How brands can capitalise on the experiential revolution
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 paralysed people to move their limbs just through thought – pure science fiction!
But today, innovation is happening faster than many organisations can fathom; and for brick-and-mortar service businesses, this can be terrifying.
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Nikolay Malyarov is chief content officer and general counsel at PressReader. He’ll be moderating the Innovation & Insight Theather at the FIPP World Congress, taking place on 9-11 October in London. Book your tickets here.
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.
But look at what happens when we move out 10 years.
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 consumer-centric 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 organisations into an EiE (Experience is Everything) enterprise to capitalise 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 commoditised.
Today, 78 per cent of millennials say they would choose to spend money on a desirable experience over buying something. Ownership is far less attractive to Gen Y’s than it was for their parents which is great for those organisations 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 travellers – 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 per cent of their revenue comes from only 20 per cent 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 travellers should be treated more like cargo than passengers. I personally find that short-sighted.
First, no airline can fill their entire plane with high-priced flyers – the demand will never be there.
Second, commercial airlines worldwide are forecasted to make US$736 billion in 2017. If 20 per cent 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 favour frugality over frills as just fillers of empty seats and rooms. These travellers 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?
Tru by Hilton
Sure, Gen Y’s 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 per cent would sit next to the lavatory
- 51 per cent would take less legroom
- 33 per cent 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, organisations 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 programmes set the bar for others to follow.
But with today’s high-demand, “me first” generations, travel programme 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% per cent of businesses have some form of loyalty or customer engagement programme 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 recognise that we live in a people-powered planet – fuelled 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 per cent of US consumers spend more with the brands they love…
- 78 per cent are withdrawing their loyalty at rates faster than three years ago
- 26 per cent 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. Organisations 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 organisations to take a fresh look at loyalty.”
And I would strongly recommend that these organisations 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% per cent from the US) about their relationship with brands. They discovered, not surprisingly, that:
- 54 per cent of consumers switched brands in the last year
- 18 per cent 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-personalisation, and co-creation, is changing consumer dynamics around loyalty and forcing brands and organisations to shift their approaches and programmes.”
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 organisations connect with customers after they’ve returned home is through a thank-you 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. Malyarov?”, 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.
Stop looking at loyalty in the rearview mirror and start capitalising on the experiential revolution. 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.
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