Digital Marketing Strategy
Digital marketing strategy – the hybrid strategy is one of the most powerful.
In the past few articles, I’ve written about how brick and mortar companies can handle digital competition, and vice versa. One of the most powerful strategies in each of these situations is the hybrid strategy. When a company uses both digital and non-digital approaches, they create better customer experiences, better service, and more cost-effective operations.
There are situations where a hybrid strategy works very well.
There are also situations where a hybrid strategy is less useful. In general, the hybrid strategy works best when the alternate approach enhances the effectiveness of the core approach. For example, when Best Buy allows customers to search, compare and choose products on their website and pick the selected product up at a physical store, they are gaining an advantage of the online interaction. Shopping online is quick, convenient and data-rich, but the advantage of offering nearly-instant pick up, eliminates the cost of delivery.
Most companies that are using hybrid strategies today started as strong brick-and-mortar players with good locations and efficient distribution.
They may have attempted to stave off the loss of customers to cheaper online competitors by using the hybrid strategy. This was certainly the case with Walmart, Best Buy and Sears. Does this approach help, though? In the case of Walmart, the business model is partially defined by a vast, data-rich, efficient distribution system. The ubiquity of Walmart stores in the US market means that picking up product is nearly as convenient as delivery. Furthermore, it’s much faster for many people in their market. For other stores, the geographic coverage may not be as great. That means the convenience of the hybrid approach only applies to certain areas in the market.
Another element that makes this attractive for some retail players is that they already have a fairly cost-effective distribution system.
Large scale distribution means that the cost of in-store deliveries is very competitive with postal or other parcel delivery services. When the distribution network is smaller and handles lower volumes, delivery by USPS, FedEx or UPS may add little, if anything, to the final cost to the customer. This is because such delivery is “baked into” the pricing of products at the tail end of the distribution chain.
A final advantage many traditional players have with the hybrid digital strategy is that a brick-and-mortar location is often a better facility for handling customer care issues, returns and possible troubleshooting that may arise.
There is a strong perception that companies handle the service element better when the customer can talk with a person, in person. While online, email and phone customer service can be very good, many customers have experiences with terrible remote service. That adds to the perceived benefit of the brick-and-mortar point of contact.
An interesting question clients ask when discussing digital marketing strategy is “Can this work the other way?”
Can a largely digital business gain some of these advantages by establishing brick-and-mortar points of contact for customers? So far, only very large digital businesses, such as Amazon, have experimented with this approach. One severe impediment to the hybrid strategy from this angle is that it is simply not how digital companies think. The costs seem astronomical (compared to online-only approaches). Also, the inflexibility of physical locations often grates on managers who like to change the appeal of a website instantaneously. So far, we haven’t seen much traction for this approach. Some would argue that the Apple Store, however, is essentially this. It is largely a digital business extending customer service, product presentation and sales into the real world of physical stores. If we accept the Apple Store in this light, it’s the one shining example of how digital-to-brick-and-mortar can create customer value.
What is your experience with hybrid strategy?
Does the change in expectations technology drives in your markets have a positive or negative effect on your business? If you’re like most people, you’d benefit from having an experienced professional lead you through the strategic planning process, so you can focus on the content of your strategies. If you’d like to explore how you could do this, please contact me at rbradford@cssp.com. Center for Simplified Strategic Planning professionals have successfully conducted thousands of strategic planning meetings, and have a great understanding of how to best use your planning time. Consider holding a one-day workshop on Simplified Strategic Planning in the next few months to improve your results.
Robert Bradford is President & CEO of the Center for Simplified Strategic Planning, Inc. He can be reached at rbradford@cssp.com.
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Co-Author Robert Bradford