It's time brands stop paying lip service to customer experience

According to Forbes, leading experience brands outperform laggards by nearly 80%.

For that reason, it shouldn’t surprise us that when Amazon announced their entrance into health care last year, share prices of many leading pharmacy brands lost between 5 and 10% in value. The same was true when Amazon entered the meal prep business and Blue Apron lost 8%. But it’s not just Amazon, and it’s not just North America. When Alibaba entered the grocery category with Hema, competitors all suffered and Carrefour eventually even announced their exit from the market. And these competitor declines are for good reason – Wall Street knows that the digital economy rewards and creates monopolies.

So, as the pandemic and the global quarantine continue to accelerate digital adoption, we have to ask, will we see more monopolies?

Perhaps no industry should worry us more than consumer batteries. Yes, you know the AA’s and AAA’s you pick up at the check out counter. The business is dominated by two brands: Duracell with circa 45% global market share, and Energizer with circa 30% market share. But if we just focus on digital sales, the picture changes dramatically. Online, AmazonBasics has nearly 97% of the North American market share of battery sales with Duracell, Energizer, and other competitors nearly disappearing. And while there is no direct parallel to this in Asia, the power marketplaces such as Lazada, T-Mall, and Flipcart will promote one brand over another when generic searches are made, making it vital for brands to move themselves from simply being considered or preferred by consumers, to being actively chosen and demanded at all stages of the buying experience.

The challenge is that while 71% of brands already consider customer experience as a top strategic performance measure, only 13% would have rated their performance as a 9 or a 10. The accelerated move to digital only elevates the importance of every brand interaction as these interactions will be the difference between bankruptcy and business continuity for many brands going forward.

But COVID hasn’t just generally increased the importance of customer experience, it has highlighted three challenges brands must solve to succeed.

1. Treat online visitors like people, not just consumer segments 

Marketers have a lot of jargon and acronyms. We’ve even used the whole alphabet to classify people into demographic clusters that if I am honest, most people in the industry only pretend to understand. And let’s hope most never learn because in reality, how similar is the A1 family on the street from their B1 neighbors.  As a cluster, they are probably similar enough that we might see the community as a good location for a high-end coffee shop, but if they walked into a store, would we treat them all the same and serve the same thing? No, we wouldn’t.

With that in mind let’s not pretend that this approach would be good enough online. Brands today can capture so many data signals about who their customer is, about their behaviours, their motivations, even affinities to other brands. And while this doesn’t provide foolproof knowledge at the individual level, when done well, it is like having a strong intuition. More importantly it’s valuable intuition as leaders in personalisation have been proven to deliver between five and 15% increases in revenue and 10 to 30% improvement in marketing spend efficiency. 

Doing this well starts with developing a data strategy and supply chain that connects first and third party data to continuously enhance your understanding of the individual. But a good data strategy is just the start. To build momentum and success, you need to use each of the individual data facets you track to define business rules to govern your communication and services.

While this approach still relies on clustering people into groups to make things manageable, in exactly the same way tradition ABC segmentation does, the impact is much more powerful as people are raising their hands and providing the data signals to tell us which group they belong in.

2. Focus on the technologies and experiences for the home 

After spending the past couple months at home, most people are looking forward to getting out again. Everyone has a different reason, or a different activity they miss, and just as we saw every brand release a COVID commercial about how we should all stay home and celebrate essential workers, we are now starting to see the wave of communication focus around getting back out and re-starting.

Brands are racing to be there with the consumer when they step outside, when they go back to a store, when they stop by a coffee shop. But why work so hard when you know that most people have used the past couple months to turn their home into a multi-tasking nest, and they will likely still spend more time at home going forward.

How do we know this? Singapore’s home fitness spend has increased by 70% according to Decathlon. Video game console sales increased by nearly 100% in March according to Lazada and online gaming players and viewers have broken records, while searches for Google Home more than doubled between February and May. So while there might be some revenge spending when things really open back up, the upgrades people have made to their homes are for the long term.

With this in mind, the question shouldn’t be how do we follow them when they leave the house, but rather how do we make sure we are part of their newly upgraded nests? How do we make our brand relevant through voice? Or connect it to gaming? After all, even before COVID, using these new platforms effectively drove real business value for brands like KFC whose Chinese gaming assistant Colonel KI drove coupon redemption rates above as 10%.

3. Build relationships around a value exchange that people will come back for. 

Every business that relies on repeat purchase from consumers focuses on increasing 'customer lifetime value'. While hard to measure precisely, indications are easy to identify: Does the customer buy more frequently? Does the customer pay for higher value products? Do your customers rely on price incentives or is the demand inelastic?

While these metrics are at a broad level measures of business performance, at an individual level they are signals of the value customers place on their relationship with your brand. Managing this relationship should be thought of in the same way that you would think of maintaining a relationship with a person – focus on building positive experiences that you can have together – focus on recognising the times they need you and being present in that moment, but also recognize that no one wants to be suffocated and so you should know how and when to offer space – which is a lesson many of us have likely encountered during the pandemic. This sounds simplistic, and it is, but we know from Byron Sharp that these are strategies designed to help build the mental and physical availability required to help brands grow.

Putting this simplistic approach into action however is anything but. It requires having built a data-driven understanding of consumers; it requires having identified and being active in the channels where your consumer lives and spends their time; and it requires connecting and marketing automation technology to activate the insights with content and services. However, when deployed and optimised, this type of approach has been shown to significantly increase customer loyalty.

In short, the changes that we have all experienced has resulted in people being more sensitive to the actions of a brand, but equally, in doing so it has opened new customer experience opportunities that should not be ignored. Experience has become the greeting consumers get from your brand, the comfort and ease that people seek out, and the reliability they come back for. Today a brand’s ability to deliver an experience where the digital channel feels more human and more natural is what will separate and elevate them so they can become tomorrow’s leading brands.

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Justin Peyton is chief strategy and transformation officer APAC at Wunderman Thompson