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Convincing Product Experience #1 – why is it important?

16 September 2020
Ida Lorenz, Michael Kugler
In different channels and in different contexts, the keyword Product Experience (PX) has been heard quite often recently. Customer experiences are becoming the linchpin of marketing strategies and the focus is shifting to building customer loyalty. And now the question arises: What exactly is it all about and how does it differ to Customer Experience (CX)?

Product Experience and Customer Experience - both terms are the subject of intense public discussions. But what exactly do they mean and what is the difference? Basically, experiences are the impressions that a person gains when interacting with a company or brand. The customer journey includes all contact points that a customer goes through until he or she decides to buy a product. The customer experience is the sum of subjective evaluations of the experiences at the various touchpoints. Therefore, an appealing Product Experience is essential for a great customer experience because it includes the presentation and use of a product in the experience observation. Excellent experiences are defined by the emotional connection to the product or service (and thus connection to the brand).

Therefore, we classify PX as a sub-discipline of CX

and in this article we would like to discuss in more detail about the added value that companies can achieve by establishing the topic of Product Experience in the company, and by addressing the challenges in Product Experience Management (PXM).

The ultimate goal is to create customer experiences that are unique, personalized, context-sensitive (i.e. tailored to a wide variety of situations) and, above all, targeted. Ideally, this relationship takes place across all interaction points between customers and companies or products.

The experiences then arise through positive or negative (always subjective) evaluation of the experiences. It is the task of the provider to lead them in such a way that, firstly, a purchase is made and, secondly, a purchase leads to customers establishing a relationship with the brand or product and, thirdly, in the ideal case, customers then act as an influencer or multiplier, e.g. through positive evaluations.

Two examples to illustrate a targeted Product Experience implementation: 
the Douglas experience store in Berlin and the Adidas store in London

In the Berlin flagship store, Douglas offers a very modern digital beauty temple in which the customer can get in touch with all product innovations in a highly interactive way. An expanded assortment, a Click&Collect station for online customers, a beauty lounge for professional hair and make-up styling and a fragrance bar for individual consultations complete the offer. Surprisingly, there is even an Influencer Room as a retreat for bloggers. So, the news of the product range can be published directly from there via various social media channels.

The Adidas Future Store in London offers athletes over 100 digital touchpoints on four levels of the store. This allows the customer to interact with the product in all possible ways. For example, interactive mirrors have been installed in the changing rooms, which recognize the products the customer tries on in the changing room and then provide appropriate information. In this way other sizes or colors can be requested without having to leave the cubicle.

Both examples demonstrate how the ‘simple surface’ of a store from yesterday can be upgraded to a future-proof solution today by linking online and offline. And these concepts show one thing quite clearly: the more that is digitalized, the more can be personalized. The data captured in the store during interaction can be analyzed accurately and thereby provide more personalized feedback to the customer.

Let's talk about Product Experience

Nowadays it is common that products and the service itself are no longer enough for all of us. Why? Because they are more and more commercialized and therefore comparable. With a smartphone in our hands, we can use the Internet to quickly find our desired product, buy it at its best price and have it delivered quickly. We as customers - and it doesn't matter at all whether we are end customers or on the road into B2B - we all want experiences. Ideally, these experiences are unforgettable.

This also applies to coffee beans. In this case, they serve to illustrate why experience should be at the center of every business model and how the value chain of products has changed over time.

progression of economic valueThe value chain of a coffee bean begins with production in the agricultural sector. Here, neither brand nor functionality is valued, but the price counts. The trade of the raw material and the following industrial mass production of the roasted coffee bean turn coffee beans into goods. In this phase final customers already feel an increase in value of the products, by a felt increase in value or a brand. The revaluation of this property is further commercialized by the supply of a service. In our example the coffee bean, which is served in the form of a latte macchiato in the café of choice.

Up to now, the customer was focused on saving time. Firstly, the raw material is offered roasted and secondly, the coffee is already brewed and made available to him.

In today's service company or service economy, products and services by themselves are no longer appropriate for customers. In order to survive in competition, the focus is on customer experiences. Now, the coffee bean is no longer brought out of the kitchen as a brewed coffee, but the preparation is staged by a barista in front of the customer with great procedure and the coffee is created individually.

At this point, the customer is no longer interested in saving time, but in ensuring that the time invested is well used. This is the part where the customer experience becomes a separate economic offer and is rewarded by the customer's willingness to pay. Because the longer he stays in the room (café or online store or retail outlet) with a positive feeling, the higher is the chance that he will spend more money there.
As of today, we all live in an experience economy. The result of this is that every retailer and manufacturer or brand competes for the time, attention and money of every single customer. As we have already shown, it's no longer much about saving time, but how well and eventful I can spend my precious time. This thin line between service and experience is quite a challenge.
To make this line clearer, here are two more examples: Uber. Anyone who has used Uber before will notice that it is a great experience to ride with Uber. Basically, it is only a way to save time. At every corner the driver can be booked via app and before the ride starts, the driver is paid. The customer only has to get off the car.

Another example is AirBnB. An experience platform for booking accommodations that is characteristically suited to the customer. In conjunction with the reservation different experiences can be booked, for example, for a journey to Amsterdam a canal ride in the famous canals. Time saved!

What does this mean specifically in relation to the price?

Back to the example of coffee: If the amount of beans for one cup of coffee is examined in concrete terms, it is worth just a few cents. Roasted, beautifully packaged and placed on a shelf in the supermarket, the value already increases to one euro per cup. If the coffee is offered freshly brewed, it is a few euros more. And integrated into a great atmosphere, in which the customer likes to spend time and watches how the coffee is freshly brewed, he then is willing to spend even more money.

experience economy at starbucksThe company Starbucks is a brilliant example of how the price of coffee can be changed when the Product Experience is sold to the customer as a benefit. The customer is willing to spend three to six euros for a cup of coffee (let's not even think about the extras). As a brand, Starbucks manages to generate more value from a simple coffee bean than any other company. But how is Starbucks accomplishing this?

On one hand, the stores offer personalized customer experiences. For example, with customer loyalty via an app for collecting bonus points. These can then be redeemed anywhere. But mainly with motivated employees. One example for that is when a customer is greeted with his or her own name. It is an experience to receive your own coffee in this special way.

In the meantime, the subject experience is also being taken up on a further level: the concept of Starbucks Reserve. It is about a luxury Starbucks. It offers many possibilities to get in touch with the three P's. One is the people, the baristas. They take the time to chat with the customers while they prepare the extraordinary creations (the product) at a bar-like counter in spectacular locations (the place).

How sustainable is Product Experience for corporate success?

experience gap - disruption happens in the gapBain & Company have published a survey according to which 80% of the interviewed companies are convinced that they offer their customers a good Product Experience. However, only 8% of the customers of these companies confirmed this opinion. The contrast between what a customer expects and what they experience in their interaction with a company therefore has a direct influence on their buying behavior. This results in a huge gap: the so-called experience gap. The goal is to close that gap by recognizing the interests and preferences of customers and paying attention to them consistently. This is exactly what can develop into a decisive competitive advantage. It is precisely in this gap that disruption takes place today.

Whether it is the example of Starbucks or other companies: The special features of the own product must be adequately transported to the customer in the particular purchase situation – this is where the great potential for all companies, that recognize and take advantage of the opportunity, lies. Basically, it is a matter of taking oneself out of conformity, being creative and thinking outside the box in order to be able to respond to customer needs individually.

How sustainable a Product Experience is for the success of a company also depends on how well the gap is closed – or how well it is avoided to make it bigger. The important thing is that no matter what industry a company operates in, there is one thing they all have in common: the provider with the focus on the customer and the product will be the winner in the end.

A negative example from recent times

Thomas Cook is a brand that has been present on the market for over 180 years and has now gone bankrupt. Here, however, it is like flying: one cause alone does not lead to a crash, but rather a chain of many incidents. At first, Thomas Cook had failed to focus on online business and thus did not follow the competition from the travel industry. Thomas Cook continued to rely more on local travel agencies and a telephone hotline. The product itself also failed to keep up with the times. The importance of package tours has changed in the travel industry, as many customers now also want flexible and modular travel. Individual experiences are also increasingly expected in leisure time activities and the eventful adventure is made possible by worldwide networking even in the furthest corner of the world. Just not with a package tour. An analysis of the product range and the customer needs (with a derived catalog of measures) could have been the solution.

This example confirms a study according to which 87% of the consumers would avoid a retailer after a bad Product Experience. Even worse: 42% of these customers even rejected the product after this experience because the bond to the retailer was not strong enough.

Another example from the travel industry

Princess Cruises is a subsidiary of a large travel company and also the provider of the Ocean Medallion, which revolutionizes the cruise industry with an innovative technology. The small accessory replaces the boarding card and offers access to countless offers on board as well as the facilities in some ports and advertises with a ‘very personal experience’ on board. With the help of personalized data collected at the time of booking, preferences can be evaluated even before the customer boards. With the help of a small chip, which can be worn on the wrist or around the neck, all perceived offers are stored on board. In combination with the cell phone, cabin TV or touch-screen monitor on board, the Medaillion serves as a personal concierge that helps with orientation on the ship.

This example shows an excellent example of a customer journey. Princess Cruises thus offers great customer experiences that are unique, personalized, context-sensitive and targeted while enabling emotional bonding across all interaction points.

Read the next article in our magazine to find out what conditions need to be created in the company in order to realize an experience in the customer journey. And why the greatest potential of digitization lies in company-wide collaboration and efficient data management.

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