Why bother with multichannel? - answer #3: multichannel customers spend more

As I mentioned in the last posts, a challenge I am often posed when I work in less developed internet-retail markets (Poland or Belarus being recent examples) is "why should we bother with multichannel? It is organisationally challenging and expensive, and we are doing fine right now."
So here's yet another answer: multichannel customers spend more. This is actually a very well documented statistic with a long history (the earliest data point I found while writing this was from 2004, but I'm sure someone will point out an earlier one).

How much more? This is rather more difficult to quantify. Laura Wade-Gery, Multi-channel director at Marks and Spencer, can be seen in today's Sunday Times (business section 2nd Sep '12) claiming multichannel customers are worth 4x store-only customers. Anecdotal figures I've heard talking to colleagues and clients are usually in the +50% to +100% range. John Lewis, generally considered one of the most sophisticated multichannel players around, seems to side with M&S appear to be quoting a multiplier of 3.5x, in this study with IDC:

"These multichannel and omnichannel shoppers: spend 3.5 times more; purchase across more categories; shop more frequently; are more loyal and have a higher retention rate"

What more could you want?

And it isn't an effect confined to upmarket UK retailers like John Lewis or M&S. A 2010 study for the US National Retail Federation found that: "39% of retailers describe cross-channel customers are significantly more profitable than single channel customers. In 2007, this figure was 18%." Of course this might be that US retailers have become better at measuring it, rather than any trend change, but nevertheless the effect is still reported consistently.

OK, these customers are more profitable, but by how much? IDC research from late 2009 apparently provides the answer: "findings show that, while multi-channel shoppers spend, on average, 15% to 30% more with a retailer than someone who uses only one channel, omni-channel shoppers will spend 15% to 30% more than multi-channel customers." Ah yes, it's those omni-channel customers again.

Accenture always likes to get in on the act, so here's the data from their more recent (Jan 2012, and European not US) equivalent study: "more than three quarters (76%) of the retailers surveyed report the multichannel customers spend more than their single-channel customer counterparts, and one third (32%) said that multichannel customers spend at least 26% more than single-channel customers."

Deloitte seems to think this is all a bit too conservative: "Multi-channel customers spend 82% more per transaction... The average expenditure for multi-channel customers across the clothing, home and electrical categories is £116 per transaction compared with £64 for store-only customers".

Everyone likes a graph, so Deloitte helpfully provide one in this report. Unfortunately it's not apparently supported by any referenced data/survey, so it's completely unclear if these figures are just plucked out of thin air. The impression from the rest of the study is that they may just be "illustrative" to use a polite word. But it's a nice graph so I'll show you it here:

Lots of nice growing bars!

Incidentally there is the ominous (if dubious) deduction possible from the Electrical bars that stores are a complete waste of time... See my previous post on this topic.

There's a nice piece of jargon for all this: the 'multichannel halo effect', which I think has made the leap from brand-marketing to retail. I rather like the pseudo-religious connotations of this term: it would certainly make convincing my clients easier if the question "why bother with multi-channel?" could be answered "because God says so"!