How Retailers Can Increase ROI In The Omnichannel World
⏱ Reading Time: 8 minutes
The return on investment (ROI) is extremely important for a business. It’s basically an indicator of how economically healthy your business is. It’s similar to the GDP of a nation – the higher the number the better off you are. This means that increasing ROI should definitely be one of the company’s priorities.
This can be done in a number of ways. What they all have in common is that they require change.
Making your retail experience omnichannel can be one major change in that direction. This is especially important given that more companies and businesses are on the same track and are taking the omnichannel leap. Falling behind your competitors will not do you any good, so it is important to stay in the loop regarding new trends.
But first, let’s clarify what ROI actually is and clarify the difference between omnichannel and multichannel.
What is Return on Investment (ROI)
In case you’re not familiar with the term return on investment, here is a short clarification. It’s a fact that the more you do know about it, the easier it will be to manage and increase it. Therefore, in the simplest words, ROI is the money an investor earns for their injection of financial capital (their investment).
The ROI figure is important because it lets the investors know if your business is one that is worthy of an investment. The higher the figure, the more promising the company is. However, the opposite is also true – if the number is low or negative then investors will stay away.
Therefore, it is an imperative to strive for a high ROI or at least try to find different ways to increase it. It’s important to be able to show to the investors that your business is successful. And that it deserves to be even more successful than it already is.
What Influences ROI?
However, it’s not so simple. There are other factors that play a huge role in determining the ROI.
One of the most important factors is financial profit. While calculating this number it is important to make a total evaluation of the money you’ve earned and the expenses you’ve had. There is an important difference that many people mix up in this process – the total revenue and the actual profit that stays in your pocket after you extract your investments.
A determining role is played by brand awareness, too. It spreads your word to your potential customers, gives you a better reach and makes the word-of-mouth marketing more possible.
Another important factor is volatility. In other words, how risky an investment is based on how the business has been running. Has it been consistently performing well or does it perform well in random sporadic bursts?
There are different ways to increase your ROI as a retailer but there are many ways that aren’t surefire. Omnichannel is, however, surefire. And that’s what makes it important for businesses around the world. It’s what separates a successful business from a not so successful one.
Omnichannel vs Multichannel
An omnichannel strategy is a way for the consumers to always be “in-touch” with the business. Having that connection with the consumer is important for purchase frequency, as well as for having a good reputation. Having an omnichannel strategy means that you give your customers a personal experience. And you do this by allowing them to access your service from all channels/platforms.
If Channels and platforms sound a bit vague in this context, let’s put it in simple terms. It’s basically a kind of connection, anything that connects the consumer to the seller or vice versa. There is a wide range of options available, from either having a physical in-store location to a store website. As long as the communication is possible, it counts as a connection.
Omnichannel for Retail
What’s different with omnichannel for retail is that the focus is on the customers that you are selling the product to, rather than on the product that you are trying to sell. This is done by providing multiple ways for the customer to interact with your business. The more ways there are to interact, the easier it will be for them to consume. The easier it is to consume, the better off your business. And these are the key steps to increasing ROI.
Omnichannel removes the differences between sales and marketing channels as they all merge together to form an ideally unified, seamless channel. The channels can be various, from in-store, social media, mobile websites, email to physical presences such as magazines. They all merge together to form a singular customer experience that ultimately makes the interaction easier.
Omnichannel does not need to include absolutely every platform. This is because that isn’t practical for many businesses. Moreover, omnichannel is not the only option. It’s an extension of multichannel, that is superior.
Picture 1. Omnichannel strategy provides a seamless customer experience – therefore a bigger chance for ROI increase
Multichannel is similar to omnichannel, but instead of encompassing practically all channels, it simply encompasses multiple. The difference between this and omnichannel is that the product is of priority, rather than the customer. Customers can still interact but the different channels are treated independently rather than as a conglomerate.
Multichannel gives multiple channels for customers to interact with. However, after a certain period, the channel that does the best is singled out and focused on. This kind of excludes and diminishes the role of other channels. Consequently, the customers that would prefer to interact via other channels don’t get the best experience.
Which is Better – Multichannel or Omnichannel?
Multichannel has limited communication options with its other channels, which gives omnichannel a lot of bonus points. Not everything is connected like within an omnichannel, so it’s more difficult for everything to function seamlessly. Communication is more difficult, as well as maintaining consistency through different channels.
This inconsistency may be one of the reasons for customer churn. So, unless the product is one of a kind, those frustrated customers will go elsewhere. Needless to say, that’s not what you want. One of the main goals of every company is to have satisfied customers. Satisfied customers are a desired scenario in every way – on the one hand, the consumers are happy, on the other they spend their money making the retailer more successful, which increases ROI. So it is pretty clear what kind of a role omnichannel has in all of this.
How to Increase ROI Through Omnichannel
When you take all of this into consideration, it comes down to the question of how will this help you in the long run to increase ROI. ROI is highly dependent on consumer experience. This is because consumer experience dictates if a purchase will occur, how often, and if you will be recommended further. So in theory, the better the experience, the higher success, and therefore the higher ROI.
This is where omnichannel comes into the picture. A great way to better the customer experience is by implementing an omnichannel strategy. If the strategy is well-executed then the quality of the experience increases. Omnichannel strategy forces the retailer to be more involved and think about their presence on a larger scale. This leads to opening more possibilities for customer interaction, which, in the end, may result in happy customers. This will in turn make the retailer more successful and increase ROI.
The health of a business largely depends on how well-received and professional it is. And nowadays more and more also on the customer expectations. Becoming omnichannel will become important in staying ahead of the game. Customers are looking for retailers that they can relate to, that make their customer journey pleasant. Retailers that are in the future rather than the past.
Store A or Store B?
Think about this situation. You are planning to buy a pair of shoes. There are 2 stores. Store A has a brick-and-mortar place where you can come and check everything out: They also have an online store but the shoes are not updated in a timely manner and sometimes the things offered on the website are not available in the physical store anymore. You also have a Store B, which offers an application enabling you to try out shoes through virtual reality, sends newsletters with special discounts and has a social media channel with an in-built store to make it easier for you to buy something. The chances you’ll be choosing Store B are quite big, right?
And that makes sense – the more present a retailer is, the easier it is to access the store and buy something. This raises the convenience level and in turn increases the chance of a product being bought as well as the consumer continually coming back. This ultimately increases ROI, and makes the business economically consistent.
All of these channels and connections merge in a certain way, creating a unified system. By becoming omnichannel is how you fully take advantage of those connections.
Consistency is the Key
Omnichannel’s greatest strength is that it focuses on all possible touchpoints a customer can have with a certain company. This is at the same time a big challenge and a big opportunity for retailers. It requires coordination of all teams and all channels on a large scale. In addition, consistency must be present in communication as well. All of this requires great preparation of all company’s teams, from customer service to retail. Not to mention that all touchpoints have to function in the same way, offering the same information and providing the same customer experience. This is also an enormous opportunity – because once this is done right, a customer us up for an extraordinary customer journey which will increase their willingness to buy something.
Picture 2. Omnichannel strategy
ROI and the Omnichannel World – Final Thoughts
You need to be ahead of the game and have what consumers are looking for. Consumers are looking for an experience that fully suits their own needs as well as gives an experience available anywhere and at any time. Ergo, omnichannel. Something that opens up many connection points that allow for constant communication and includes many channels.
Omnichannel is a retail strategy that can satisfy those needs and wants of the consumer. If you have a solid omnichannel strategy, your ROI will increase because the customers will consistently come back. Because it will be easier to stay in touch with the company, it will be easier to access it from anywhere, anytime, which is what this is all about.
Going omnichannel is one of the few surefire ways to increase ROI and should be done sooner rather than later.
Gabe Nelson is a content specialist of over 7 years of experience, currently working for semaphoreci.com. Just out of high school he set off crab fishing on the Bering sea in Alaska. From there he went back home to finish his college degree at the University of Montana. He is a vivid reader who likes to read about hacks and tricks to be applied for businesses to grow faster.
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