Retailers are in a tough spot. Shrinking profit margins. Copycat manufacturing. Fierce competition. There’s no room in the market for good, only exceptional. And being exceptional comes down to just one thing—experience.
Not your background in the retail business, but your personality—your ability to give your customers unforgettable moments that make your brand unique and authentic. The reality is that customers don’t care that your margins are too small or that you were the first one to design a product. It’s not about what’s in it for you, but what’s in it for them.
Modern neuroscience suggests that humans don’t only use their rational brains to make decisions. Instead, we often rely heavily on our emotions. And it’s our experiences that drive what we feel.
More and more retailers are delivering distinct and tangible shopping experiences. Consider the retailer Scharffen Berger Chocolate Maker. According to Reality Interactive, the chocolatier used selfies created on Instagram with the hashtag #wonderfullycomplicated, which were displayed on 50 outdoor digital signage boards in San Francisco bus shelters. The company chose the best selfies and added headlines with adjectives about chocolate, such as “I am sweet, salty, and a little nutty.” Since anyone could post a selfie, the campaign reached beyond current customers, encouraging interaction in a fun, social way with the brand while driving new customers to the company’s retail locations.
Winning sales the old way—through price, selection, or convenience—is no longer a cure for the retail blues. With a mobile device in every customers’ pocket and sites like Amazon and Alibaba dominating e-commerce, there must be more than these common selling points for customers to take notice.
“As they struggle to survive, distressed retailers can take more desperate measures, including highly promotional pricing that can border on irrational,” notes Moody’s Vice President Charlie O’Shea in a Forbes article. But such tactics help no one. “This leaves stronger firms with the choice of either competing in a race to the bottom or giving up sales in order to preserve margin,” says O’Shea.
But there is a better choice for retailers—you can become an experience-oriented business in which delivering new customer experiences is your business, as much as or more than the products you sell.
Throughout the history of retail, brands have built their reputation primarily on the image they presented to their customers—the look of their logo, the quality of their products, the ambiance of their store. But in a digital world filled with instant gratification, it’s not looks alone that matter. It’s the feelings the experience generates.
As a retailer, gaining brand loyalty is now as much or more about the experience as it is about the knowledge of what products you stock on your shelves. Highlighted in an article in the Charlotte Observer, retailers O’Neill Clothing and Metal Mulisha use technology to deliver a unique and personalized online shopping experience to their customers. Online shoppers receive personal recommendations—based on where the shopper is located as well as what they click on—about items to purchase. The more shoppers surf the site, the more information the system has to make recommendations, and the more likely it is that those recommendations will results in sales.
“The software is more advanced than programs on other sites that make suggestions based on a shopper’s order history,” says Daniel Neukomm, CEO of the retailers’ parent, California-based La Jolla Group. “If a shopper is looking at garments designed as active wear rather than fashion, the software will take that into account. If someone from Wisconsin visits the site, the software is likely to suggest hoodies rather than surfing shorts.”
Since creating this online experience, O’Neill Clothing and Metal Mulisha have seen sales increase 25 percent. These results are backed up by research from Virtual Incentives, which found that the vast majority of those surveyed perceived brands more positively when offers were personalized. Additionally, personalization makes a brand seem smart, unique, and caring in the eyes of its customers.
Retailers also use experience to develop emotional capital. Lowe’s did this by developing a seamless customer experience across channels. For example, a customer who wants to replace a garbage disposal starts with a Google search that leads to the Lowe’s website, where she watches a video showing her exactly how to do it. Then by clicking on the product page for garbage disposals, she can see how many units they have in stock at the closest Lowe’s. Next, when she arrives at the store, the Lowe’s mobile app guides her to the right aisle and suggests some tools to make the job easier. And the next time something breaks, it’s almost certain that the positive emotional resonance from that experience will resurface, and the customer will turn once again to Lowe’s.
When brands can create positive experiences for their customers, it makes them more charismatic, more connected, and ultimately more trusted. And when customers identify with a brand emotionally, they’re more willing to purchase even when the brand isn’t the least expensive or most convenient.