Of all retail companies, IKEA’s combination of a unique selling concept, low prices, and terrific customer service have yielded levels of customer commitment, bonding and advocacy unmatched around the world. At the same time, the company has balanced customer focus with a peerless product sourcing, inventory management, and staff training program.
IKEA focuses on creating a ‘branded customer experience’. Everything IKEA does regarding the in-store experience is designed to create positive memories and deliver the brand values of the organization. Part of this, of course, is being customer-centric; but it’s considerably more. IKEA looks at the most important and leveraging touchpoint elements of the customer experience from the customer’s perspective—from parking the car, to service, selecting stock, checking out, delivery, and installation. Understanding, dissecting, and improving the processes behind these elements of experience results in strategies for optimizing each so that IKEA can focus on delivering a differentiated, positive brand experience.
Unlike other furniture stores, IKEA wants the experience to be a ‘destination’, with expectations clearly articulated. They say:
“Bring the kids. We want everyone to have fun at IKEA, including the kids. That’s why we have a children’s playroom. Leave the compass at home, it is actually easy to navigate IKEA stores. Each IKEA store has a clearly marked path that takes you through the entire store. If you are a veteran IKEA visitor, there are many shortcuts to get you where you want to go quickly.”
What also makes IKEA a world-class branded customer experience creator isn’t that every transaction is perfect. It’s that they effectively marry the brand positioning and messaging with an emphasis on making certain that customers remember all of the positive things about shopping at the store—from parking to delivery and installation. It’s not just about the functional effectiveness and efficiencies. These are table stakes. Brand values must be built into the overall concept. Focusing on the critical components of both is what enables IKEA to generate three times the amount of sales per visit as the average furniture store.
Many b2b and b2c companies offer antiseptic, commoditized, vanilla experiences or customers. These are almost guaranteed not to be memorable, not to be talked about (unless neutrally or negatively), and not creating outside-in advocacy creation. Some, through culture, discipline, and purpose have succeeded in creating consistent, positive experiences which are appealing to customers and which customers consider worthy of passing along through informal conversation and recommendation.
Differences Between Most Companies and Those Focused on Branded Experiences for Customers
Most brands and corporations get by on transactional approaches to customer relationships. These might include customer service speed, occasional price promotions, merchandising gimmicks, new product offerings, and the like. In most instances, the customers see no brand ‘personality’ or brand-to-brand differentiation, and their experience of the brand is one-dimensional, easily capable of replacement. Moreover, the customer has no personal investment in choosing, and staying with, one brand or supplier over another. Consulting organizations like Forrester report that, at a time of economic pressure, two-thirds of companies feel the customer experience will become even more important. At the same time, Peppers & Rogers reports that their studies of senior marketers have found that three quarters believe the full revenue potential of current customers is unrealized.
A key opportunity for companies to become stronger and more viable to customers is creation of branded experiences. Beyond simply selling a product or service, these ‘experiential brands’ connect with their customers. They understand that delivering on the tangible and functional elements of value are just table stakes, and that connecting, and having an emotionally-based relationship with customers is the key to leveraging loyalty and advocacy behavior.
These companies are also invariably quite disciplined. Every aspect of a company’s offering—customer service, advertising, packaging, billing, products, etc.—are all thought out for consistency. They market, and create experiences, within the branded vision. IKEA might get away with selling super-expensive furniture, but they don’t. Starbucks might make more money selling Pepsi, but they don’t. Southwest Airlines could offer first-class seating, but they don’t. Every function delivering experience is ‘closed-loop’, maintaining balance between customer expectations and what is actually executed.
Exemplars of branded customer experience also understand that there is a ‘journey’ for customers in relationships with preferred companies. It begins with awareness, how the brand is introduced, i.e. the promise. Then, promise and created expectations must at least equal real-world touchpoint results (such as through service), initially and sustained over time, with a minimum of disappointment.
As noted, there is a strong recognition that customer service is especially important in the branded experience. Service is one of the few times that companies will personally interact with their customers. This interaction helps the company understand customers’ needs while, at the same time, shaping customers’ overall perception of the company and influencing both downstream communication and future purchase.
Finally, branding the customer experience requires that the brand’s image, its personality if you will, is sustained and reinforced. Advanced companies map and plan this out, recognizing that experiences are actually a form of branding architecture, brought to life through excellent engineering. Companies need to focus on the touchpoints which are most influential.
Zappos has all of the traits just described. First, serial entrepreneur Tony Hsieh, CEO of Zappos, is an evangelist for his company’s culture and what makes them successful. He has traveled the country (in a specially designed bus, no less) presenting the Zappos story—”Delivering Happiness” – to rapt marketing executives and students eager to learn what has taken the company from $0 to over $1 billion in sales in a few short years. As Hsieh describes the culture, and what has propelled them to become one of the Fortune magazine’s ‘100 Best Companies to Work for In America’ for the past two years, and what propelled Amazon to purchase their organization (with the critical proviso that the company would remain intact and independent within the Amazon empire), it is built on a foundation of inside-out and outside-in stakeholder advocacy
The outside-in advocacy Zappos has created is pretty straightforward. They build advocacy by understanding, and exceeding, customer expectations, creating WOW branded experiences. They make an effort to focus on the emotions connected with customer relationships, and identify ways to ‘reinforce good memories’. As Tony Hsieh notes in his presentations: “People may not remember exactly what you did or what you said, but they will always remember how you made them feel.” Finally, they continually ask how their culture can create more positive stories and memories.
Breaking Out of the Customer Experience Pack
Some branded customer experience-centric companies, like Zappos, IKEA, Disney, Target, REI, Nike, American Girl, Starbucks, Southwest Airlines, Baptist Health Care, Whole Foods Markets, The Container Store, and Harley-Davidson are well-known. Others deserve mention because they are original and distinctive, and because they represent excellent examples of bringing employees, process, and culture together in highly effective ways.
- W. L. Gore: When Bill Gore, a research scientist from du Pont, founded the company (known for ‘Gore-Tex’ fabrics used in outerwear, one of his goals was to give employees more freedom to innovate. Long a ‘lattice’ organization, whose structure is informal and interconnected, rather than a conventional hierarchy, project initiatives become team-based. Team leaders emerge based on both their initiative and ideas, plus their ability to take customer input and put these concepts into action. Gore has been listed in the Fortune magazine ‘100 Best Companies to Work for in America’ continuously during the 25+ years the list has been compiled.
- Zane’s Cycles: This retailer, based in Connecticut, is one of the largest bike shops in the U.S. They’ve calculated that the lifetime value of each customer is in excess of $12,000. Because they trust their staff and customers, an expensive bicycle can go out on test drive without any identification or form of collateral needed. Of 4,000 bikes sold each year, only about 5 are stolen; and Zane’s figures that this is a small price to pay in exchange for placing their confidence in the honesty of both employees and customers. Their annual sales growth has been in excess of 20% since the company was founded in 1981. At Zane’s Cycles, customers are seen as an asset not a cost.
- Trader Joe’s: Shopping at Trader Joe’s is truly a branded customer experience. Each store has a light-hearted South Seas island theme throughout, including the Hawaiian shirt garb of store staff. Employees at their Monrovia, CA headquarters often served as a ‘tasting panel’, and they help determine which new products will be stocked in the stores; and, with tasting locations at each store, customers get to give the final stamp of approval, or rejection, by ‘voting with their taste buds.’ This is also a device for bonding with customers at the store level. Even though Trader Joe’s stocks about 3,000 items, compared to the average supermarket’s 30,000 items, sales per square foot are typically two to three times that of chain supermarkets.
What has made Trader Joe’s so successful—apart from wage and benefits packages, and opportunities for advancement, well above most companies in the supermarket industry – is the sense that employees are the brand, its communication style and fun, upbeat culture. Employees are selected and trained to multitask, and everyone seems to enjoy what they do. They deliver a great branded customer experience, and they stay (voluntary turnover is only 4 percent) because they enjoy working there and because the organization is thriving.
- Umpqua Bank: Every customer wants a bank that can deliver personalized, customized, enjoyable experiences. Umpqua is one of the few banks which actually organizes, at a branch level, to make that happen. Employees are rigorously cross-trained, so that service reps can make change, and tellers can open loans. Umpqua sees itself as a retail, store-type, destination; and branches function as both bank and community center, with shadings of Internet coffee shop. As a senior bank executive has stated: “The retail model gives people a reason to come to the bank. Many come for entertainment or just to read the paper and enjoy a cup of coffee. When people come to the stores, they experience our culture and are more likely to do business with us or make an ‘impulse buy’.”
If Umpqua doesn’t sound like the typical bank, then they have achieved their objective. This model is not only good for the customer, it’s good for the employee; and Umpqua’s voluntary turnover rate is half that of the retail banking industry’s. Umpqua has regularly been near the top of Fortune Magazine’s ‘100 Best Companies to Work for in America’ for the past several years.
- Wegmans: Though Wegmans is a supermarket, shopping there feels more akin to being in a European outdoor food and beverage emporium. Wegmans’ success has been widely publicized. It is built on employee passion, and customer focused training (over 40 hours per employee per year) and empowerment, with a liberal sprinkling of proactive, charismatic customer service throughout the store. It is not at all on uncommon, for example, for employees to offer hands-on shopping help if customers are confused or in a hurry.
Recently, Wegmans had to pull and replace a reusable plastic Chinese-made tote bag with a pea design after a consumer group found that the bags had high levels of toxic lead content. They turned this into a positive by communicating their recognition of responsibility to protect customers from potential contamination.
- Apple Stores: Unlike typical office products and specialty electronics stores, Apple elected to create a sense of community and a user-friendly, supportive environment for customers. One very tangible and visible result of this thinking is the ‘Genius Bar’, where expert employees dispense advice and guidance to customers like bartenders make drinks and engage patrons in dialogue. Customers respond very well to this type of experience, making Apple Stores one of the fastest growing retailers in the U.S.
- USAA: An innovative financial services company for members of the military, plus direct relatives, and children and grandchildren of people who serviced in the armed forces, USAA has about 8 million members. One of the differentiators of USAA lies in the new employee training program. New hires, whether they have military background or not, are required to wear military garb, eat what soldiers and sailors are served in the field, and read letters received from members of the armed services and their families. Through this immersion, employees have stronger affinity for the needs of their members.
USAA is always seeking to provide differentiated, value-add service in an otherwise antiseptic industry. One of their recent innovations is a car-buying service for members that provides detailed pricing information, and even helps shop around for the car. The service, which is also available as an iPhone app, promises members that the price will be the lowest in their area. After members select their cars, a request for quote is sent to three USAA-approved dealers in the area. USAA even offers to pay the difference if a member/buyer finds a lower price within three days of purchase. USAA believes that this will save members an average of $4,500 from new vehicles’ sticker prices.
Today, we are witnessing customer-driven marketing through empowerment, self-management, and consumer generated media; and many companies have found themselves in the back-seat of the new age vehicles used in customer-supplier relationships. They are forced to modify existing communication techniques, or create new ones, and re-think interactions between employees and customers, and how they hire and train employees, and the experience processes they utilize, so that they can be positioned to generate advocates among their customer bases. How they use, or misuse, these techniques, and how they assess the return-on-customer effectiveness, and level of monetization, of their initiatives will change how word-of-mouth is pursued by both small and large enterprises.
At Market Probe, our primary and secondary research into the underpinnings and drivers of customer loyalty behavior show that organizations can manage customer commitment and advocacy only to the extent that they can create and sustain strength of the brand or company’s value proposition franchise. This is ‘inside-out’ advocacy creation, a core element of the branded customer experience.
In a recent study by the Chartered Institute of Marketing in the United Kingdom of 1,000 adults, only 8 percent believed that regular contact with suppliers is more beneficial to them than to the suppliers, while 50 percent thought that such an ongoing relationship benefited the suppliers. Worse, only 9 percent of the respondents said they wanted that contact to be driven by the supplier. These are alarming numbers, and they strongly suggest that skeptical consumers are rejecting common customer relationship-building and experience practices.
To succeed at customer relationship and experience management, the cold reality is that frequency programs are not enough. Great product is not enough. Exceptional service and customer-sensitive staff, though incredibly important, are not enough. Use of new and innovative communication technologies and multiple channels is not enough. Tight, efficient operational processes are not enough. Reputation, though also extremely important, is not enough. What really leads to loyalty and advocacy is the company-wide commitment to customers—strategic customer-centricity if you like—along with the ongoing creation of customer-perceived value and “barriers to exit.” often best demonstrated through attractive and desired branded experiences.
Success in the marketplace will be defined by three outcomes: the highest share of customer possible, optimal lifetime customer value generation, and the lowest voluntary churn. This requires both discipline and commitment from the entity endeavoring to reach this goal. It’s not easy, and nobody promises it will be. But it is elegantly simple.
The value of creating branded experiences for customers is discussed, in detail, in my new book, The Customer Advocate and The Customer Saboteur: Linking Social Word-of-Mouth, Brand Impression, and Stakeholder Behavior. For a brief description of our customer advocacy research concept and framework, please check one of our YouTube podcasts, including this one shot at a 2010 customer loyalty conference in London.
Important Note: Market Probe will be offering a webinar on our approaches to customer advocacy and brand passion research on Tuesday, June 28th, at 2 p.m. EDT. Click for further information and registration.