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Are They Experiencing Marketing, Or Are You Marketing Experiences?
Article Description:
====================
You've probably heard of experience marketing - but are you
using it? Executing well? Our experience tells us most businesses
have not yet adopted this new approach; while many that have,
still miss the point.
Additional Article Information:
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4363 Words; formatted to 65 Characters per Line
Distribution Date and Time: 2006-08-10 10:48:00
Written By: V Rory Jones
Copyright: 2006
Contact Email: mailto:mail@biassociates.com
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Are They Experiencing Marketing, Or Are You Marketing Experiences?
Copyright � 2006 V Rory Jones
Business Intelligence Associates LLC
http://www.biassociates.com
You've probably heard of experience marketing - but are you
using it? Executing well? Our experience tells us most businesses
have not yet adopted this new approach; while many that have,
still miss the point.
We are advising our clients to get out ahead on experience
marketing, as it is likely to be a powerful source of competitive
advantage for many years to come. Here are some pointers on what
it is, why it is important, and how to adopt it (and how to avoid
some of the pitfalls):
What Is Experience Marketing?
Think of experiences the way Walt Disney does. To deliver the
Disneyland experience (the happiest place on earth), they align
ALL customer interactions; from advertising and logos, to ride
queue decoration and the piped scents ( like hot chocolate); no
detail is too small. Do you exercise the same degree of control
over the experience you deliver?
Experience marketing extends your proposition far beyond
traditional products or services - to include using using
multiple vehicles and senses to envelop the customer with a
carefully managed experience; with the goal of influencing
behavior. When customers buy your experience, they are valuing
something larger than a product, and the more relevant the
experience, the more intense will be the demand.
Why Adopt Experience Marketing?
Experience marketing is able to deliver hard, tangible
improvements in business performance; in growth and in
profitability - together these have a very material impact on the
operating value of the business (and market cap).
a. Enhanced growth. Experience marketing improves both perceived
and actual differentiation, and offers a real opportunity for
competitive advantage in even commodity markets - leading to
share growth. Furthermore, there is abundant opportunity to
bundle other products or services (even through partnerships) -
leading to incremental sales.
b. Enhanced profitability. In addition, premium prices result
from increased perceived value (of the experience itself - see
'pitfalls' caveat below), and increased demand.
How Should Experience Marketing Be Adopted?
While it delivers tangible benefits, experience marketing is
somewhat qualitative in how it works. And remember when crafting
your experience - it is the aggregate of all interactions. Here
are our implementation tips:
a. Three not-so-easy steps. First, use key customer traits and
needs to characterize an experience; then design the experience
using the full range of tools and resources; and finally, circle
back using adaptive learning techniques.
b. Watch for pitfalls. Pitfalls are common-place - here are a
few: Half measures (obscuring an experience's true potential);
scant attention to business economics in the design phase;
shortcutting around piloting and research.
What Is Experience Marketing?
Experience marketing; simply the use of experiences, by
businesses, to achieve specific market goals. We call such
experiences "Business Sponsored Experiences" (BSEs).
(------
Definition: business sponsored experience
* A contrived setting of the key factors of interaction
("Experience Levers"), arranged to appeal to a target
customer's needs and wants
* Such experiences are created and executed with the intent to
influence customer behaviors, such that key business goals of the
sponsoring company are achieved
* Configured experiences are the next step in the evolution of
marketing; they typically aim to create a heightened
differentiation for the company, and attractnew customers to the
market
------)
BSEs are contrived, managed and controlled by the sponsoring
entity or its partners / allies. BSEs are designed to accomplish
explicit goals.
BIA's Experience Marketing Philosophy
We have three guiding principals in our approach to designing
experiences:
1. The customer's experience is the sum total of all
interactions it has associated with a business; it begins from
the moment customers becomes aware of the business (and what it
offers) and its effects never end
2. Businesses have considerable influence over the consistency
between the actual experience and their desired positioning
strategy
3. Experience-influencing 'levers' must be selected and set
according the desired experience; implemented within the context
of strategic objectives (differentiated positioning, market share
growth, capital resource availability, etc.)
Despite the common sense nature of these principals, they
represent a sea-change in business' approach to the marketplace
and customers. Businesses are often unconcerned with experiences
that are negative (whether created by them or partners); they
seem to have a fatalistic view on the experience delivered; while
deploying almost no resources to identifying objectives - let
alone designing a desired experience.
Experiences Revealed
At the core of experience marketing is the notion that customer
purchasing behavior can be more effectively influenced with an
appeal that extends beyond the simple product or service. Such
extensions address multiple senses and emotions, as well as
multiple customer needs.
By appealing to multiple senses and emotions, the customer
becomes more aware of you, and more engaged with you. Politicians
have known this for years - knowing that the effect of a simple
handshake dramatically heightens the likelihood of a vote, over
an experience simply as a spectator. The extent of the handshake
touch is often not even accompanied with eye contact, as the
politician recognizes the additional sense input (with its
associated bragging rights) is where the value really is.
Some product markets are new to the game, while others have used
BSEs for some time; though have realized it can be extended (for
competitive advantage) far beyond the product or service.
The car industry is one example in which BSEs have been tightly
controlled for years, with varying degrees of success, and are
now undergoing incremental extensions. The focus to date has
typically been on the message and positioning of the brand, and
the use of in dealership interactions. The extensions grew to
include merchandizing of clothes, toys and numerous nick-knacks,
sponsored events, clubs and social events. Even the test drive is
adapting to over-night trials and contrived test tracks. Land
Rover has built off-road tracks in many of its locations, tilting
the vehicles to extremes and painting a local scene of wilderness
for would-be city naturalists.
Segmenting Experiences
We find it helpful to consider the situation in terms of
experience types. The two most important factors appear to be the
type of the 'target' (i.e. the recipient of the experience) -
consumer or business; and the type of connection to the target -
whether direct, or through some intermediary.
Figure 1 discusses these segments.
We believe consumers are relatively more influenced by the
experiences, in contrast to business targets (who are often
constrained by specific business considerations). With that said,
business relationships are often quite complex - and extend far
beyond the experience of individuals to include institutional
experiences (these encompass systems and process issues).
We are mostly concerned with consumer experiences here.
'Direct' connections offer the opportunity to control
experiences more fully; while intermediaries (such as retailers,
distributors and even media outlets) have the potential to inject
their own goals and objectives to the experience. It is worth
noting however, that many successful experiences have been
delivered, in conjunction with intermediaries, such as retailers;
the BOSE LifeStyle experience is a good example of this since
BOSE delivers a unique consumer listening experience, even within
big box retail environments.
Experience Stages
We view experience delivery as a four-stage process (see Figure
2).
Typically, experiences will successfully draw customers through
all four stages. Notably, they may also iterate; as new
experiences are made available, they will re-start the process
from the beginning.
The first stage is 'awareness' of a BSE. Here, individuals are
introduced, and attracted, to the business; underlying messages
are delivered and relationships are established.
Next, the target is called to action in the 'acquisition'
stage. Once the target becomes a customer, there us a transaction
of some type, and the experience is reinforced.
Following the acquisition, the customer will experience the
purchase directly, we refer to this stage as the 'appreciation'
stage (certain components of this stage have historically been
seen as the only relevant aspects of customer experiences).
Finally, the 'association' stage offers the potential to
consolidate and strengthen the relationship through an ongoing
connection. Properly handled, this stage will increase perceived
value of the product or service by promoting use and enhancing
customer satisfaction. It should also drive future transactions
(new or repeat); encouraging word-of-mouth and other
endorsements.
(------
A Good Experience
LEGO offers a great example of an effective business-sponsored
experience.
For a business that sells small plastic blocks, they have
created a hugely powerful behavior driver for pre-teenagers. The
experience LEGO delivers towers above those of its competitors,
in all experience stages.
Awareness is delivered from all the usual good marketing
sources(good brand management, targeted communications, etc.),
and then some. Word of mouth is a critical vehicle for LEGO to
Awareness and Appreciation. In fact, their Appreciation stage
experience is soabsorbing, and so oriented toward collaboration,
that kids proactively discuss the experience withmost people they
meet �and are even further motivated by strong emotions such as
pride and competitiveness.
LEGO has also opened theme parks and shops, and uses
co-marketing well in the appreciation stage (discussed later),
accompanied by extensive and consistent themesub-branding.
Despite being subject to the experience-impacting actions of
retailers, LEGO has crafted an Acquisition stage experience that
is electric in its motivation. Images on boxes and elsewhere are
well leveraged to create excitement among kids in the shop about
possibilities �though are tantalizingly out of reach (needing
assembly). Inter-dependencies between the products are cleverly
used to increase demand, created by the exploitation of story and
other themes, sub-brands and co-marketing partnerships.
LEGO'sability to manage its retail environment is noteworthy.
It repeatedly has the benefit of end-caps and other prominent
positioning, and its packaging is carefully designed to keep the
Appreciation experience in view �though, just out of reach.
Which brings us to LEGO's Appreciation stage. Their creation
of themes and stories tantalizes the kids, while the pre-designed
solutions that are part of the stories (rocket ships, submarines,
etc.) positively charges them with real senses of accomplishment
�further extended by the enjoyment of actually playing with a
realistic toy.
LEGO is able to translate this heightened motivation into real
dollars, selling a box of 100 plastic parts for as much as $20
(or, 20 cents each) �many multiples in excess of the actual
production cost.
However, it is the Association stage where LEGO shows its true
strength. LEGO has built social communities, using traditional
means (mail, magazines and a club), and the Internet (on-line,
theme-based games, club membership, shopping, competitions,
etc.).
It also fosters sub-communities based on specific interests
and on-going themes. And it has delivered all of this with
positivity�having gone to great lengths to eradicate potential
miss-steps, while rapidly dealing with customer issues. If a
child loses a part while building a pre-designed LEGO assembly,
LEGO will send out that very part, that day, first class.
The experience is truly amazing, and we are not able to do it
justice here in words in this short article �it must be lived to
be properly appreciated.
We have, however, one reservation over LEGO'sexperience
marketing, and it is one that we see often; it is that the
business model delivers poor economic results. While the
experience is very effective, and highly motivating (leading to
unparalleled premium pricing), the overall business model is
unable to deliver premium profits. LEGO has not properly folded
economics into their experience design, and are paying the
price.
------)
Why Adopt Experience Marketing?
Enhanced Growth
Experience marketing has the potential to heighten
differentiation, even in commodity markets, and so deliver share
gains. It also offers the potential for incremental sales -
bundling sales with other products, and drawing customers to make
purchases they might otherwise have forgone.
In terms of differentiation, experience marketing addresses a
subtle, but core element of the increasing sophistication of our
society - personal branding. Personal imaging and perception are
driving personal expression to new levels - it is not enough to
be associated with an image - now individuals are seeking out
entire messages and collections of messages.
The iPod is a good example of this. The statement made by the
iPod wearer relates to the experience created by Apple - hip,
individual, confident, progressive.
And it is this that is being used to differentiate the iPod from
the other personal digital music players - which seem to be just
that; personal digital music players.
The result is clear for all to see. Apple has captured much of
the market despite being the most expensive player. By pulling on
emotions, Apple has taken the power that marketers assigned
entirely to brand, and extended it to drive a powerful share
strategy.
However, the story does not end there. Experience marketing is an
integrated package, and the clever experience provider can find
additional benefits in the other elements of the package. The
product or service can be accompanied with add-on sales (iPod's
music business, for example), strengthened by community
activities. In creating a discussion forum (such as music
assessments and other tools and mechanisms on the web), Apple
locks in a range of business opportunities in its experience.
A well executed experience can completely alter the competitive
landscape, and even propel a bit player to leadership. Samsung's
results in cell phones is a prime example; in 1989 Samsung was a
tertiary brand, in financial trouble, and not significant in the
US market. Now, Samsung has developed an experience that is
magnetically compelling to youthful cell phone buyers; including
a hip image, leadership in trendy features (ring tones, styling,
etc.), firsts in technology (pictures, data-integration, video),
and - most importantly - intuitive operation. Samsung has grabbed
huge swathes of share, and has forced Nokia and others to mimic
their moves. In the meantime, Samsung is now here to stay as one
of the market's key share leaders.
Enhanced Profitability
Growth is only a positive force for businesses when it is
profitable growth, and experience marketing has the ability to
make dramatic improvements to profitability.
In simple terms, experience marketing, when properly managed, can
heighten demand - and in so doing present the opportunity for
increased prices and margins. Using many of the same drivers as
for growth (discussed above), such as superior differentiation
and bundled/integrated products and services, experience
marketers can manage pricing to cover the cost of the experience
and add further profitability.
In spite of its poor company-level profitability, LEGO is an
obvious example of the ability to create premium pricing; we
estimate each plastic block yields a price tens- to one
hundred-fold over its actual production cost. If LEGO is able to
properly prioritize its 'experience cost-return' formula, it
will be in a position to drive unparalleled profits. In fact, we
see LEGO as a classic example of superior creative capability -
well harnessed in creating experiences - unbalanced by comparable
creative economic management.
Too often, the economics of experience marketing are an
afterthought and, as a result, the entire initiative is set up
for failure. To achieve true success, economics must be addressed
ALONG WITH the design of the experience - within a coherent
growth strategy.
We see this state of affairs as a huge opportunity. Failures due
to the lack of insightful and creative economic skills outlined
above, result in companies not adopting or not attempting
experience marketing. Any competitor that overcomes this problem
has an almost clear field of play in most marketplaces.
While the economics are not easy, and are unlikely to be well
estimated at the start of an experience marketing initiative,
they must be a core component to the program - at the outset, in
the design, and in the feedback and refinement processes.
How To Adopt Experience Marketing?
Crafting an experience marketing program is an art - and is very
much dependent on trial and error. To complicate matters,
experiences must continually change and adapt with the market.
With that said, there are a range of tangible techniques that can
be adopted to deliver a rich experience; together with early,
profitable, results.
Three Steps To Implementation
Are you ready to break the mold in your market? Figure 3 depicts
three steps for you to undertake to design, refine and deliver a
successful experience.
Once you have identified and clearly defined your target (our
experience suggests this does not always happen first), the steps
are: 1. Find out what motivates target individuals; 2. design an
experience to engages those motivators; and 3. embark a
considered, well crafted implementation.
1. What Motivates Your Target?
First, a close examination of target individuals is needed to
delineate "Offering-Related Motivators" (ORMs).
We focus on two types of ORM; emotional and practical. There is
some overlap between these two groups, and there are ORMs that do
not fit into either group; with that said, this grouping is a
great starting point to identify ways to influence behaviors.
Emotional motivators relate to the individual's own goals and
thinking (e.g. achievement, image, etc.). While emotional
motivators are typically unique to individuals, they are
frequently within groups. The art is to pick out segments where
emotional traits are common in intensity and attributes.
Practical motivators are slightly easier to get a fix on, since
they are in the physical world, and can be teased out with
first-order investigations. Before we leave you with the
impression that they are not difficult, it is worth saying that
each individual has their own preferences for what they like - or
what they find helpful. Segmentation here is an art-form also.
A few example ORMs are listed in Figure 3. We strongly believe in
thoughtful segmentation schemes, and well-researched ORM
descriptors. Mistakes at this juncture prove to be very expensive
down stream.
2. Experiences, And The 'Levers' That Make Them
ORMs allow experience designers to create an almost infinite set
of potential experiences. Such a list needs to be mulled over,
consolidated and condensed into a small list (to ten or so). This
is an artful and fun process.
A key element to this 'options development' process is crafting
an intuitive assessment of each experience's likely impact,
versus its likelihood of successful implementation.
The short list of high-level experiences now need to be
evaluated, starting with fleshing out what each would actually
mean in terms of practical implementation. This starts the design
process.
The most important aspect to designing experiences is in gaining
a solid understanding of those factors that can be adjusted to
shape the experience. We call these 'experience levers' - and
there are three groups:
* Relationship: Direct interaction between customer and company
* Environmental: Indirect interaction between customer and
ecosystem
* Offering-Related: Interaction between customer and
product/service
The levers in each group vary depending on the situation (indeed,
some address more than one group), though there are commonly used
ones / favorites that readily spring to mind (see Figure 4
below).
In the relationship area, branding, advertising and
communications vehicles are the most salient levers. In the
environment area, retail settings (including sales activities)
and packaging are highly influential. In the offering area, the
usual suspects defining product attributes are found.
Your experience will be shaped at the nexus of these
interactions, between the target and you. In adjusting these
levers, the experience designer is looking to meet three
objectives:
a. Deliver the experience defined in the first step
b. Ensure that all aspects of the experience (including
'collateral' experiences) are consistent and additive
c. Ensure that no aspect of the experience is negative; any
interactions that are inconsistent with your experience will have
a negative or disruptive impact
While these objectives may seem obvious, there are numerous
points where it is all too easy to ignore one or more of the
objectives. For example, in putting together an experience, one
part of a business may conclude that the control of certain
levers is not possible, and they proceed with such a nagging
issue outstanding (e.g. an inconsistent brand positioning, or
call centers that focus on efficiency).
The net result is that any weak link in the chain is sufficient
to reduce the effectiveness of the effort to a very small
fraction of the potential, and the investment simply becomes a
waste.
While avoiding experience-negative interactions is essential, it
is uneconomic, and unreasonable, to utilize all desirable
experience levers. To help prioritize, we suggest ranking the
impact of levers, subject to the stage of the experience - as
illustrated in Figure 5.
Using this framework, the experience may then be designed in a
way that makes efficient use of the resources available -
focusing on the levers that matter most. Naturally, some levers
are more expensive to control then others, and the design process
we advocate addresses both the impact of the lever and investment
needed.
Each experience will have its own profile for what is important
among the group of levers (Figure 4 presents an illustration
only, and not a template for all experiences). Filling in this
framework for a specific situation is also an activity that must
be done accurately; the importance of the levers must be based on
thoughtful research, not intuition.
Some iterations are likely in the experience design stage,
including a responsible creation and evaluation of alternatives,
and an explicit use of economics in the assessment process
(assessing both the viability of experience investments, and the
relative merits between choices and options).
This stage must output both a very simple outline of the
experience (its target(s), objectives, and its form), and a
detailed description of the experience from the design exercise
(including key assumptions and economics).
3. Implementing The Experience
Implementation is mostly a function of the experience that has
been designed, and is largely unique to each case.
With that said, experience marketing is not a fire-and-forget
initiative. Given the 'artistic' nature of experience design,
it is very unlikely that the initial output has met its
objectives - and testing and iterations must be planned for. In
addition, tastes, outlooks and cultures change over time, and
the experience must evolve with these to remain relevant.
Experience marketing is not for ordinary marketing groups - it
takes the best it get it done at all.
Mind The Pitfalls
Half-Measured Implementations
There is a tremendous temptation to implement business-sponsored
experiences on the cheap, and then to wait for results to exceed
expectations.
The trouble with business-sponsored experiences is that the
entire experience needs to be managed. One break in the chain is
all that is needed for it to be damaged, exponentially reducing
its impact (impression made).
For example, a well crafted awareness message focusing on, say,
ease-of-use of a technology item, together with a great packaging
and in-store presentation modules, could be totally negated by
retail sales staff that incorrectly set up the presentation. Not
only would the message be lost, but the frustration to the
customer may actually lead to a negative impression. In such as
case, ignoring / not properly investing in the retail setting
results in the reduced effectiveness of the entire investment.
Beyond the retail environment, there are numerous other examples
of half-measures being utilized. Branding is a common area of
failure, where the difficulty in adjusting the corporate brand is
so great that it is ignored - resulting in conflicting messages.
Customer service is also another area of incomplete deployment of
an experience. Without the proper messaging, let alone training,
call center staff have one of the most powerful abilities to
destroy the experience entirely.
By the way, we see this pitfall as the most significant reason
for the limited adoption of experience marketing in any one
market. The half-measured implementations phenomena will actually
act as an entry barrier - causing many businesses to either a)
try the half-measure and fail (and to drop the initiative); or b)
shy away from the proposition altogether, concerned at the risk
(the outlay needed to do it properly). Of course, the risk is in
the execution, not the notion of experience marketing. If LEGO
can drive up demand for small plastic bricks, imagine what can be
done for other commodity products.
Insufficient Economic Assessments
All business managers have a fiduciary responsibility for the
investments they make. However, all too often, this element of
experience marketing programs are overlooked or ignored. There
appear to be three drivers for this:
1. The artiste in the primary manager (usually from marketing) is
overbearing, leading to myopia
2. The economics are viewed as too complex to assess, and are
ignored in totality, or in part
3. Management is desperate (usually to develop a
differentiation), and deliberately chooses not to conduct an
economic assessment
Reason 2. is often pointed to as an acceptable basis for
inaction. However, the potential returns are so great, in terms
of increased growth and profits, that it is worth investing to
develop a core skill in economically savvy experience marketing.
If it were easy, there would be no market leaders.
Notably, much of the investment aspects of experience marketing
can be assessed with some accuracy. Returns may be a little more
ambiguous to assess - though to the extent there are unknowns,
managers can still benefit from 'backing-into' the answer. For
example, identifying the ranges where results / metrics must be
for the initiative to be in the black is imperative, as it
provides a basis for judgments of reasonability.
At the minimum, completing an economic assessment is a
responsible management act in itself, providing managers with the
parameters of what might be expected, together with triggers and
metrics with which to monitor the initiative. Managers must have
the insights of an economic assessment to hand, and must be
continually in a position to update them as their experience
grows.
Shortcutting (Piloting And Research)
Whether driven by urgency or a desire to limit investments,
managers are continually tempted to circumvent rudimentary
management hedging.
Information is a basic form of management hedge, and tailored
market research - particularly primary research - is a must when
it comes to estimating the impact of an experience marketing
program.
The examination of customer responses to an experience marketing
program can be made directly in a set of tailored research
projects. These can be based on known and traditional techniques.
Furthermore, with the growth of experience marketing programs in
various industries, there is an increasing body of results that
can be used to extrapolate results to new industries and
situations - and so drive more informed judgments and
assessments.
---------------------------------------------------------------------
Mr. Jones is a management consultant with extensive experience
analyzing markets and crafting strategies that deliver superior
financial returns. He began his career as an engineer with
Thomson Consumer Electronics. Subsequently, turning to
consulting, he joined PricewaterhouseCoopers, where he was a
Partner in the strategy consulting practice, and he is now at
Business Intelligence Associates - a consultancy he co-founded.
He earned an engineering BSc from City University, London, and
an MBA from University of Chicago. http://www.biassociates.com
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