers who have numbers to meet are encouraged to use the kiosks as much as possible when online can meet a specific customer need that retail can't -- such as when retail is out of a particular SKU.

They'll sell the customer the best possible product to meet that customer's needs, instead of what happens to be on the shelves in that location at that time. In the end, that increased customer satisfaction should lead to more sales for everyone.

Useful links related to this article

General Nutritions Center:
http://www.gnc.com


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