Channel Integration and Benchmarks in the Retail Industry.

Although many retail businesses have mastered the art of multichannel direct marketing, quite a few are still apprentices when it comes to cross-channel integration. This is one of the key findings of a report by the Direct Marketing Association (DMA), entitled “Channel Integration and Benchmarks in the Retail Industry.” DMA takes an in-depth look at the multichannel players in the retail industry, helping retailers determine what aids the process of cross-channel integration — and what hinders it.

The 116-page report, divided into four chapters — Respondents’ Profile, Marketing Revenue and ROI, Direct Marketing in the Retail Industry, and Multichannel Integration — explores trends in expenditures and results per channel; integration of sales channels, direct marketing functions, and operations; and the use of personal data for customer segmentation, acquisition, and retention.

Dozens of graphs and charts help marketers benchmark their own company revenue, direct marketing expenditures, and ROI. Additionally, DMA’s new report examines how companies incorporate various direct marketing strategies, the challenges that they face designing and launching campaigns in different channels, and how they manage multichannel integration.

“This DMA report presents both the popularity of each direct marketing practice, measured in the percentage of respondents who use it, and its effectiveness, measured in the strength of ROI,” said Eugenia Steingold, Ph.D., DMA senior research manager and the report’s chief author. “Because many, if not most, retailers have now moved beyond brick and mortar and have added other channels — catalogs, websites, TV, and radio — for both sales and promotions, this report analyzes direct marketing practices in each individual channel and investigates channel integration.”

“The report’s conclusion is quite clear,” Steingold continued. “To be successful, retailers need to merge and synchronize all channels in terms of consistent brand message, timing, creativity of promotions, loyalty programs, and fulfillment. To achieve such a level of integration, organizational support and restructuring might be necessary. DMA’s report provides data on the concrete steps that retailers may take toward channel integration, the challenges that they meet, and strategies that they can use to address the challenges.”

The report’s key findings include:

· The absence of a brick-and-mortar store is becoming prevalent among retailers — 41 percent of survey respondents don’t have a physical store.

· The website is the most consistently used direct marketing channel, followed by email and direct mail.

· Mobile is the direct marketing channel retailers are least likely to use.

· Among the survey respondents, 66 percent gather customer information from direct mail, and 65 percent gather it from the Internet.

· About 83 percent of respondents segment their customers based on demographics, 77 percent do so based on purchasing frequency, and 76 percent on products purchased.

· Only 33 percent of respondents provide cross-channel order fulfillment.

· Discounts remain the most popular loyalty program, with 80 percent of respondents using them.

· Brick-and-mortar stores (20 percent) and websites (22 percent) produced the highest level of revenue in 2007.

DMA conducted the Internet survey in November 2007, with 101 retailers participating.