How Retail Brands Should be Creating Customer Experiences

January 29, 2018 John Deighton

Before the great recession of 2007, retail was quite adventurous. The idea of retail as theater was explored in everything from Niketown to American Girl to the Lego Store in Chicago’s Watertown. The recession forced us back to safer territory.

Perhaps it’s time to venture out again.

Why? Because invoking a customer experience, by which we mean the sense of having encountered something out of the ordinary, needing to be made sense of, something fun, is deeply rewarding. Jerome Bruner, the Harvard psychologist, conceived of an innate human “predisposition to organize experience into a narrative form.” The narrative can be boring—I went to the drugstore. Or it can be challenging—I walked into a drugstore where there was a weird assembly of elements: a medical student’s skeleton in the doorway, people grinding compounds in mortars and pestles. A culture carries ideas about what is normal or ordinary, and when events occur that depart from the norms, there is a compelling need to make sense of them in story form.

"...invoking a customer experience, by which we mean the sense of having encountered something out of the ordinary, needing to be made sense of, something fun, is deeply rewarding."

In the world of restaurants, an exotic branch of retailing, story frames can be very explicit. Rich Melman, a very successful Chicago restaurant owner and manager, once told the Chicago Tribune that that he designed restaurants much as Steven Spielberg did movies. “I do it in paragraph form, but essentially it’s the same thing as a screenplay. I pick the setting, the era, a leading character and a story line. For example, when I was planning Ed Debevic’s (a Chicago retro-themed diner) I took the year 1952.” The fictional Ed, so the script ran, was born in Chicago of Polish stock, went to public school, and after a spell in the army returned to open a diner. He wasn’t very good at it. His mantra was “Eat and Get Out.” Brassy table servers snapped gum, talked loudly, and disparaged patrons if they dared to decline the meatloaf. Melman claims that customers often assumed the mannerisms and language of the era, as if playing bit parts in his movie.

Everything about the experience at Ed Debevic's (including its dancing waitstaff) contributed to the story. Photo credit: scribble-scraps-blog.

Restaurants may have more latitude to be playful than retail, but after a trip to Lululemon you may ask, do they really?

To underscore the value of stories in making experience memorable, think of the obverse. As the cognitive scientist Roger Shank put it, “We fail to create stories if we want to forget them. When something unpleasant happens to us, we often say, ‘I’d rather not talk about it because not talking makes it easier to forget.”

The future role of brick-and-mortar stores

For shoppers, brick-and-mortar retail is the last refuge for those seeking anonymity in a world of perpetual surveillance, which may be attractive to privacy advocates but is hardly a basis for competition with digital retailers. When Best Buy competes with Amazon in the sale of electronics, Best Buy looks out at a sea of shoppers in its stores, almost every one of them totally unknown to the retail clerks. Amazon watches its online visitors fully informed of their past Amazon browsing behavior, their demographics and likely their Facebook psychographics. To gain further customer insights, it may well have bought, from third-party data brokers, their histories in other digital retail environments and their exposure and response to ads. Brick-and-mortar retailers have no choice but to know their customers as individuals if they are to compete with digital stores.

Brick-and-mortar retailers have no choice but to know their customers as individuals if they are to compete with digital stores. 

We continue to watch how born-digital operators go physical. When e-commerce comes down from the cloud, it brings its data with it. Look at Amazon, Nasty Gal, Everlane, Bonobos and Birchbox. The stores greet their customers with some form of identity elicitor, and take the conversation from there. The sales associate at an Amazon store knows as much about someone who walks into the store as the online algorithm knows of a visitor to the site, and deploys the same customer support tools. “Based on past buying and browsing history, you might like this?”

With Amazon’s acquisition of Whole Foods, we now have the opportunity to study the most elaborate instance to date of an offline operation with online insights. It’s quite possible to imagine that in that case, data insights won’t only flow from online to off, but may even allow Amazon’s e-commerce operation to benefit from what it learns from in-store performance.

Integrating digital into the physical experience

Almost every customer entering almost every kind of retail store does so carrying a so-called phone, in fact a computer transmitting a signal that can be read by in-store beacons. Shopkick is one of the startups that tries to take advantage of this digitally enhanced consumer. The Shopkick mobile phone app was launched less than two years after Steve Jobs announced the Apple iPhone in 2007. It was intended initially to drive people into stores. The trick was to entice them in with “kicks,” a form of rewards currency. Once in stores, shoppers often found something to buy. In fact, conversion from entering a store to making a purchase in the fashion category was close to 20%, in electronics 50%, and in the grocery category 95%.

Once shoppers had been nudged to enter a store, the vision was to deploy some of the methods of online commerce. The data profile linked to their phone identifiers gave brick-and-mortar retailers insights previously available only to digital retailers. The app could direct them to parts of the store most likely to interest them, or encourage them to pick up a new product and photograph its barcode in exchange for more “kicks,” or to buy a product that they likely would find appealing. The incentives could be varied in experimental designs, with real-time data on what worked and what didn’t for each individual shopper. The computer in the shopper’s pocket was the key to ending shopper anonymity.

Some retailers like Starbucks and malls like Simon Property Group’s Simon Malls have their own apps and some have their own location sensor systems. There are competitive systems such as Ibotta, with inducements to consumers to install these competing apps. There is also the prospect that, as augmented reality headsets fall in price, the mobile phone can be the foundation for an augmented retail environment.

Virtual reality has made an appearance at Home Depot, first in what it calls a micro-content hub on Pinterest, where users can explore room ideas through a series of video pins, and soon in selected stores, where shoppers can “step inside the pin in real life.”

How/why retailers should get to know customers better

Anonymity is the state of being unrecognizable in a second encounter. For retailers, where anonymity is the norm, that’s as good as saying you get one shot at every shopper. Once they leave the store that’s it. Yet even when the customer is persuaded to carry a loyalty card, few stores ask to see it until the shopping expedition is over, by which time it is too late to use the information in the shopper’s history to the shopper’s advantage.

That’s not to say that shoppers like to be identified. They don’t. In fact, many hate the “can I help you” question. It is just that without individually identifying information, one size has to fit all. The retailer can’t experiment with alternative ways of being helpful.

“Use data like a butler, not a stalker.” —Ana Andjelic & Rachel Conlan of Havas

I really like the slogan recommended by Ana Andjelic & Rachel Conlan of Havas, “Use data like a butler, not a stalker.” But just what is the difference between being helped and being stalked? The answer requires a lot of experimentation across methods and across individuals. Anonymity is the enemy of relationships both good and bad, and is a crippling obstacle to experimentation.

Building retail brands: The role of content marketing

Content marketing has worked very well for product brands. Red Bull is best in class, in my view, but there are so many others. Leading edge, and often edgy, brands have realized they are better off speaking to potential customers not through advertising, but through thousands of ‘amateur’ creators. These creators have built their audiences not through traditional broadcast media, but by speaking directly about brands they like to the fans they have built, for content that is often unrelated to the brands they like. I investigated the detail of content marketing in a case I wrote on the Ford Motor Company’s launch of the Ford Fiesta by enlisting so-called Fiesta agents, who had built significant social media audiences.

Marriott is another effective user of content marketing for its brand. (Is it a retail brand? Certainly, it’s a service brand.) My colleague and co-researcher Leora Kornfeld wrote in CMF Trends, October 19, 2017:

“If you’re a hotel chain, don’t talk about the quality of your mattresses or the attentiveness of your front desk staff. Those are features and benefits which are much less important today than they once were because such product attributes are easily found by people on their own in a search-at-your-fingertips world.

“This is one reason why, since 2015, Marriott Hotels has taken a very different approach to its online marketing. In a bold move, the company set up its own content studio, placing its bets on attracting consumers’ attention not with interruptive ads but with high-production value content that incorporates the themes of the drama and adventure of travel without overtly touting their brand.

“Speaking at Buffer Festival’s Industry Day, David Beebe, head of Marriott Content Studio, pointed to its Two Bellmen series of videos, which range from 30 seconds to over 30 minutes in duration and have racked up millions of views.

Mainstream retailing has an enormous opportunity to shape what it means to its shoppers by bypassing media and taking content direct to consumers. 

“The videos’ YouTube page introduces the series as follows: “Meet Gage and Christian. Gage is serious, focused and wholly committed to the Bellmen Way. He studies and trains for this job. Christian is, well, he’s in it for the fun. Together, they are the Two Bellmen and they do more than just carry your bags. They save the day, every day, through a stunning performance of parkour, dance and martial arts.

“The most watched of the Two Bellmen videos clocks in at 35 minutes and has been viewed over 9 million times.”

Why don’t more retailers either enroll agents to create content, or develop viral content for digital media? Lululemon has. In the past few years, the athleisure trend has exploded, and Lululemon has responded by doubling down on creation of content for their community of followers. The retail brand has over two million followers on Instagram, over 18 million video views on YouTube, and regularly publishes original content that educates their community on topics that relate to yoga, travel, nutrition, and their products. Kiehls and Sephora have moved in the direction of content marketing. But mainstream retailing has an enormous opportunity to shape what it means to its shoppers by bypassing media and taking content direct to consumers.

Conclusion

Technology has transformed brand-building as dollars have flowed from broadcast media like television to media that work in both directions, like search and inbound methods. It’s starting to transform retailing too. Particularly in physical retail spaces, the shopper is becoming part of the interactive show. It’s not the ‘retail as theater’ movement of the early part of this century. This time it is ‘retail as festival,’ with none of the division between front stage and back stage, the audience and the show. Technology, particularly when it is driven by personal data, places the shopper in the action, on the stage, in the experience. The future of retailing is as promising as the future of technology.

About the Author

John Deighton

John is Baker Foundation Professor of Business Administration at Harvard Business School. He is an authority on consumer behavior and marketing, with a focus on digital and direct marketing. John is the former director of the Journal of Interactive Marketing and is currently developing a course on Big Data in Marketing. He founded the HBS Digital Marketing program and taught Digital Marketing Strategy. His research on marketing management and consumer behavior has been published in a variety of journals (for example, the Journal of Consumer Research and the Harvard Business Review). John has a Ph.D. in Marketing from the Wharton School, University of Pennsylvania and an MBA from the University of Cape Town.

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