A recent Adobe Think Tank, a video streaming forum, entitled “The Future of Experience Business,” began with a startling premise: “Marketing is an outdated practice, period.”
The statement arose from a question about marketing’s role in the experiential economy now that simply selling a product isn’t enough anymore. “The customer doesn’t want to buy a product from you, they want an engaging experience with the brand,” said Nandini Nayak, managing director of design strategy at Fjord (Accenture). “The sum of the experience is the product.”
All marketers are ultimately in the business of delivering an experience and product is only a part of that experience. Bringing that message home, Daniel Newman, Forbes contributor and CEO at Broadsuite said, “Every experience point is a marketing effort. Taken in that context, everyone in the company becomes a marketer.”
What customers want may not be what retailers are selling
Everyone recognizes the fact that we’ve entered an experiences economy. But few retailers know how to navigate it successfully. Ethan Imboden, vice president of design and strategy firm Frog, made the call, “It’s time to put forward and reformat marketing.”
Here is the new format for retail marketing: Retailers have to replace the outmoded 4Ps model of marketing based on Product-Price-Promotion-Placement with the 4Es format of Experience-Exchange-Evangelism-Everyplace.
The old 4Ps ideas don’t work anymore, which the reported retail apocalypse makes crystal clear. The 4Es are the guide for retailers to align with the experientially-driven mindset, expectations and needs of customers.
Education and training aside, one reason we cling to the old 4Ps of marketing is its simplicity. Following that need for a simple approach, Ogilvy & Mather’s Brian Fetherstonhaugh developed this new 4Es formula. The secret is to use these 4E ideas to communicate and deliver meaningful value to the customer.
Let’s drill down:
- Experience replaces Product
It’s easy to understand how experience replaces product when you are selling experiences, like dining, travel or spas. But retailers continue to think they are in a product business. Not anymore. Retail is first and foremost a people business.
Product, good product, cheap product, is everywhere. When customers want a product experience, they simply have to go to their computers or cell phones. Today going to the store is a choice, so shopping becomes the experience. Retailers need to restructure their offerings to lead with the experience. Yes, customer service is important, but it takes more than that.
Retail success has been proven to hinge on two factors:
- Amount of time shoppers spend in the store, where if a retailer increases the time spent in the store, their sales increase; and
- Extent of interaction with the store personnel and merchandise, so the greater the shopper interaction and engagement, the higher the sales.
Retailers succeed in the experience economy not so much by what they sell, but how they sell it. Look at men’s bespoke suiting company Knot Standard as an example. It started as an online e-tailer and has since expanded to include nine brick-and-mortar retail showrooms on two continents. Recently, Knot Standard entered the wholesale channel through a partnership with Bloomingdale’s. It is a true omni-channel retailer exemplifying the best experience in every touchpoint with the customer.
Online Knot Standard uses videos to guide customers through the process including how to do fittings, take measurements and select fabrics, buttons, and other design details. For the man who wants the personal touch, he can schedule a visit in a showroom where he are greeted in a lobby with a bar and couches that make the customer feel like he has walked into a boutique hotel. The result is he feels more comfortable and is encouraged to stay longer and hang out with the stylists and other guests. And the new Knot Standard-Bloomingdale’s partnership extends the brand’s personal touch to an even wider audience.
Morty Singer, President & CEO of Marvin Traub Associates, which also invested in Knot Standard through its TRAUB Capital subsidiary, says, “Retail visionary Marvin Traub would talk about retail theater. Today, it’s a fusion of retail and hospitality.”
But perhaps Knot Standard’s biggest claim to fame is figuring out how to offer a beautiful quality garment starting in the $500-$800 range, at least 40% more affordable than what most bespoke brands offer, thanks to technology that streamlines the entire manufacturing process. In that Knot Standard understands the next E – Exchange.
- Price morphs to Exchange
Retail thought-leader and Forbes contributor Robin Lewishas bemoaned the race to the bottom caused by retailers’ reliance on price as a driver for engagement. Without doubt, price still matters, even among the affluent with discretion to spend. But for the highest potential customers, the absolute price takes a back seat to value, as they are perfectly willing, and able, to pay when real value is there.
Exchange involves more than money in the till; it is the entire value experience a customer derives through the process of engaging with the retailer. Part of the exchange can be respect for the customer’s time, which is at a real premium today. It can be special insider knowledge or know-how that helps customers navigate their lives. Sephora succeeds because it expertly delivers expertise through makeup lessons and professional application.
Exchange can also be personalizing the product selection process, as Knot Standard does with its bespoke offering or Nike which trains its staff to match the customer with the right shoes or beauty retail Bluemercury which customizes its customers’ skincare routines by recommending across brands, rather than the industry-standard vertical brand selections offered at department store beauty counters.
It can also be a pay-it-forward gift that is passed along, as Toms gives a pair of shoes to children in need for every pair of shoes bought, Warby Parker’s ‘buy-a-pair/give-a-pair’ eyeglass offer or FEED bags which gives meals to the hungry in exchange for each bag sold.
Or it can be as simple as a meaningful thank you that makes the customer feel appreciated. Beekman 1802, the retail and product company founded by the Beekman Boys Brent Ridge and Josh Kilmer-Purcell, greets its Facebook followers every morning with a beautiful picture of the Beekman farm. It’s a personal way of saying thank you to their “neighbors,” what the company calls its customers. Ridge explains, “‘Customer’ says ‘What you can do for me,’ i.e. conduct a transaction and give me your money. ‘Neighbor’ says ‘We are all in this together.’”
Exchange elevates the idea of price beyond the transactional into a real relationship with the customer.
- Promotion is now Evangelism
By making the retail shopping experience personal and the exchange valuable, retailers can tap the potential of its customers to evangelize their experience of the store. The highest mark of engagement is turning customers into store evangelists that will spread the message of your store. It’s activated through content marketing, social media, traditional public relations, influencer blog posts, and through good, old-fashioned word-of-mouth marketing.
That WOM is profoundly effective goes without question. In survey after survey of B2C and B2B companies, word-of-mouth is ranked among the most important marketing strategies. The Word of Mouth Marketing Association puts numbers to its impact: WOM drives 13 percent of sales, two-thirds of which is offline person-to-person talking and sharing and only one-third social media driven.
Apple is one of the most effective brands in turning its customers into evangelists. Outdoor brand Patagoniacemented its engagement with its brand loyalists in its “Don’t Buy This Jacket” advertisement that encouraged its customers to think responsibly before buying new products. It underscored the brand’s core value of quality and lifelong performance. It was such a remarkable program, it went viral with lots of people talking about it.
And Beekman 1802’s daily exchange of life on the farm Facebook postings invite their neighbors into Josh and Brent’s lives. And their neighbors pass those inspiring photos along, not in any strong-armed way to market Beekman 1802, but simply because the pictures are so remarkably beautiful. Ridge and Kilmer-Purcell reject the ‘lifestyle brand’ label, in favor of being a “living brand.” And so the story of the Beekman 1802 living experience is spread.
- Place becomes Everyplace
The concept of Everyplace includes the idea of allowing customers to engage with retailers on their own terms, through their own paths to purchase, whether it be online, in store, at home or by phone. Many retailers have embraced the idea of Everyplace by creating beautiful sites and mobile platforms to deliver seamless customer interaction.
But Logan Rodriguez, Director of Retail at Square Root, warns that so much emphasis on technology-enhanced customer interaction can distract retailers from their primary goal of creating meaningful, memorable customer experiences that builds loyalty.
“It becomes a classic case of the snake eating its tail,” he says. “Data shows that only about 8-12% of retail sales stem from online purchases. So while brick-and-mortar retailers are driving their customers online, their actual stores, where 90% of their business comes from, is becoming less profitable.” Pushing customers to the online channel cuts back on the personal, one-on-one experience, in effect, “Giving shoppers no reason not to make future purchases online,” Rodriguez says.
Everyplace doesn’t have to be only via the Internet, with its many different platforms (mobile, tablet, computer) to support. It can be delivering the customer experience directly to the customer, face-to-face, person-to-person.
Take Lincoln Motor Cars, with its new Lincoln Conciergeservice which allows clients 24/7 personalized connection with its dealers including a pickup-and-delivery service to the owners’ home or office whenever repairs are needed. It is all part of “The Lincoln Way” of delivering services and experiences to its customers; in other words, Lincoln has evolved into the 4Es way of marketing.
In conclusion, retailers need to abandon the old 4Ps of marketing model and evolve to the new 4Es approach where Experience, Exchange, Evangelism and Everyplace guides the customer interaction. The 4Es of marketing is essential to transform retail from a product to a people-based business. That is what your customers are looking for today