On driving successful O2O marketing

Doing a quick search using combination of “online” and “offline” does not yield any satisfactory definition nor acronym, thus for the purpose of this article, O2O will be referred as “online-to-offline”.

So what is O2O marketing and why does it matter?

Stop here if you are expecting a success formula to increase ROAS or ROI for your marketing spending.

O2O marketing is the new hot keyword around the block. It offers new ideas and chances to capture further conversions from both existing customers and new customers from offline to online or vice versa. In the beginning of online business, online business is often characterised with lower prices due to lower operating costs. Traditionally customers travel from online to offline to have physical experience of the actual products, as well, from offline to online in order to obtain cheaper prices, provided the transportation costs to the physical stores are minimal and does not outweigh the shipping costs. 

Historically, it has been shown that companies with purely online model has lower operating costs while brick-n-mortar companies show much bigger revenue generations. Since the early 90’s, online business has been grabbing exponential large shares from the traditional brick-n-mortar business model. In the recent years, we start seeing companies relying online business building offline stores, as well as the reversed direction.

From the organizational point of view, online business utilises new talents which are often brought in from outside and treat as separate group. Managers not fully grasping the macro picture will often put people on the same scale of sales KPI measurements, which often let the online business people shine like new born star in the organization.

Guess what? Jealousy is a human nature. Most people work on simple motivational factors which maximize their reward with lowest risks. When a new entrants endangers their reward, it is natural to go into defensive mode either by defending their territories or destroying new entrants entirely. In either case, it is not exactly healthy for the growth of organization. As a smart manager, you want the people sells via both offline and online channels to play nicely and work together.

The main question is how to drive long-term successful O2O marketing.

The same question can be reworded to “how to get online and offline people to play nicely?”

It doesn’t help when you, the smart manager who wants different groups to work together in order to achieve a unified goal while they are motivated and measured unequally. In the O2O paradigm, there is no universal formula due to the differences of revenue generation in different business models. You have to understand the entire channel driving mechanism, and work out fair motivational measurements in order to get people to play their parts.

Measuring the point of conversion is fundamental and understanding who comes from where is vital to every business. O2O by default generates fears of losing sales that should’ve been. To minimise such fear, lead generations to other channels should be evaluated as positive contribution and be rewarded. It should be considered more in the fashion of affiliate network. Without proper motivational factor, it is unlikely that one group would be voluntarily work for the other groups.

In the O2O paradigm, both conversions and lead generations should be evaluated, but not on the equal weight. Depending on the responsibilities of each player, the evaluation should be adjusted accordingly depending on the flexibility of HR. After all, if the entire group doesn't win, everyone in the group loses.