Why physical brand experiences are essential in the digital age
Authors: NEST ONE - Florian Jürgs und Slaven Marinovic
„An experience in and of itself is worthless. It depends on what one makes of it. If the experience does not make you greater, deeper, purer, then it had better not have happened.“
Jakob Bosshart, swiss writer (1862 - 1924), freely translated
Jump Points
I. Prologue
The global lockdown in the wake of the 2020 COVID pandemic has greatly accelerated the digitization of the economy. Companies that previously sold and marketed their products and services in an analog-physical way had to shift their business models to the digital world in record time in order to survive. This pressure for transformation will continue in the long term and brands will inevitably compete to offer the best digital customer experience in order to attract new and retain existing customers.
Despite the shift to a thoroughly digitized world, it is important that physical touchpoints and experiences are not neglected.
Experiences are an essential feature of human perception and information processing. How does our consciousness work when we experience brands - that was, is and remains an exciting question. We find answers in philosophy, psychology, neuroscience - and practically up close in corporate experience architecture, the visible, tangible part of a brand identity.
Brands and companies can nowadays use more and more channels to communicate their messages, products or services. At the same time, however, they are under pressure to offer consistent emotional experiences across an ever-growing number of touchpoints. In a time of increasingly fragmented digital media as well as increased information speed and changing consumer behavior, what counts above all is a consistent experience quality of the entire customer journey across all real and digital touchpoints. No experience without emotion. And the stronger the emotion, the more vivid and long-lasting the memory. So if you want to be successful, you have to understand how to steer emotions and focus on constantly optimizing the customer experience.
A key success factor for creating lasting and positive memories of a brand is the direct involvement of people - not in the sense of action-reaction, but as inter-action. Viewing the world through the eyes of the customer and following an intelligent omnichannel strategy, brand experience spaces make values, attitudes, campaigns, and products more intense and multi-dimensional experiencable. Even purely digital brand constructs can thus unfold a personality to create a genuine and emotional relationship with their target group.
However, people only become sustainably enthusiastic about an object or brand when all their senses are stimulated. According to studies, multisensory stimuli are ten times more effective than purely visual stimuli. This means that brands that are experienced with several senses are better remembered.
Modern brand management cannot work without a rigorously planned customer experience journey across all touchpoints. Successful brand experiences are therefore always part of a holistic customer experience in order to inspire and ultimately convince the target groups. A reinforcement effect occurs when signals are directly decoded by the recipient and when a consistent overall picture is created. For the brand, this means that its core is translated sensually - color, shape, light, sound, material and haptics of surfaces, as well as relevant experience content, must contribute to a defined overall image of the brand. The decisive competitive factor is how the brand is presented in a way that can be experienced in different contexts.
It is the enthusiasm that is created in the consumer through this approach that makes brands valuable.
Emotional storytelling and fascinating (experience) architecture across all touchpoints of a customer experience journey create sustainable relationships between people and brands. Spatial stagings must not only appeal to multisensory stimuli, but also contain interactive elements, be surprising and tell stories. It all depends on what you make of the experience and how the individual building blocks are orchestrated.
According to a survey of more than 100 German companies conducted by NEST ONE in May 2021, real customer experiences (brand experiences) will retain their importance in the future. 90 percent of all companies consider direct encounters with customers to be extremely important in the future as well and see them as an opportunity to increase the attractiveness of their brands and their revenue. Even brands with strong digital distribution channels such as Apple and Nike continue to open flagship stores instead of closing stores as a result of Corona [Apple operates 511 Apple Stores worldwide (as of May 2021) and Nike plans 200 new stores by 2025].
Likewise, 75 percent of all customers still desire physical brand experiences. Attempts to move events such as product launches, trade shows and conferences to the virtual world have been received poorly and have shown that videos and chats on Zoom cannot replace the physical experience.
Extending digital customer experiences into the physical space increases the number of relevant touchpoints and thus the complexity and cost of C/DXE strategies, concepts and processes.
But the advantages outweigh the disadvantages. Brands that develop unique customer experiences along seamlessly connected digital and analog touchpoints differentiate themselves from purely digital competitors. They reach their target groups and stakeholders directly in the real space and can build a genuine and emotional relationship - and hopefully permanent brand loyalty - with them. Personal experiences make brands, products, services and the people behind them tangible through all senses and thus more immersive.
If the entire customer experience is positive and the brand succeeds in inspiring the customer, he will buy the products repeatedly, recommend the brand to his friends and family, and share brand content on his social media channels. It is enthusiasm that makes brands valuable.
But how do you develop a customer experience that excites?
II. The principle of excitement
Excitement arises above all when expectations are exceeded, when the customer gets more than he expects. The more often a brand leaves the known and expected behind and positively surprises the customer, the faster it will win him over.
Customer experience excellence creates excitement above all when it meets - and exceeds - the following nine rules.
1) Know your target groups
To create experiences that truly resonate with customers, companies need to thoroughly understand their target audiences, what they expect, what they like, and what media they use and when. The preferences and habits of young, tech-savvy customers can sometimes differ greatly from those of older consumers. The spatial staging of brands and their touchpoints must therefore be precisely tailored to each target group. Each touchpoint determines the success of the brand. Qualitative and quantitative surveys and the use of data analytics tools provide brands with information about the preferences and user behavior of their customer groups and deliver valuable and important insights.
2) Be relevant
A customer will only visit a website, a store or a trade show booth if he can find products and services that meet his needs and that he can't get anywhere else. What people need can be identified by the well-known hierarchy of needs by American psychologist Abraham Maslow (1908 to 1970). According to Maslow, people have eight types of needs, including physiological and social needs, but also individual, cognitive and aesthetic needs. The most successful brands satisfy several needs and offer products and services that are simpler, faster and better than those of their competitors.
With IMG's relevancy analysis, brands can continuously review the needs of their target audiences and develop tailored content, offers and campaigns (learn more about the relevancy analysis).
3) Appeal to all senses
The probability of inspiring people increases the more senses are addressed. Multisensory stimuli are ten times more effective than purely visual stimuli, for example.
Digital media usually stimulates only the senses of seeing and hearing. They lack the physical dimension, the spatial experience in which all five human senses (hearing, smelling, tasting, seeing, feeling) are stimulated. Encounters with brands in real space therefore influence consumers more than any other form of advertisement. When developing events, store concepts and trade fairs, brands should therefore make sure to integrate all sensory organs into the customer experience.
4) Design with reason
Just as with the design of digital user interfaces and touchpoints, stores, offices, trade fair booths, exhibitions, hotels and event spaces must be designed so simple, clear, concise and comprehensible that visitors can intuitively orient themselves and move around. If the visitor gets lost in a maze of areas and incomprehensible signage and lettering, the brand loses a customer.
A high quality experience must also be recognizable at first glance as the appearance of a specific brand. For the brand, this means that its corporate identity, personality, logo, values, colors and fonts must be physically translated into corporate architecture with specific forms, materials and surfaces. Corporate architecture is the spatial staging of a brand, the walkable, tangible part of a brand identity, which must contribute to the overall image of the brand. The goal is to create a consistent, coherent, and contradiction-free brand experience across all touchpoints that customers can decode immediately.
5) Communicate clearly and personally and tell stories
Communication along the customer experience should be clear, personal, empathetic and authentic. This is especially true for the brand's employees on site, who significantly shape the experience. They are direct brand ambassadors, and their appearance, their behavior, can increase the value of a brand - or harm it. Selecting and training appropriate personnel is therefore a high priority.
Human history is shaped by stories. Stories entertain, inform and convey relevant knowledge across generations. People learn through stories and remember stories better than pure information [Memory champions memorize sequences of numbers by matching each digit to a picture and connecting them in a story].
Brands must therefore tell stories and develop interesting storylines for their customers alongside the customer experience.
6) Be innovative
Technological developments continue to offer new tools for future-proof design concepts that optimize brand experiences and corporate architecture and offer customers something new and exciting. Augmented reality technologies, for example, offer countless opportunities to connect the real world with the virtual world to create unique and innovative experiences.
7) Be interactive
A key success factor in creating lasting and positive associations with a brand is the direct participation and involvement of people. Physical customer experiences must contain interactive elements and invite visitors at digital and analog touchpoints to try things out and actively shape the experience themselves.
8) Think digital
When designing and implementing physical brand experiences, the ability to share content online must also be considered. We live in a world where experiences are the new currency. Consumers want to share their experiences and talk about them on social media. Real experiences therefore have the potential to be extended digitally-medially. Many award-winning campaigns at the Cannes Lions International Festival of Creativity are based on real experiences that have been distributed around the world with the help of intelligent social media and PR strategies.
9) All inclusive
When designing physical brand experiences, use cases and customer journeys must be defined and designed as early as possible in the planning phase. The goal is to quickly generate customer interest and curiosity and then maintain it through a sequence of different and varied touchpoints. If digital touchpoints outside the space are also integrated and if the entire customer experience results in a stringent journey in which all touchpoints are perfectly coordinated, then the brand will inspire the customer and win him over.
III. Case Study Nike
In our survey on the state of customer experience excellence in May 2021, we also asked DAX companies and German SMEs about the brands and companies they consider to be leaders in customer experience. Apple (1st), Amazon (2nd), Nike (3rd), Netflix (4th) and Tesla (5th) were named. The fact that four brands with an outstanding customer experience are from the technology sector is not surprising.
Nike, the number three and only non-tech brand, has been pursuing a consistent direct-to-consumer strategy for years, which has enabled the brand to set sales and share records even during the pandemic - despite closing more than 900 stores during the global lockdown in fall 2020.
The consistent transformation from an "analog" brand to a digital-first and direct-to-customer brand began at Nike with the "Consumer Direct Offense" strategy presented in June 2017. The goal of this strategy was to improve the entire customer experience along all physical and digital touchpoints of the brand and to build immediate, personal customer relationships.
As part of its "Consumer Direct Offense," Nike implemented these four measures:
Restructuring of the global dealer network.
Expansion of own e-commerce channels.
Scaling of Nike´s mobile apps.
Introduction of novel retail concepts.
1) Restructuring of the global dealer network
The image and customer experience of any brand suffers if its own products and services are not marketed and distributed appropriately by its distribution partners. As part of its "Consumer Direct Offence," Nike therefore terminated many of its 30,000 dealer contracts (such as with Amazon) and at the same time invested in an exclusive group of 40 distribution partners who were prepared to present the Nike brand in a special way with pop-up stores and other promotions.
The partnership with Amazon was terminated because Amazon did nothing for years against the sale of unauthorized Nike products on its platform; according to a study by U.S. bank Morgan Stanley, 73,000 unlicensed Nike items alone were offered on amazon.com in 2017. Selected partners such as Zalando or Footlocker, on the other hand, are supported by Nike with limited products, special collections and campaigns.
2) Expansion of own e-commerce channels
Simultaneously with the downsizing of its distribution network, Nike massively expanded its own e-commerce channels with heavy spending on data analytics, logistics and supply chain.
For example, in 2018 and 2019, Nike bought Zodiac, a U.S. software company that increases customer lifetime value with personalized campaigns and product recommendations, and Celect, a company that uses artificial intelligence to predict consumer demand. Nike also expanded its logistics centers to deliver online orders within hours. Thanks to these measures, the brand was able to increase its sales through e-commerce by 79 percent between 2019 and 2020 and compensate for the closure of Nike stores during the lockdown.
3) Scaling Nike mobile apps
In recent years, Nike has expanded the brand's four apps (Nike, Nike Training Club, Nike Run Club, SNKRS) with numerous content and community features, and acquired more than 50 million new users during the pandemic, who use the apps for daily training and shopping for Nike apparel and footwear. While "Nike Running Club" and "Nike Training Club" focus on running and personal training, the "Nike" and "SNKRS" apps are primarily additional sales channels for the brand. On the Nike app, users receive special discounts, invitations to special events and exclusive collections. The app also functions as an interface to the Nike Store, allowing customers to order and pay for products. The SNKRS app, where sneaker collectors find rare models, helped Nike generate $1 billion in revenue in 2020. The apps also provides the brand with valuable insights into user behavior, which often inspires new products and services.
4) Introduction of novel retail concepts
Few brands understand the value of real experiences as well as Nike. Despite the expansion of digital channels, Nike's "Consumer Direct Offense" strategy therefore also focuses on the development of new retail and store concepts and the opening of 200 new stores by 2025. In the "House of Innovation" flagship stores in Shanghai, New York, and Paris, visitors can personalize products, participate in workshops and events, and receive advice from trainers and stylists. The stores increase customer loyalty - and revenue per customer. Customers who have visited a "House of Innovation" are spending 30 percent more than others (find a detailed case study here).
IV. Conclusion
The way we live and work has changed dramatically in the wake of the pandemic. We have increasingly moved away from physical spaces to digital ones. These may currently seem more effective and productive to us, but the very element of magic that happens when people (and brands) come together in real life is missing. What remains of the new digital tools and communication formats in a post-Covid era - the "Hybrid Age" - is yet to be seen, because great ideas and experiences need a real human encounter. What is certain, however, is that a customer experience excellence strategy is essential for every company and every brand to emerge as a winner from the new competitive situation.
In the future, brands will have to rethink existing marketing and communication models and make them more flexible. Perhaps more important than ever for the hybrid post-Covid communication age, is to provide unique customer experience excellence along seamlessly connected digital and analog touchpoints.
V. About NEST ONE
BRAND.EXPERIENCE.ARCHITECTURE.
NEST ONE is an owner-managed communications agency that specializes in the trinity of brand, experience and architecture in staging brands in three dimensional spaces. As a strategy and creative agency, we inspire through emotional storytelling and fascinating architecture across all physical and digital touchpoints of the experience journey and create sustainable relationships between brands and target groups.