How brands can cap­i­tal­ize on the ex­pe­ri­en­tial rev­o­lu­tion

The Insider - - AUDIENCE - by Igor Smirnoff, Chief Com­mer­cial Of­fi­cer, PressReader

If I were to ask you to de­scribe the In­ter­net of Things (IoT), I ex­pect many of you would start to talk about how new tech­nol­ogy is rev­o­lu­tion­iz­ing the in­ter­net, pro­vid­ing “any­thing con­nec­tiv­ity” through ad­vanced net­works, sen­sors, elec­tron­ics, and soft­ware. And you wouldn’t be wrong.

But I’m of the same mind­set as Tel­stra CEO, Andrew Penn, who said af­ter his visit to CES this year that the IoT is not a tech­no­log­i­cal rev­o­lu­tion at all — it’s an ex­pe­ri­en­tial rev­o­lu­tion.

Just a few years ago, the thought of a self-driv­ing car would be con­sid­ered lu­di­crous. Brain-com­puter in­ter­faces that al­low par­a­lyzed peo­ple to move their limbs just through thought — pure sci­ence fiction!

But to­day, in­no­va­tion is hap­pen­ing faster than many or­ga­ni­za­tions can fathom; and for brick-and-mor­tar ser­vice busi­nesses, this can be ter­ri­fy­ing.

The law of ac­cel­er­at­ing re­turns

Ev­ery 12-18 months, com­put­ers dou­ble their ca­pa­bil­i­ties, as do the tech­nolo­gies that use them. Our per­spec­tive on this level of ad­vance­ment over a five year pe­riod is ra­tio­nal; we can com­pre­hend it.

Sud­denly the first five years don’t seem quite so im­pres­sive when you con­sider that only five years later, tech­nol­ogy will be over 1,000 times more ad­vanced than it is to­day — just about the time the ma­jor­ity of Mil­len­ni­als will be in their prime earn­ing and spend­ing years. Will your busi­ness be ready to serve them the way they want to be served?

The world won’t look any­thing like it does to­day and life ex­pe­ri­ences far be­yond most peo­ple’s imag­i­na­tion. To sur­vive, let alone thrive, busi­nesses will need lead­ers with vi­sions that look far be­yond spread­sheets and an­a­lyt­ics that only tell them what worked yes­ter­day.

They will need to be brave new pi­o­neers who — as one of the great­est Amer­i­can writ­ers of the 20th cen­tury, Kurt Von­negut said — “con­tin­u­ally jump off cliffs and de­velop their wings on the way down.”

We’re still see­ing too many ex­ec­u­tives in con­sumer­centric ser­vice in­dus­tries (e.g. travel) fo­cus­ing on pre­vi­ous years’ suc­cesses when plan­ning for the fu­ture be­cause they see safety in the pre­dictablity of the past; when, what they should be do­ing is trans­form­ing their or­ga­ni­za­tions into an EiE (Ex­pe­ri­ence is Ev­ery­thing) en­ter­prise to cap­i­tal­ize on the ex­pe­ri­en­tial rev­o­lu­tion.

Ex­pe­ri­ence trumps… ev­ery­thing!

Way back in 1998, James H. Gil­more and Joseph Pine II co-au­thored The Ex­pe­ri­ence Econ­omy: Work Is The­atre and Ev­ery Busi­ness a Stage — a best-sell­ing book that as­serted that the fu­ture of eco­nomic growth lay in the value of ex­pe­ri­ences and trans­for­ma­tions; goods and ser­vices were no longer enough.

At the time it was an emerg­ing econ­omy not well un­der­stood, but to­day it’s main­stream and wreak­ing havoc in busi­nesses that just lump ex­pe­ri­ences into ser­vices and pay the price of lost loy­alty.

Gil­more and Pine strongly cau­tioned against that, la­belling ex­pe­ri­ence as the “fourth eco­nomic of­fer­ing” due to its unique and pro­gres­sive value. Ser­vices, like prod­ucts, are in­creas­ingly be­com­ing more and more com­modi­tized.

To­day, 78% of Mil­len­ni­als say they would choose to spend money on a de­sir­able ex­pe­ri­ence over buy­ing some­thing. Own­er­ship is far less at­trac­tive to Gen Ys than it was for their par­ents which is great for those or­ga­ni­za­tions in the travel busi­ness, ex­cept for the fact that Mil­len­nial ex­pec­ta­tions are at an all-time high.

They as­sume their ex­pe­ri­ence with a ho­tel or air­line to be the best they’ve ever had and won’t tol­er­ate any­thing less. And they want cre­ative dig­i­tal ex­pe­ri­ences that in­clude a per­sonal touch — a mix of tech­nol­ogy and hu­man en­gage­ment.

The hu­man touch has been part of the lux­ury travel busi­ness for decades. I have en­joyed many “to­kens of ap­pre­ci­a­tion” from travel com­pa­nies like com­ple­men­tary wine in my room and ex­trav­a­gant amenity kits on board an air­craft.

But those gifts come with a hefty price tag.

Bud­get class ho­tels and air­lines rarely give any perks to their clien­tele. In fact, many air­lines are tak­ing more and more away from econ­omy class pas­sen­gers and up­ping the ante with their pre­mium class trav­el­ers — a bet that I think will bite them where it hurts the most in the not too dis­tant fu­ture.

Per­haps they are still liv­ing by the old 20/80 rule, where 80% of their rev­enue comes from only 20% of their guests — the ex­ec­u­tive class. Yes, it’s true that busi­ness class seats make air­lines more money, but that doesn’t mean econ­omy class trav­el­ers should be treated more like cargo than pas­sen­gers. I per­son­ally find that short-sighted.

First, no air­line can fill their en­tire plane with high­priced fly­ers — the de­mand will never be there.

Sec­ond, com­mer­cial air­lines world­wide are fore­casted to make US$736 bil­lion in 2017. If 20% of that comes from those in the rear cabins, that’s US$147.2 bil­lion — a siz­able chunk of cash air­lines and ho­tels would se­ri­ously miss if it were gone.

So let’s stop re­gard­ing those who fa­vor fru­gal­ity over frills as just fillers of empty seats and rooms. Th­ese trav­el­ers are your fu­ture.

Just look at what Mil­len­ni­als to­day want in ho­tels — af­ford­able, func­tional, and min­i­mal­is­tic lux­ury. Will they sud­denly, in mid­dle age, change buy­ing habits and start spend­ing their US$10 tril­lion on lux­ury goods and ser­vices?

Sure, Gen Ys en­joy pre­mium ex­pe­ri­ences like the rest of us, but their needs are sim­ple — they want a com­fort­able, con­nected, and en­ter­tain­ing flight that they can eas­ily book on­line; and they’ll tell oth­ers if they’ve had a bad flight ex­pe­ri­ence.

Also, to get a bet­ter flight deal…

• 66% would sit next to the lava­tory

• 51% would take less legroom

• 33% would stand

It’s time to pay at­ten­tion to all your cus­tomers and cater to their unique needs — de­liver what de­lights them.

Cre­ative dig­i­tal ex­pe­ri­ences

Al­though we’ve been liv­ing in a hy­per-con­nected so­ci­ety for years, the prac­tice of giv­ing a cre­ative dig­i­tal ex­pe­ri­ence isn’t as com­mon as one might ex­pect.

The good news is that things are start­ing to evolve in that di­rec­tion. There are many ho­tels and air­lines to­day who of­fer com­ple­men­tary ac­cess to thousands of news­pa­pers and mag­a­zines; and a few pro­vide ac­cess to Net­flix and Spo­tify dur­ing their stay/flight.

How­ever, th­ese perks don’t ex­tend once the pas­sen­ger is at home. It’s time to change that.

It’s all about the jour­ney

For decades, or­ga­ni­za­tions in the travel in­dus­try went to ex­tra­or­di­nary lengths to cater to the needs of their clien­tele dur­ing their stay or while on board their flight or cruise; their loy­alty pro­grams set the bar for oth­ers to fol­low.

But with to­day’s high-de­mand, “me first” gen­er­a­tions, travel pro­gram points aren’t adding up to en­gage­ment or re­peat busi­ness like they used to.

In the case of ho­tels, in­stead of mak­ing the most of op­por­tu­ni­ties to build long-term re­la­tion­ships through­out the en­tire cus­tomer ex­pe­ri­ence jour­ney — from the mo­ment a per­son thinks about book­ing a trip right through to their re­turn home and their next wan­der­lust wish — too many ho­tels only fo­cus on the low hang­ing fruit — be­tween the se­lec­tion and check-out phases.

If you had told me that two months ago, I prob­a­bly wouldn’t have be­lieved you. But when I saw the re­sults of a re­cent sur­vey we did with Forbes Travel Guide, I was more than a lit­tle sur­prised.

Per­haps it’s be­cause too many book­ings are be­ing done through third-party On­line Travel Agen­cies (OTAs) th­ese days — book­ings that take rev­enue away from hote­liers and air­lines and block ac­cess to those guests’ con­tact in­for­ma­tion.

What­ever it is, it be­came bru­tally ob­vi­ous from our sur­vey that ho­tel ex­ec­u­tives aren’t see­ing op­por­tu­ni­ties dur­ing the loy­alty loop — the de­sire, re­search, and post-stay part of the jour­ney. And that im­paired vi­sion that will not help them re­verse the trend of de­creas­ing brand loy­alty we’re see­ing across most busi­ness sec­tors.

Loy­alty ain’t what it used to be

Ac­cord­ing to Ac­cen­ture’s Fe­bru­ary 2017 Strat­egy re­port, more than 90% of busi­nesses have some form of loy­alty or cus­tomer en­gage­ment pro­gram in place, but many of them are fail­ing mis­er­ably.

Bil­lions of dol­lars are be­ing wasted be­cause what worked in the past doesn’t work any­more, es­pe­cially with to­day’s “me first” gen­er­a­tions — con­sumers of all de­mo­graph­ics who rec­og­nize that we live in a peo­ple­pow­ered planet — fu­eled by the in­ter­net, the shar­ing econ­omy and the 1.8 bil­lion Mil­len­ni­als that are es­ti­mated to have a life­time value of US$10 tril­lion.

Al­though 66% of U.S. con­sumers spend more with the brands they love…

• 78% are with­draw­ing their loy­alty at rates faster than three years ago

• 26% think brands should do ev­ery­thing pos­si­ble to earn their loy­alty (and keep it)

Robert Wol­lan, se­nior man­ag­ing di­rec­tor, global lead of Ad­vanced Cus­tomer Strat­egy ex­plains why the good old days of loy­alty are gone,

“New ‘lan­guages of loy­alty’ have emerged, driven by brands ex­per­i­ment­ing with cre­ative dig­i­tal ex­pe­ri­ences, which have changed the dy­nam­ics of cus­tomer loy­alty to­day.

The tra­di­tional ‘low price’ and ‘re­li­able ser­vice’ me­chan­ics are no longer as ef­fec­tive at driv­ing loy­alty. Or­ga­ni­za­tions that stick to tra­di­tional ap­proaches and don’t ex­plore the new driv­ers in­flu­enc­ing loy­alty risk drain­ing prof­itabil­ity and push­ing cus­tomers away – even when they have the best in­ten­tions or are fol­low­ing their his­tor­i­cal play­book. It’s time for or­ga­ni­za­tions to take a fresh look at loy­alty.”

And I would strongly rec­om­mend that th­ese or­ga­ni­za­tions also look at loy­alty in con­text of what the 2017 Edel­man Trust Barom­e­ter calls a global im­plo­sion of trust.

Trust in busi­ness dropped in 18 coun­tries over the last year. It’s hard to ex­pect a per­son to be loyal to you when they don’t even trust you.

What drives brand loy­alty to­day

The table stakes for brands to get into the loy­alty game are pretty sim­ple — re­spect and pri­vacy pro­tec­tion.

Re­spect is the easy part — treat your cus­tomers as you would want to be treated. Ig­nore them when they need you or spam them and you’ll have lost their trust and their loy­alty.

Pri­vacy pro­tec­tion is whole other ball­game, es­pe­cially now that the US House of Rep­re­sen­ta­tives just voted to wipe out the FCC’s in­ter­net pri­vacy pro­tec­tions (with the pres­i­dent’s sup­port), al­low­ing in­ter­net ser­vice providers to sell users’ data to mar­keters, fi­nan­cial firms and other busi­ness, without their con­sent.

In a world that’s be­com­ing more and more de­fense­less, brands have to step up their game and work even harder to pro­tect their cus­tomer’s data or suf­fer the aban­don­ment of loy­alty that will be next to im­pos­si­ble to re­cover.

But as­sum­ing you’ve been in­vited to the table by pass­ing

that en­try exam, here are some in­sights on how you can in­crease your loy­alty quo­tient with cus­tomers.

In the sum­mer of 2016, Ac­cen­ture Strat­egy sur­veyed 25,426 con­sumers around the world (~20% from the US) about their re­la­tion­ship with brands. They dis­cov­ered, not sur­pris­ingly, that:

• 54% of con­sumers switched brands in the last year

• 18% said their ex­pec­ta­tions around brand loy­alty had com­pletely changed

So what’s driv­ing cus­tomer re­la­tion­ships in the dig­i­tal age?

Ac­cord­ing to Kevin Quir­ing, man­ag­ing di­rec­tor, Ad­vanced Cus­tomer Strat­egy “An ap­petite for ex­tra­or­di­nary, multi-sen­sory ex­pe­ri­ences, hy­per-per­son­al­iza­tion, and co-cre­ation, is chang­ing con­sumer dy­nam­ics around loy­alty and forc­ing brands and or­ga­ni­za­tions to shift their ap­proaches and pro­grams.”

Take a les­son from the best

To­day if you were to ask what com­pany de­liv­ers the best in cus­tomer ex­pe­ri­ence, it would be hard to ar­gue against Ama­zon Prime. What started out as just free ship­ping has evolved into a pre­mium buf­fet of dig­i­tal de­lights through its photo, movie, mu­sic, and TV stream­ing apps.

The ben­e­fits, that far ex­ceed the US$99/year price users pay, have cre­ated a huge and grow­ing loyal fol­low­ing — a phe­nom­e­non that has af­fil­i­ate mar­keters con­cerned as they watch more and more of their vis­i­tors now go­ing di­rectly to Ama­zon to make their pur­chases.

Since the early days of sell­ing books on­line from his garage of­fice in 1995, CEO and founder Jeff Be­zos has al­ways put the con­sumer first — not through lip ser­vice, but through ex­em­plary cus­tomer ser­vice.

“If there’s one rea­son we have done bet­ter than of our peers in the in­ter­net space, it is be­cause we have fo­cused like a laser on cus­tomer ex­pe­ri­ence… We see our cus­tomers as in­vited guests to a party, and we are the hosts. It’s our job ev­ery day to make ev­ery im­por­tant as­pect of the cus­tomer ex­pe­ri­ence a lit­tle bit bet­ter.”

Jeff Be­zos (Ama­zon CEO)

When Ama­zon’s cus­tomers aren’t buy­ing prod­ucts on­line, they are still en­gaged with the com­pany through all the dig­i­tal “to­kens of af­fec­tion” they get through “their pre­ferred chan­nels” — no-strings-at­tached gifts that re­mind them on a daily ba­sis that Ama­zon cares. It’s no won­der Ama­zon ranked No. 1 in the re­cently re­leased Amer­i­can Cus­tomer Sat­is­fac­tion In­dex (ACSI) with a score of 86.

The ROI of rec­i­proc­ity

The typ­i­cal way travel or­ga­ni­za­tions con­nect with cus­tomers af­ter they’ve re­turned home is through a thankyou email that asks them for a re­view of their stay — use­ful in­for­ma­tion for the com­pany, but not some­thing that in­stills loy­alty with the cus­tomer.

May I sug­gest that in­stead of send­ing an Ex­pe­dia-like au­to­mated email that says, “How was your flight Mr. Smirnoff?”, send me the next dig­i­tal edi­tion of a magazine I read while on board; or bet­ter yet, a year’s free sub­scrip­tion to it, or an­other choice of thousands.

Now I’m hooked. You’ve just given me an ex­pe­ri­ence of re­ceiv­ing and read­ing a qual­ity monthly dig­i­tal magazine of tan­gi­ble value that suits my tastes and pas­sions on what­ever de­vice I choose. This un­ex­pected token of ap­pre­ci­a­tion kicks in the rec­i­proc­ity prin­ci­ple — the feel­ing of in­debt­ed­ness that trans­lates into a need to re­turn the fa­vor. It’s a win-win-win for me, the air­line and the pub­lisher.

I re­ceive a cre­ative dig­i­tal ex­pe­ri­ence that I ap­pre­ci­ate and the air­line gets my at­ten­tion ev­ery month when the magazine ar­rives, of­ten be­fore it hits the news­stands — at­ten­tion I’ll likely ex­tend to their pro­mo­tional com­mu­ni­ca­tions there­after. Mean­while, the pub­lisher gets paid for the is­sues I read.

Share the cus­tomer ex­pe­ri­ence jour­ney

A cre­ative dig­i­tal ex­pe­ri­ence that keeps on giv­ing can help travel brands join the cus­tomer ex­pe­ri­ence jour­ney from the per­son’s first de­sire to book a trip, to the next time they start itch­ing to get away from it all.

Hav­ing a per­son fly with you or stay in your ho­tel is the warm­est lead you’ll ever get. Don’t let it get cold. Fuel the fire by of­fer­ing cre­ative dig­i­tal ex­pe­ri­ences at all touch­points in their jour­ney and it won’t be long be­fore they start rec­om­mend­ing you to oth­ers and grow­ing your fan base and rev­enues.

April was In­ter­na­tional Cus­tomer Loy­alty Month — an op­por­tu­nity to start cap­i­tal­iz­ing on the ex­pe­ri­en­tial rev­o­lu­tion.

Stop look­ing at loy­alty in the rearview mir­ror and start plan­ning for a new fu­ture of for­tune. Ex­punge the word, “amenity” from your vo­cab­u­lary and re­place it with Ex­pe­ri­en­tial To­kens of Ap­pre­ci­a­tion (ETA) that are so ef­fec­tive at cap­tur­ing and re­tain­ing the loy­alty of the “me first” gen­er­a­tions, there is no way to de­scribe them with a sin­gle word.

Tru by Hil­ton

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