Customer Experience: How to Earn Brand Loyalty for Life
It was recently announced that U.S. Toys R Us stores may be returning. In an Oct. 3 bankruptcy court filing, a group of investors announced that they were doing away with a planned auction of Toys R Us assets. Turns out, this group feels that it would be more lucrative to revive the toy chain than sell off its parts.
The news is a bit of a surprise, especially since the fall of Toys R Us was so public it was practically akin to a modern Greek tragedy: a king of industry, overconfident due to past success, is blinded by hubris and unable to see its downfall lurking nearby until it is too late to stop.
These investors stated that they would work with potential partners to develop ideas “that could bring back these iconic brands (referring to Toys R Us and Babies R Us) in a new and re-imagined way.”
Which is good. The revitalized stores would have to be “new and re-imagined” because, in the end, the old ones were a total disaster. One has to imagine that, being so intimately involved with the Toys R Us bankruptcy, these investors have learned several lessons about modern retail and what works compared to what doesn’t.
Should they actually return, these new Toys R Us stores will likely look very different than the ones that went out of business earlier in 2018. Instead of stacks of inventory crammed onto rows and rows of shelves and piled to the ceiling, there will likely be several interactive areas where children can play with digital screens where parents can order products to be brought to them or sent to their home. Perhaps, instead of screens, there will be QR codes that can be scanned for product information or to make a purchase, making mobile an essential part of the shopping process while integrating the online and in-store experience.
Photo Credit: Trinax Media
In addition, there will be a greater focus on online shopping, making this aspect as equally important as the physical shops. Most stores will likely be smaller, too – and serve as places where special events will happen periodically throughout the year. However, large metropolitan areas may host one of a few huge flagship stores that will serve as must-visit destinations for locals and out-of-towners alike.
Of course, this is all speculation, but that is the future direction of retail – making shopping a memorable and seamless experience for the customer. The days of the big box stores are mostly extinct. There are a few holdovers – Walmart isn’t going anywhere – but, for the most part, the retail stores that are surviving and thriving in today’s economy are the ones that understand and have adapted to prioritizing the customer’s experience.
Focusing on the customer’s (or user’s) experience is a notion derived from software development. It’s the reason our phones are full of big, colorful icons instead of us having to type “<run.command//angry.birds>” or whatever.
Similar to software design, in retail, customer experience is a notion that places the consumer’s journey first – it is the most crucial aspect. Then, once that journey is fully understood, steps are taken to ensure that the experience is as elegant and straightforward as possible.
Photo Credit: Reonomy
A recent joint study by SAP, Siegel+Gale, and Shift Thinking looked at the difference between digital brands and traditional brands, with results that are illuminating for every retailer.
By surveying more than 5,000 U.S. consumers and asking them about 50 different brands, both digital and traditional, the study found two distinct clusters of brands, which it categorized as “purchase brands” and “usage brands.”
The priority for purchase brands is everything that happens before the sale: the marketing, the packaging, etc. Usage brands are much more interested in what happens after a sale. Is the consumer using the product? Does it fit in their lifestyle? Are they talking about it on social media?
An example given in the study is two ways to buy makeup. In a department store, there is a makeup counter where salespeople hand out free samples and offer makeovers, all with the intent of nudging a consumer toward a purchase. This is compared to brands like Sephora and Ulta that deliver services and instruction to make people feel confident in their ability to be able to artfully apply their makeup once they get home.
For the most part, traditional (legacy) brands that have been around for a while tend to be purchase brands, while the digital up-and-comers (or, really, the already-here’ers) are usage brands. However, the study is quick to point out that not all legacy brands are purchase brands. The examples it cites are Visa, FedEx, Costco, and Lego.
It’s interesting to note that, not too long ago, Lego was on the verge of extinction. Founded in 1932, Lego was immediately successful – the company never posted a loss through 1998. Yet, by 2003, Lego was hemorrhaging money, sales were down, and it was $800 million in debt.
Then, in 2015, Lego was named the world’s most powerful brand. From 2008 to 2010, its profits quadrupled.
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Bet you can guess how the turnaround occurred. First, Lego diversified from everything it wasn’t good at managing. The various Legoland theme parks, for example, although founded by Lego, are now controlled by a British company. Second, Lego began focusing on their customers and how they experience the product. In 2011, the customer base for Lego was 90 percent boys. Today, the brand has a successful line geared toward girls. How did it accomplish this? By conducting the most extensive ethnographic study of children in the world.
“We call it ‘camping with consumers,’” Anne Flemmert Jensen, Senior Director of Lego’s Global Insights group, said in an interview with The Guardian. “My team spends all our time traveling around the world, talking to kids and their families and participating in their daily lives.”
Lego was a purchase brand since its founding, yet it was able to switch to become a usage brand. If it hadn’t, the company would not have survived. If the new Toys R Us don’t make the switch, it’s attempted comeback will flop.
The SAP, Siegel+Gale, Shift Thinking study found that brands that shift their approach to focus on the customer experience earn a customer who is more loyal, more likely to recommend the brand to friends and family, more likely to choose that brand over another, and willing to pay more (an average of a 7 percent premium).
However, a willingness to change does not guarantee that the transition will be a smooth one. Shifts have to occur throughout the company. The role of the marketing department, for example, becomes much more integral since the product or service and the brand image are going to be linked closer than ever before. Usage brands are not interested in making a one-time sale. They want to forge a connection and ongoing relationship with consumers.
Advertising focus must shift, as well. Instead of trying to convince a potential buyer of your value, the focus is now on the buyer and how you can continue to nurture that relationship once your brand is a part of their world.
Finally, the way you measure results will also need to shift to focus on engagement. How are people talking about your brand? Do they find it plays a role in their everyday lives? It is imperative to know that people are actively using or engaging with your brand and are willing to share their experiences.
Consumer experience creates a memorable experience for your customers. By focusing on the customer’s journey – and making it is enjoyable and painless as possible – you may just earn customers for life. For more on how to transform your brand to focus on the customer experience, give Event Architecture a call at 972-323-9433.