Best Experience Brands: A Global Study by Jack Morton Worldwide

BESTEXPERIENCEBRANDSA GLOBAL STUDY BY JACK MORTON WORLDWIDE

EXECUTIVE SUMMARYBEST EXPERIENCE BRANDS reports the topline findings ofquantitative and qualitative research conducted in late2011 among consumers in the US, UK, Asia and Australia.This research strongly endorses the view that the brandsthat will lead in the 21st century will be experience brands– that is, brands that invest in building and continuallyimproving how people experience and interact with themas a point of differentiation from competitors and a reasonfor consumers to become customers and advocates.This view is proven out in the following topline findings:• aving a unique experience with a brand is important H in determining purchase We expect unique brand experiences• wo in five consumers would pay more for a brand that T offers a unique experience But howBEST EXPERIENCE BRANDS also highlights the “experience do we do that?drivers” that brands can adjust based on their audienceand industry sector.Additional insights from the BEST EXPERIENCE BRANDS studywill be released at a future date or may be requested bycontacting Jack Morton. BEST EXPERIENCE BRANDS /2

TABLE OF CONTENTSBrands are Verbs 4About the Study 6Key Research Insights: Experience Matters 7Experience Brand Drivers 11Experience Brand Trends 16Learn More 19About Jack Morton 20 BEST EXPERIENCE BRANDS /3

BRANDS ARE VERBSJosh McCallToday, more than ever, how a brand behaves is more Every brand can beimportant than what it says. Messaging is important,but what really matters is how a brand engages and an experience brandinteracts with the people who impact the business, fromits customers to the people who influence customers. by understanding theGiven an intensely competitive and (in many regions) experience drivers thatrecessionary climate, there’s huge pressure on everyinteraction with the brand, every touchpoint – from the influence customers andshopping experience to the customer experience andbeyond – to be effective, efficient and aligned with optimizing these driverswhat the brand says it stands for. Additionally, socialmedia channels have radically amplified the capacity to have the greatestfor consumers to broadcast positive and negativeexperiences with a brand. impact.On a fundamental level, brands are verbs: what they domatters more than what they say. And thus understandingbrands as verbs matters to business success.Think about today’s most celebrated brands: from Appleto Zappos, one of the things that stands out about leadingbrands now is how many have established a uniqueand differentiating experience. Whether it’s Apple’sgroundbreaking retail concept or Zappos’ legendarycustomer service, this unique experience gives the brandclear advantages over competitors. BEST EXPERIENCE BRANDS /4

BRANDS ARE VERBS (CONTINUED)These advantages include: differentiation and memorabilityin a cluttered and competitive marketplace; the abilityto maintain price integrity despite commoditization andrecessionary caution; and increased brand awarenessthrough resulting earned media and word of mouth(often more cheaply than by buying GRPs).We at Jack Morton have long contended that brandsthat invest in creating a unique experience – which havecome to be known as “experience brands” – will be themarketplace leaders of the 21st century. Josh McCall is Chairman & CEO of Jack Morton WorldwideThe BEST EXPERIENCE BRANDS study that you are aboutto read represents our commitment to providing research-based insights and data not only to prove out this assertion– but also to understand why experience matters somuch to consumers, and how this varies across productcategories, geographies and demographic groups.Our goal with this study is to help clients understand howthey can become an experience brand, or be a betterone. Because we believe that every brand can be anexperience brand by understanding the experience driversthat influence their customers and optimizing them to havethe greatest impact.The following pages highlight top-level findings,but we invite you to contact us to learn more. Let usknow what you think, and look for more of our annualBEST EXPERIENCE BRANDS studies in the future. BEST EXPERIENCE BRANDS /5

ABOUT THE STUDYBEST EXPERIENCE BRANDS is based on a survey sponsoredby Jack Morton Worldwide and conducted online by KRCResearch among 1,605 consumers between August 22and September 2, 2011. following definition: Survey respondents were provided the When you see the term “brand experie nce”, e with it is referring to any of the interactions you hav ser vices. either the specific company or its products or product or brand, your This can include your own personal use of the or people who represent the conversations or interactions with employees marketing, word-of-mouth, brand, or anything you learn from that brand’s es or social network. recommendations from your friends, colleaguRespondents were aged 18 and older and were drawn In addition to the results of the online survey reported infrom the US (1,000), UK (200), Asia (205 [Beijing, Hong the pages that follow, the BEST EXPERIENCE BRANDS studyKong, Singapore]) and Australia (200). Data from the comprised a follow-up qualitative study with a smallersample for the US and for Australia were weighted by number of respondents relating to their actual experiencesdemographics so that the results would more closely reflect with airline brands. Insights from this qualitative study, asthe distribution of adults according to the US Census well as more detailed quantitative findings relating to otherBureau and the Australian Bureau of statistics. Total data product categories, will be released at a later date or maywere weighted to represent each of the four geographies be requested by contacting Jack Morton.equally. All findings are statistically significant at a 90%confidence level or higher. BEST EXPERIENCE BRANDS /6

KEY RESEARCH INSIGHTS: EXPERIENCE MATTERSLiz BighamI have a lot of conversations about experience brands. WE ASKED CONSUMERS "WHICH BRANDS DOThese conversations often falter when, inevitably, the YOU BELIEVE OFFER UNIQUE EXPERIENCES?"question is asked: What are some examples of experience HERES WHAT THEY SAID:brands? The answer I most often hear, and give, isApple. Interestingly, answering “Apple” often leads to an #1 #2 #3 #4objection – one I’m confident the BEST EXPERIENCE BRANDSstudy will help to dispel.The objection goes: “I can’t be Apple, therefore I can’t be #5 #6 #7an experience brand." The assumption is that Apple is suigeneris; only Apple gets to be Apple. Therefore, being anexperience brand is a rarified condition, achievable only #8 #9 #10by a special few.BEST EXPERIENCE BRANDS proves first and foremost thatbeing an experience brand is neither optional nor limitedto certain kinds of brands, Apple or otherwise. Put simply: [ fig. 1 ]consumers want and expect brands to provide a uniqueexperience. Yes, consumers do indeed rank Apple as thebrand that provides the most unique experience across allcategories (see [ fig. 1 ] ). But more importantly, they revealan expectation that they should encounter unique brandexperiences everywhere, across many different productcategories (see [ fig. 2 ] ). Consumers reveal that theywill reward brands that offer unique experiences (and byimplication, the opposite is true, too: fail to offer a uniquebrand experience and consumers will choose anotherbrand). BEST EXPERIENCE BRANDS /7

No more punting on brandexperience: consumers expect it,they will buy and paymore because of it,and brands aren’tdelivering. “ 44% Strongly agree “Overall experience “Previous unique with a brand is the single experience is very important biggest factor in whether I decide to when deciding what specific purchase a product or service.” brands I use in the future.” 60% Strongly agree 62% Strongly agree[ fig. 2 ] BEST EXPERIENCE BRANDS /8

KEY RESEARCH INSIGHTS: EXPERIENCE MATTERS (CONTINUED)Here are three things the BEST EXPERIENCE BRANDS I will have a unique experience with that brand instudy makes very clear about the need for all brands to some way,” over two in five (44%) of consumersunderstand and invest in their unique experience: strongly agreed that they would pay more, and only 6% disagreed. Among those willing to pay a premium#1 DIFFERENTIATED BRAND EXPERIENCES DRIVE for a unique experience, nearly four out of five (79%) CONSUMER CHOICE strongly agreed that experience is the #1 factor in their Most consumers surveyed across markets say that purchase decision. Not surprisingly, willingness to pay experience drives – and in large part determines – their a premium is highest among those least impacted by purchase decisions. For example, in answer to the economic uncertainty. It’s 34% higher among upper question “My overall experience with a brand is the income respondents. In Asia, 58% of respondents single biggest factor in whether I decide to purchase strongly agreed they’d pay more for an experience. a product or service,” three out of five (60%) strongly Even in the UK, of the regions studied currently the agreed; only 5% disagreed. Asked “How important region most impacted by recession among those is a previous unique experience when deciding what studied, 28% of respondents still said they’d pay more specific brands you use in the future?”, over three out for a unique experience. of five (62%) also said a unique brand experience was very important; only 1% disagreed. #3 TOO FEW BRANDS ARE MEETING CONSUMER DEMAND FOR UNIQUE EXPERIENCES If it was ever in doubt, this definitively establishes that The study revealed a big gap between the value brands do not have a choice when it comes to their consumers assign to experience and the number of experience: they need to invest to optimize experience brands that are actually providing them with unique and leverage it as a point of differentiation. experiences. When asked to rate how unique their past brand experiences have been, just one in four#2 CONSUMERS WILL PAY MORE FOR BRANDS (26%) said their past brand experiences have been THAT OFFER UNIQUE EXPERIENCES extremely or very unique. The chasm between the Although most of the survey respondents dwell in almost two thirds of consumers (62%) who say unique regions suffering from economic uncertainty, many will experience drives purchase, and the less than one third pay more for brands that offer a unique experience. who say they’ve had a unique experience, suggests a In answer to the question, “I am willing to pay a tremendous opportunity for companies to dramatically premium price for a product or service if I know that elevate their brand experience. BEST EXPERIENCE BRANDS /9

KEY RESEARCH INSIGHTS: EXPERIENCE MATTERS (CONTINUED)Collectively, these three key insights should definitivelydo away with any punting on brand experience:consumers expect it, they will buy and pay more on thatbasis, and there’s a big gap between demand and supply.Of critical importance, the BEST EXPERIENCE BRANDSfindings also suggest that these patterns hold true acrossdifferent sectors. As part of the study, respondents wereasked in-depth questions about their experiences with aservice-driven sector (airlines); a product-driven sector(mobile devices); and a web-driven sector (internetretailers). Additional topline findings relating to thesesectors are covered in the following pages. Liz Bigham is SVP, Director of Brand Marketing, Jack Morton Worldwide BEST EXPERIENCE BRANDS /10

EXPERIENCE BRAND DRIVERSSo consumers expect unique experiences and will rewardbrands that provide them. What can brands do about that?Where to start? Brands must understandThey can’t just decide to be more “experiential” (a term how different experiencethat has, by the way, become extremely ambiguous throughoveruse, arguably since the publication of “The Experience drivers influence consumersEconomy,” a 1998 Harvard Business Review article by James Gillmore and Joseph Pine that brought experience tothe forefront of business leaders’ thinking). Community experienceIn order to build a strong experience brand, it’s importantto understand what the drivers of experience are, and howthey variously impact consumer perception and purchase. WHAT Discovery Digital experience INFLUENCES experience Customer experience ME? Shopping experience Employee experience Product experience BEST EXPERIENCE BRANDS /11

EXPERIENCE BRAND DRIVERS (CONTINUED)As part of the BEST EXPERIENCE BRANDS study, consumers 1were asked to rank the importance of a variety of factors T O P EXPERI E N CE D R IV E R S OV E R A L Lto their experience of brands. They were asked to rankimportance both to brand experience overall and to 1 Products and services that meet your needsexperience with brands in specific sectors (airlines, mobile 2 Understands your needsdevices, internet retailers). Some interesting insights about 3 Continues to serve and engage you after you’vethese experience drivers emerge: become a customer#1 DRIVERS ARE FUNCTIONAL AND BRAND- 4 Exceeds your expectations FOCUSED, BOTH RATIONAL AND EMOTIONAL 5 Makes it easy to find information and buy their products, wherever and whenever I want to shop Across all sectors, geographies and demographics, consumers are highly consistent in selecting both transparently functional, needs-driven factors and those with softer, more brand-driven associations as very EXPERI ENC E D R IV E R S IM P OR T A N T 2 important to them when experiencing a brand [ fig. 3 ]. T O U N IQU E B R A N D E XPE R IE N CE For example, the #1 driver across nearly all category sets is as functional as it gets (“Products and services 1 Initial impression the brand makes on you that meet your needs”), followed closely by the softer 2 Continues to serve and engage you after you’ve become a customer “Understand my needs”. Interestingly, the third-ranked experience driver is a demand to be engaged and 3 Understands your needs educated on an ongoing basis: consumers say it’s 4 Differentiates from similar products important that experience brands “Continue to serve 5 Employs people who anticipate your needs and engage you after you’ve become a customer”. When top ranked drivers are correlated specifically to those consumers who were most likely to say that 1. Data reflects top box rankings for “very/somewhat important”. unique brand experience strongly influences their 2. Data reflects derived ranking based on correlation of driver ranking and respondents who were most likely to state that unique brand experience is brand choice, the experience drivers became more very/somewhat important in deciding brand choice. brand-driven and less needs-driven [ fig. 3 ]. [ fig. 3 ] BEST EXPERIENCE BRANDS /12

EXPERIENCE BRAND DRIVERS (CONTINUED)#2 THE MOST IMPORTANT CATEGORIES OF Across all three, consumers indicated a significant gap EXPERIENCE DRIVERS ARE PRODUCT between drivers that were ranked very /somewhat EXPERIENCE AND CUSTOMER EXPERIENCE important and those they deemed excellent /very good Looking holistically at the various drivers ranked in based on actual experience [ fig. 5 ]. In some instances, the study and grouping them into different types of the gap exceeds a 20-point gulf between expectation and experience [ fig. 4 ], it’s clear that on a general level, delivery. Clearly, there’s work to be done to fulfill both product experience and customer experience are brand promise and consumer expectations most influential for consumers, followed fairly closely by shopping experience. Other drivers, although It’s interesting to note how well these findings about still important, figure less explicitly in consumers’ experience drivers map onto what’s already evident judgments of brand experiences. This suggests that about top experience brands. From Apple to Zappos, brands may need to reprioritize programs and Amazon to Zipcar, top experience brands emphasize partners to reinforce innovation in product experience and invest in innovating their product experience even as as well as exemplary delivery across the customer and they orchestrate and perfect their customer and shopping shopping experience. This is definitely not to say that experiences. They’re dedicated to continuing to serve any areas of experience are unimportant, but rather to and engage consumers even after they’ve become emphasize that in the minds of consumers, the areas customers. And they’re truly passionate about exceeding of product, customer and shopping experience are the expectations. forefront of conscious decision-making. BEST EXPERIENCE BRANDS demonstrates that it’s not just#3 ACROSS EXPERIENCE DRIVERS, BRANDS these leaders who are setting a path for experience NEED TO CLOSE AN EXPECTATION AND brands: it’s consumers themselves who are demanding DELIVERY GAP these very qualities from all brands. There’s a sizable gap between the importance LB consumers place on varying experience drivers and how those drivers actually deliver in reality. For example, consumers were asked about actual experience with brands in three sectors: airlines, mobile devices and internet retailers. BEST EXPERIENCE BRANDS /13

EXPERIENCES VALUED BY CONSUMERSAverage importance on a scale of 1- 7 for unique brand experience drivers, by category (mean score) 5.8 5.8 5.7 5.4 4.9 4.8 CUSTOMER COMMUNITY EXPERIENCE EXPERIENCEPRODUCT 5.9 Understands your needs 5.0 Supports causes that areEXPERIENCE 5.8 Continues to serve and engage important to you6.1 Products and services that you after you’ve become a 4.8 Makes you feel part of a meet your needs customer special group of people5.6 Invents new ways to enhance 5.8 Exceeds your expectations their products or services, after you’ve become a 5.6 Educates you about how to use their products and services DIGITAL customer and be a smarter customer, EXPERIENCE after you’ve become a 5.0 Array of available digital customer functions (apps, mobile, etc.) 5.3 Employs people who DISCOVERY to engage with the brand SHOPPING anticipate your needs EXPERIENCE 4.8 Online presence (web site, social networks, advertising) EXPERIENCE 5.6 Initial impression the brand makes 4.5 Active online following or 5.8 Makes it easy to find on you community information and buy their 5.5 How the brand differentiates itself products, wherever and from similar products and services whenever I want to shop (in store, online, mobile) 5.0 What a brand says about itself in 5.8 Provides an efficient marketing and ads purchasing experience[ fig. 4 ] BEST EXPERIENCE BRANDS /14

EXPERIENCE BRAND DRIVERS BY SECTORSERVICE-BASED SECTOR / AIRLINES PERFORMANCE IMPORTANCE GAPProducts and services that meet my needs 44 70 26Understand my needs 40 69 29Provide an efficient purchasing experience 41 66 25Make it easy to buy their services, whenever and wherever I shop 42 63 21Exceed my expectations 34 62 28Employ people who anticipate my needs 35 60 25PRODUCT-BASED SECTOR / MOBILE DEVICESProducts and services that meet my needs 53 72 19Understand my needs 43 69 26Make it easy to buy their services, whenever and wherever I shop 51 63 12Provide an efficient purchase experience 43 62 19Exceed my expectations 40 59 19Educate me about how to use their products and be a 41 58 17smarter consumer, after I’ve become a customerWEB-BASED SECTOR / INTERNET RETAILERSProvide an efficient purchasing experience 60 76 16Products and services that meet my needs 64 74 10Make it easy to buy their services, whenever and wherever I shop 59 71 12Understand my needs 50 65 15Exceed my expectations 46 63 17Initial impression the brand makes on me 45 60 15[ fig. 5 ] BEST EXPERIENCE BRANDS /15

EXPERIENCE BRAND TRENDS Consumers more likely toBEST EXPERIENCE BRANDS provides detailed insights intovarying considerations and influences for experience value experience arebrands across sectors, geographies and demographicgroups. Although we will be sharing more detailed insights prized by marketersin future articles and presentations, the following top-linetrends stand out:GEOGRAPHIC TRENDS:Impact of brand experienceConsumers in Asia are far more likely to say that experienceis the single biggest factor in brand choice (71%, comparedto 60% overall). This should inform the strategies for brandsmoving into Asian economies like China.Willingness to pay more for experienceAsian consumers are more likely to be willing to pay apremium for brands that offer a unique experience (58% vs.28% in the UK). Australian consumers are as likely as USconsumers to indicate they’d pay more (45%).Customer experienceIn general, US consumers have the highest expectationsaround customer experience: they’re most likely to identify“Exceeding expectations” as a driver (75%). By contrast,consumers in the UK are far less likely to cite “Exceedingexpectations” as a driver (57%); Asian and Australianconsumers are in the middle (67%). High expectations for customer service in the US are an important considerationas brands seek to compete in the American market. BEST EXPERIENCE BRANDS /16

EXPERIENCE BRAND TRENDS (CONTINUED)DEMOGRAPHIC TRENDS: Premium audiences outshine other groups when it comes to valuing experienceWomen more responsive and receptive Not surprisingly, those with higher incomes are far moreto experience likely to say they’d pay more for a unique experience.Women are somewhat more likely to say that unique brand Also not surprisingly, those consumers willing to pay moreexperience is very /somewhat important in determining are also far more likely to cite experience as the #1 factorbrand choice (64% vs. 59% among men). Women are informing their purchase choices (84% vs. 60% among thealso more likely to agree that they will pay a premium general population). Interestingly, the drivers influencingfor experience (47% vs. 41% among men). Interestingly, these “experience-seeking” consumers are far more likelywomen are also slightly less likely to say that they’ve been to be customer experience drivers such as “Understandsengaged in a unique experience in the past (24% vs. 28% your needs”, “Continues to serve and engage you afteramong men). Since women still make or influence most you’ve become a customer” and “Educates you abouthousehold purchase decisions, this is an important insight how to use their products and services and be a smarterfor marketers. Also of note, women rank some experience consumer, after you’ve become a customer”.drivers much higher than men: “Understands your needs”(73% vs 65%), “Continues to serve and engage you after SECTOR TRENDS:you’ve become a customer” (71% vs 62%) and “Exceedsexpectations” (72% vs 60%). Airlines Consumers appear to suffer from low expectations basedYounger and middle-aged consumers are on less than stellar experiences when it comes to the airlinemore willing than seniors to pay a premium sector. Over two in five consumers (43%) say that uniquefor experience brand experience is important to their purchase choicesThere is a ten-point gap between people under 55 and in this sector. Yet fewer than two fifths (39%) of consumerspeople over 55 when it comes to willingness to pay more rate their previous airline experiences as excellent or good.for brands that offer a unique experience (47% vs 37%). Again, refer to the significant gap between consumers’Whether this reflects seniors’ budgetary caution or a more expectations for key drivers and how airline brands haveconservative brand-view, it’s worth noting for marketers. actually performed [ fig. 5 ]. BEST EXPERIENCE BRANDS /17

EXPERIENCE BRAND TRENDS (CONTINUED)Mobile devicesThere is a much smaller gap between consumers’judgment of past experiences with mobile device brandsand the importance they place on experience. Almosthalf (48%) say that unique experiences drive purchasein this sector; a slightly smaller group (46%) rank their What makes an experienceactual past experiences as excellent or very good. memorable?Interestingly, although Apple tops the list of experiencebrands in this sector with a 69% ranking for highly uniquebrand experience, the next best-ranked brand pales in I like tocomparison, at 41%. experience new Whats a wow thingsInternet retailers factor?Most consumers ranked this sector very positively in termsof actual past experience: over two out of three (70%) saidtheir past experiences had been excellent or very good.Simultaneously, unique experience was most importantin this sector compared to the others (49% vs. 48% formobile devices and 43% for airlines). This is worth notingas more transactional or exclusively web-based brandsmay assume that “brand experience” is less relevant in theonline marketplace. Clearly, online brand experience mapsclosely to user experience – just look at the drivers cited asimportant by consumers [ fig. 5 ].LB BEST EXPERIENCE BRANDS /18

LEARN MORELook for more insights from the BEST EXPERIENCE BRANDSstudy to be released in the future. To request insights fromthe qualitative phase of the study, as well as more detailedquantitative findings relating to product categories, contactliz_bigham@jackmorton.comREAD OUR ARTICLES ON EXPERIENCE BRANDS:What is an Experience Brand? readExperience Brands and the Owned Media Opportunity readExperience Brands and the New Engagement Model (research) readExperience Brand Leaders 2010 readTO JOIN THE CONVERSATION ABOUT BEST EXPERIENCEBRANDS, PLEASE CONNECT WITH US ONLINE:Follow us on twitter: @jackmortonVisit us online: jackmorton.comRead our blog: blog.jackmorton.com BEST EXPERIENCE BRANDS /19

JACK MORTON WORLDWIDE IS A GLOBAL BRAND EXPERIENCEAGENCY WITH OFFICES ON FOUR CONTINENTS. OUR AGENCYCULTURE PROMOTES BREAKTHROUGH IDEAS ABOUT HOWEXPERIENCES CONNECT BRANDS AND PEOPLE – IN PERSON,ONLINE, AT RETAIL AND THROUGH THE POWER OF DIGITALAND WORD OF MOUTH INFLUENCE. WE WORK WITH BOTHBTOC AND BTOB CLIENTS TO CREATE POWERFUL AND EFFECTIVEEXPERIENCES THAT ENGAGE CUSTOMERS AND CONSUMERS,LAUNCH PRODUCTS, ALIGN EMPLOYEES AND BUILD STRONGEXPERIENCE BRANDS. RANKED AT THE TOP OF OUR FIELD,WE’VE EARNED OVER 40 AWARDS FOR CREATIVITY, EXECUTIONAND EFFECTIVENESS SO FAR THIS YEAR, INCLUDING BEST NEWPRODUCT INTRO, BEST MEDIA EVENT AND EMPLOYEE CAMPAIGNOF THE YEAR. JACK MORTON IS PART OF THE INTERPUBLICGROUP OF COMPANIES, INC. (NYSE: IPG).© Jack Morton Worldwide 2011 BEST EXPERIENCE BRANDS /20

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Best Experience Brands: A Global Study by Jack Morton Worldwide

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Best Experience Brands: A Global Study by Jack Morton Worldwide — Presentation Transcript