As Customers Worship Experiences Over Items, Where is The Brand Opportunity?
The notion of placing more value on experiences over material items is just one of the paramount shifts in consumer behavior recently identified. FC Tech’s Elizabeth Canon explains.
It’s no secret that retail brands are suffering, whether mass or luxury, American or European, large or small. Amongst the many reasons are economic shifts, competitive saturation, and changing cultural values that impact customer behavior. The old tactics don’t necessarily work in this new ecosystem. To survive, and thrive, brands today need to understand their customer to new depths, just as thoroughly as they understand their business, heritage and competitors.
The notion of placing more value on experiences over material items is just one of the paramount shifts in consumer behavior, recently evidenced by the Worldwide Luxury Goods Study conducted by Bain & Company. The study found the sale of personal luxury goods flatlined, whereas travel, food and beverage all grew by 5%.
What’s more, whereas growth for luxury goods was previously driven by travelers purchasing during their trips abroad, that’s no longer the case. For the first time in fifteen years, sales for locally purchased luxury items are growing at a faster rate than those of travelers, indicating an even more interesting shift in the relationship between the travel and luxury goods industries, and a changing opportunity in how brands compel local and traveling customers.
In any new ecosystem, fresh strategies are needed. As a response to this shift, brands have begun expanding beyond their traditional offerings to architect and design, not only products, but experiences.
For instance, in an appeal to the local shopper, luxury outdoor cycling brand, Rapha, has built clubhouses in its store locations where the brand hosts talks, gallery exhibits and serves as a public meeting place for clientele. Not only do they sell products, but they also plan international adventures for customers seeking to cycle the Dolomites, for example.
For the traveling customer, the manufactured store approach that allowed brands to rapidly open uniform locations across the globe, is no longer enough to entice. Brands like Dolce and Gabbana, have announced that multiple stores around the world will be re-designed, not in an effort of brand conformity as has been the norm, but to create unique designs that pay homage to each store’s city. It remains to be seen if this will be enough of an incentive to capture the interest and time of traveling customers.
The savvy and most sophisticated customer of today is building their own personal brand, and it is not fundamentally, or singularly, rooted in the badge of a brand logo. Instead, this customer collects stories and memories, born of experiences, that define them as people. What separates them at a cocktail party or job interview is not their handbag, but their point of view. In this way, experiences have become a more important and central form of social currency. Luxury goods, and brands, are still coveted, but to stand out today, they need to deliver more than the simple cache of being affluent, or high-quality, or hand-crafted; they need to stand for something more substantial, and they need to deliver an experience, even in the smallest of forms.
“But brand experiences are not only about grand gestures or innovative initiatives that transport the customer; they are also about the moments throughout the customer journey where a brand impresses, satisfies or disappoints.”
But brand experiences are not only about grand gestures or innovative initiatives that transport the customer; they are also about the moments throughout the customer journey where a brand impresses, satisfies or disappoints. Herein lies the brand opportunity. Because there is a high cost to experiential marketing, with different key performance indicators and unproven returns, prudent companies will also evaluate their end-to-end, cross-channel customer journey, because they understand something crucial: To wow a new customer through an unexpected and innovative experience may be enough to trigger momentary affinity or a one-time purchase, but it will not be enough to sustain repeat purchases and lifetime loyalty if the customer experience is disconnected and wrought with disappointments throughout the more practical aspects of the customer journey.
Especially now, when basic expectations in browsing, shopping, last-mile shipping and after-sales service are influenced by leaders like Apple, Uber and Amazon, customer expectations across all categories are higher than ever. To leverage the full return on an experiential marketing investment, shoring up the end-to-end customer experience across channels is key. Even a marginal improvement in customer satisfaction throughout their experience can increase revenue and retention.
It is the companies that approach experience design as a two part strategy that are the best situated to increase profitability during a fickle and trying time. Part one is understanding, auditing and improving the brand experience across channels to meet all essential customer expectations. This not only ensures any new customers captured through a more innovative, novel experience stick with the brand beyond the moment, it also increases average order value, and lifetime value amongst existing customers. Only after this is done can an experiential marketing investment generate the highest degree of real, and ongoing, returns.