Brand Experiences – The Importance of IRL in a Digital World

As 2020 comes to a close, we reflect on the year that was and start to predict the year that will come.  What will remain constant and what will change?   What will return to normal and what is the new normal?  While consumer behavior changed radically in 2020, some things will never change.  

First, consumers will always find ways to shop.  Despite a pandemic and the accompanying high unemployment and government restrictions, holiday sales finished +2.4% vs. 2019.  The things they bought and the ways they shopped this year were different, but consumers still splurged on themselves and their loved ones this holiday season.  Remember 2008?  Holiday sales that year were -3.5%.  

Second, physical retail isn’t going anywhere.  While traffic numbers were down compared to last year, shoppers still came out in droves for last minute gifts.  According to a report by Placer.ai, over the weekend before Christmas, traffic to the top 10 retailers was -12.7% vs. the year prior.  While this isn’t exactly a Christmas miracle, context is important here.  First, this was 18 percentage points better than Black Friday weekend traffic, -31%.  Second, there were definitely bright spots in this group.  Traffic to Target was only -1.7%, TJ Maxx -6.8% and Dollar General up a whopping +10.7%.  Coupled with increased higher conversion and larger baskets, the share of total retail sales transacted in stores remained about 70% for the holiday season.

"Holiday sales finished +2.4% vs. last year, with more than 72% of those sales transacted in brick & mortar locations."

Third, delivering brand experience is more important (and more challenging) than ever before.  With more than 6 of every 10 shopping trips starting online, and nearly 3 in 10 starting on Amazon.com, the consumer’s lens through which they view your brand is becoming even more narrow.  Customer reviews, search rankings, and timely social media ads have moved from marketing tactics to shaping the way consumers view brands. Companies are rapidly losing control of how they deliver their brand experience.

So, what is brand experience and why is it important?  How can brands start to regain control over it instead of leaving it up to Amazon, Google and Facebook?   Chris Cavanaugh, Chief Marketing Officer of Freeman, defines a brand experience as “a sensory experience that brings a person into a lasting and meaningful relationship with a brand.”  Brand experiences are unique because while they appeal to the 5 general experience dimensions (sensory, affective, intellectual, behavioral, and social), consumers don’t need to actively seek out these experiences to be affected by them.  These experiences are created by product itself, shopping for and receiving service related to this product, and how we feel when we consume the things we buy.  These experiences are both direct and indirect.  Direct experiences are immersive and required physical contact with the product.  Indirect, or virtual, experiences are growing much faster than direct, which means less and less brand experiences happen IRL (in real life).  

Good brand experiences are stored in consumer memory and, according to research by Richard Oliver, influence future customer satisfaction and brand loyalty.  More than 80% of consumers said they are more likely to consider and also are more likely to pay more for brands that deliver good experiences.  Brands with strong experiences deliver 25% more loyalty and 200% higher NPS score than those with average or poor experiences.  And 47% of customers will abandon your brand if they feel like the experience doesn’t live up to their expectations, expectations which are now increasingly shaped by factors outside of your control.

A study by Jack Morton, found that good brand experiences deliver in 6 key areas:  discovery, product, shopping, customer service, employee and digital.  The best brand experiences are multi-dimensional, multi-sensory and combine lo-fi and hi-fi stimulus in a way that creates lasting impressions with consumer.  While the digital experience is increasingly important to today’s consumer, it’s only one part of a good customer experience.  Without those direct experiences -  or physical interactions - customers impression of your brand is too often shaped by two dimensional images, product descriptions that have been optimized for search engines not humans, and chatbots.  

So, brands invest in campaigns to re-shape these digital brand impressions, pouring money into flashy influencer campaigns, carefully crafted Instagram cadences, and Facebook marketing that can literally read your mind (or listen to your conversation with your wife…)  And as more and more companies pursue this perfect digital brand experience, the cost of online brand marketing increases more and more each year.  Since 2010, media inflation has averaged 6.5% per year, with social media platforms leading the way in finding more ways for brands to spend.  Facebook collected more than 5 times as much in ad revenue per active user in 2019 than in 2012, which means users are seeing more ads than ever and brands are paying more for this privilege.

"The best brand experiences are multi-sensory and combine lo-fi and hi-fi experiences. In a direct, or physical, experience, the customer can see, smell, hear, touch and even taste the essence of your brand."

Smart brands are realizing that, while investing in the right digital experience and paying to get eyeballs on your content is critically important, direct interactions are required to create a holistic brand experience for the customer.  Investing in the right physical experience gives brands another dimension to meet the consumer in – one that is inherently more multi-sensory and easier to control than ranking algorithms and influencer fees. Increasingly companies that were once digital natives are opening stores – pop-up, pop-in, or permanent – to improve their brand experience.  Warby Parker opened their first store 2013 and now transacts the majority of sales in its more than 120 stores.   Also, their stores act as brand billboards, establishing a strong mental marker in the consumer’s mind which makes those digital marketing efforts even more effective.  As Warby Parker co-founder Neil Blumenthal told Business of Fashion, “Before people shop with you, they need to know you first, and so as our brand awareness increased, it made our online marketing more efficient.  If people see an ad for a brand they’re semi-familiar with, they’re more likely to engage with it… that’s the synergy between our [brick-and-mortar] marketing strategy and our online strategy.”

Physical stores can appeal to all 5 senses – touch, smell, sight, sound, and even taste.  The sensory experiences are rich and if properly controlled, create lasting impressions for the consumer.  Stores also satisfy an inherently human need for social experiences.  How many people do you know that went to the grocery store during the spring shelter-in-place orders just to see another person’s face and hear their voice?  Shopping can be a social activity and is much more so in-person.  Companies like Hero are working hard to bring the in-store experience of a sales advisor into your digital shopping experience.  People want to interact with other people, not chatbots.  According to a recent Business of Fashion study, good store experiences act as a community hub, as well as a service touchpoint and providing immersive entertainment.

Brands are also leveraging pop-ups and pop-ins more and more to meet the customer in new ways.  Established brands like Coach and Gucci, digital natives like Allbirds, Everlane, and Gossier, and even well-known retail brands like Barneys New York are appearing in new ways through pop-up shops and concession agreements.  These go-to-market strategies allow brands to evaluate new markets, study consumer behaviors in new ways, collect actionable data, and most importantly, build brand recognition through great experiences.

By reconsidering multi-channel retail in new ways, smart brands are creating a more holistic brand experience for their customers.  They are taking back control of their brand from Amazon, Facebook and Google, and leveraging digital investments to enhance physical experiences and vice versa.  After all, we’re still human. After 10 months of non-stop Zoom meetings, wouldn’t it be nice to disconnect for a bit and experience brands IRL again?

Jeremy is a Managing Partner at Anner Consulting, LLC.  He has over 20 years experience as an innovator in brand experience and new retail business models.  Contact him with any questions or comments at [email protected].