According to MasterCard CMO Raja Rajamannar, 75% percent of brands could disappear and no one would care.
Let that sink in for a moment.
Many brands operate under the assumption that their marketing communications and advertisements define the brand. In reality, you can tell customers what your brand is all day, but people will perceive your brand based on their own experiences with it. And if those experiences are unremarkable—or worse, negative—your customers won’t miss you when you disappear.
Yes, it’s a harsh reality. But it’s one that your consumer brand can absolutely adapt to. And there’s more upside than mere survival in the marketplace: 80% of consumers say that they’d be willing to pay more if they could be guaranteed a good experience.
You heard correctly. Get CX right, and you’ll gain a competitive advantage while also making your brand more valuable to your customers. Excellent customer experiences help brands to both acquire new customers and keep them coming back (reduce churn).
The Challenge with Third-Party Retailers...
But there are some unique challenges that consumer brands need to overcome in order to deliver on the customer experience mandate.
Most notably, selling through third-party retailers makes it difficult to own the customer experience. Amazon—and its Chinese equivalents Alibaba and JD.com—can be particularly challenging for consumer brands; they completely steal brands’ ability to distinguish themselves through experience. Instead, brands that sell on these platforms, and through many third-party retailers, get stuck competing solely on price.
As John Deighton, Baker Foundation Professor of Business Administration, Harvard Business School, explains in an interview, these types of retailers “…focus the consumer’s mind on one feature of brands in the category: their prices. When a comparison mindset is invoked, in contrast to a mindset that invites consumers to reflect on a single brand’s merits, the mystique that brands matter is diluted.”
Deighton goes on to explain that this is why luxury brands commonly present themselves in stores in which only one brand is present—they don’t want to compete on price alone. At the other end of the spectrum, bazaars place products from the same category “cheek-by-jowl.”
Some Consumer Brands Are Nailing CX Anyway
Despite these challenges, there are numerous consumer brands innovating to deliver excellent customer experiences today. One approach is for consumer brands to open their own brick-and-mortar locations. LVMH, Burberry, and Samsung, for example, have taken this approach and created store locations in which they have total control over what their customers see, hear, smell, feel...even taste.
Moët Hennessy Louis Vuitton (LVMH), has not only opened their own retail stores—the brand actually owns an entire shopping center in Paris, called Le Bon Marche ("The Good Market"). Its location on the left bank's Rue de Sèvres is on precious real estate. Although the building has seen multiple expansions and renovations, its art deco theme remains lavish yet elegant. The store provides an immersive experience in breadth and depth. Visitors can upgrade their wardrobes and home decor with timeless investments. They can shop for exquisite gourmet foods at La Grande Epicerie on the first floor. Product tailoring is offered on every floor. Stationery can be personalized at the second-floor bookshop. Clothing from hats to evening coats can be customized and accessorized to suit personal tastes, all with the help of in-store experts. Each department's product selection and display is better described as curated for an art gallery rather than bought and merchandised for a department store.
Product personalization at Le Bon Marche.
The shopping center is more than just a place to buy products—it’s also a place to be seen interacting with high-end brands, giving customers social currency.
The Le Bon Marche experience includes integration with its online site, 24Sèvres.com. With reminders of the Le Bon Marche store throughout the site, a customer can browse and then choose among four delivery options, including pickup at the store or a "bespoke messenger" who arrives at your home at a scheduled time so you can try on items and decide whether to keep or return them.
Burberry seeks to be on the same playing field as brands like LVMH—and they're using customer experience to move upmarket. Burberry CEO Marco Gobetti says “By re-energizing our product and customer experience to establish our position firmly in luxury, we will play in the most rewarding, enduring segment of the market.”
To that end, Burberry has also opened its own retail shops in which they have complete control of the customer experience. When you visit the London location, you are greeted as an honored guest. They offer you champagne. A stylist helps you design outfits and try on clothing to suit your needs and tastes. It's not about searching through racks for your size; it's about the one-on-one attention that helps you to find exactly the right apparel while also treating you like royalty.
Samsung has taken a similar but different approach. In order to let customers “experience the best of Samsung,” this consumer electronics brand opened its own “experience center” in Manhattan where experience is more important than purchase. In fact, you cannot purchase anything at all at the Samsung 837 “store.”
Gabriel Mas, Director and Head of Marketing for Services & New Businesses at Samsung Electronics America, explained at a recent Harte Hanks Marketing Advisory Board meeting, it was difficult for consumers to find an expression of the brand through third-party retailers alone. They couldn’t tell their story on their terms, and they couldn’t showcase all of the products they wanted to offer their customers.
Samsung’s experience center offers the opportunity to try out and play with the latest Samsung products without having to purchase them. It also offers customer care services with troubleshooting and workshops for new and existing users. Finally, the store has an impressive VR tunnel where customers can step into a virtual world and be transported anywhere—a studio, a kitchen, a playroom, a living room—all where customers can see how Samsung products would fit into their everyday lives.
Virtual reality in Samsung 837 store. Image Credit: Samsung
How are they doing it?
These brands have all created dedicated brick-and-mortar locations in which they can create their own experiences that benefit both the brand and the consumer. These “experience centers” alleviate the lack of experience ownership that many consumer brands face, and they are designed to help customers more easily and enjoyably complete their jobs to be done.
The customer's job to be done at a brick-and-mortar location is often more about the shopping experience than the purchase transaction. Leading retailers realize the customer has made a considerable effort to show up at their location. In effect, they "buy" the customer's time by delivering a rich, rewarding shopping experience. Then they provide multiple, pre-established purchase and delivery options to facilitate the purchase transaction. Or, as with Samsung, they don't even mix the shopping experience with the purchase transaction—they separate these two parts of the buyer's journey rather than mix them within the same physical location.
The extensive efforts by these retailers create a sharp contrast with the notion that brick and mortar is ‘dead.’
As Neil Blumenthal, CEO of Warby Parker, explains: "I don't think retail is dead. Mediocre retail experiences are dead.”
Indeed, Forrester predicts that retail will grow in 2018.
Designing delightful experiences around the jobs customers are trying to complete requires deep knowledge and understanding of both personas and the buyer’s journey—and the technology to connect all pieces of the experience together. It’s a process that requires dedicated time and resources (if you're interested in learning more about this process, check out: Decoding Customer Needs with the Buyer's Journey Framework).
Creating and owning these experience centers that cater to customers' jobs to be done is helping brands like LVMH, Burberry and Samsung both attract new customers and retain their base—a key challenge in today's brand environment.
Beyond the physical store...
But opening physical store locations is not the only way consumer brands can work to improve the customer experience. They can also work more symbiotically with the third party retailers they choose to do business with.
Check this out in my next post: Why Consumer and Retail Brands Should Collaborate—Not Compete.