GOING BEYOND EXPERIENCE. The emergence of the relationship economy January 2015

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1 GOING BEYOND EXPERIENCE The emergence of the relationship economy January

2 EXECUTIVE SUMMARY The nature of interaction between brand and consumer is changing, and it brings both opportunity and threat. Do you rise to the challenge of offering your customers not only the experience they expect from you but the means and importantly the desire to propagate it? Or do you steadfastly maintain your marketing approach, which as compelling as it may be, is perhaps becoming a little distant? In our short accompanying video, Iain Stanfield tells you more about the relationship economy, to watch please click on the left 2 3

3 GOING BEYOND EXPERIENCE When Matthew Pledger and his friends went to see a movie at his local cinema, they didn t have a particularly good time. The cinema was half empty, the employees were rude and unhelpful and the tickets and food were expensive. None of these things made any difference to the quality of the film but Matthew didn t feel the overall experience was good value for money. 1 Matthew might have chosen to say nothing, not return to the cinema and dissuade his friends from going. Or he might have complained in person. Instead, he wrote a witty criticism and posted it on the cinema s Facebook page, where it gained almost 300,000 likes and 25,000 comments. This is an illustration of changing nature of the interaction between consumers and brands; from the Experience Economy to the Relationship Economy. Whilst Matthew Pledger s comments will not stop all 300,000 Likers going to see that film at the cinema in question, it does mean that a damaged relationship has been widely aired and thus set up a forum for discussion and complaint. In the Relationship Economy, the experience that the consumer expects of the brand is more far-reaching. It does not end with purchase - it will be posted on Facebook, or tweeted or made legend on Pinterest. It will reverberate through friends and colleagues and reach strangers. It will last long after the event. Opportunity or threat? It depends upon your understanding of your customer and what they want from you. Canny brand marketers who are truly consumer-centric will exploit this trend by differentiating themselves from their competitors through innovative use of social media to build relationships with consumers. Good branding has always been about tapping into emotions and creating relationships with consumers, but now these relationships go both ways. As with all relationships, the more you put in the more US consultants B. Joseph Pine II and James Gilmore, who first posited the experience economy as the next step after the service economy, stressed that it doesn t only apply to business that provide entertainment, like Disney or the Hard Rock Cafe, but to brands in all sectors. It changes the way brands interact with their market, and as it would seem that only a few have got this level right, why the shift towards the Relationship Economy? The primary driver is the rise of social media, giving brands and consumers a variety of platforms for conversations and connections. Research into youth trends shows that people under 30 have similar motivations globally and that they are primarily driven by a need for connection, relationships and community. 2 GfK s own research into consumer trends shows that people aged under 30 rank friendship as the second most important in a list of more than 50 personal values. 3 Remember the athletes walking into the arena for the opening ceremony of the London 2012 Olympics They were capturing the moment not simply for the gratification of their immediate friends and families, but to share with a wider audience and in doing so, enhance their own brand. In this climate, the most innovative brands are proactive about differentiating themselves, not waiting for competitive pressure to effect change. Companies like Groupon are based entirely on the power of the internet to connect groups of people. The reality of the Relationship Economy is that it doesn t supersede the Experience Economy but rather translates to the sum of the experiences you have together. In order for the relationship with a brand to work, as with any relationship, it must be based on the exchange of something of value. The brand must provide more than a good product/service for the price, but an engaging experience and ongoing dialogue that builds the relationship. you get out. holding smartphones and tablets aloft? 4 5

4 At the most basic level, brands have taken this to mean that they must gain as many likes or followers as possible through hosting small giveaways or prize draws. However, for brands to truly succeed they must emulate the qualities that draw us to other people and want to engage with them. Having too many online friends may be seen as desperate, so authenticity is key to building a meaningful brand relationship. Our data ranks authenticity as fifth most important value globally with 66% of consumers saying it is important.3 Buying fake followers for your Twitter campaign to may work in the short-term, but consumers will soon wise up to this type of deception. To combat this, Facebook has recently launched an automated system that will strip sites of fake likes in an effort to convince brand owners of the return on investment from marketing on the platform. 4 Marketing in the relationship economy must be appealing and engaging without being pushy or rude. Football club Bayern Munich had to apologise to fans after a Facebook stunt backfired. When the club announced a transfer to the team, it elicited a great deal of excitement and online debate. But when fans who had to like the site to find out more clicked, they received an image of their own profile picture on a Bayern shirt. This message was intended to be that supporters are the most important part of the team but instead it generated thousands of complaints. It didn t help that the club had recently lost an important game. 5 Using humour is risky, but it can be effective if done in an unintrusive way, and is not at the expense of the consumer. Apple s Siri voice-activated interface on the iphone 4S has some hidden jokes programmed in. Ask the phone What is the meaning of life? and it might answer I don t know but I think there is an app for that. Ask Who s the daddy? and Siri says You are, now can we get back to work? The humour doesn t interfere with genuine tasks and is discoverable by the user, thus adding a sense of exclusivity. Brands need to learn how to understand all consumer interactions with their brand touchpoints if they are to build successful relationships. Getting it wrong may cause damage, but failing to address mistakes is even worse. Matthew Pledger s complaint went viral and was picked up by the traditional media. The cinema had no control over the message or the audience but responded in a variety of ways including by contacting him in person, issuing a press release 6 and a posting on Facebook. Whilst this scenario can be difficult to rectify, it could be the start of a new relationship, if handled correctly. References Truth-About-Youth 3. GfK Roper Reports Worldwide You and Yours, Radio 4, August 29th

5 PRODUCT/SOLUTION IMAGE Brand value optimization Brand value is about the entire experience your prospects and customers have with your company, products or service. It s all about connecting with various audiences on common ground then articulating clearly what s in it for each of them. That sounds simple. But, to do it well, requires detailed understanding of who your target audiences are, what matters to them, and all the factors that influence their perception of your brand. We help you understand and optimize your brand value through a thorough exploration of four core areas: Brand trends We start with the big trends on what brands and why. We analyze your key customer segments, to reveal their different values and attitudes and how these affect their brand choices. Brand potential and positioning Then we benchmark your own brand performance against your competitors. And explore the details of your consumer-tobrand relationship, competitive positioning and potential brand extension. Build and maintain brand value We identify how - and to what extent - your products, channel experiences, and promotions feed into your brand value. And help you optimize each element. Brand relationship tracking And we run ongoing evaluation of your overall brand vitality, along with your brand reputation among key consumer and customer segments. Customer experience & loyalty management Being aware of what your customers are experiencing lets you identify and rectify potential problem areas before you lose Our approach provides understanding of the full picture, to help you maintain and increase customer loyalty. We analyze whether you are in tune with your target audiences values, what channels they are using and the experience they are receiving there, and what specific factors drive their loyalty. We do this by exploring the following key areas: Customer segmentation Starting with the big picture, we look at the major consumer segments, to identify your potential customer base and whether your products and services are in tune with key segments and their personal values. Customer experience planning For each segment, we examine their behavior across online, mobile and physical retail. To that, we add a comprehensive review of the experience points that they have with your Customer loyalty and satisfaction Finally, we provide ongoing tracking of your customers current satisfaction. We include insight on the key factors that drive their loyalty and early warning on customer churn, to help your retention strategy. customer trust. products and services, across all channels. 8 9

6 For more information on how brand awareness and customer experience can help your business please contact: Iain Stanfield, Director UK Head of Brand and Customer Experience GfK UK T +44 (0) About GfK GfK is the trusted source of relevant market and consumer information that enables its clients to make smarter decisions. More than 13,000 market research experts combine their passion with GfK s long-standing data science experience. This allows GfK to deliver vital global insights matched with local market intelligence from more than 100 countries. By using innovative technologies and data sciences, GfK turns big data into smart data, enabling its clients to improve their competitive edge and enrich consumers experiences and choices. 10 GfK. Growth from Knowledge

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