Recently I read Sapiens: A Brief History of Humankind, a fascinating take on evolution by the historian and philosopher Yuval Noah Harari. One of the big questions Harari tackles is how humans have been able to grow such large, connected communities, when all other primate groups in history top out at about 150 individuals in any one group. His answer: the ability to build networks.
This ability to connect and build networks was on my mind at a meeting I attended in mid-January in New York. At the National Retail Federation’s annual event — the world’s largest gathering of retailers and consumer companies — I had some interesting conversations with industry experts about the growing power of the connected consumer. A revolution in technology has created the devices and interfaces that allow people to interact with companies anywhere and anytime, and has enabled customers to influence a global audience with their comments or “likes.”
As Canadian Prime Minister Justin Trudeau said at last year’s World Economic Forum: “The pace of change has never been this fast, yet it will never be this slow.” To keep up with accelerating changes in consumer habits and to acknowledge customer importance, companies need to focus on — and measure — people’s experiences with their products and brands. Moving beyond ROI
Traditional return on investment (ROI) metrics are no longer sufficient on their own to determine your company’s success. Evaluating whether your value proposition, capabilities, and portfolio of products and services will create shareholder value requires laser focus on how well you’re meeting higher expectations around the customer experience.
Organisations need to map consumers’ purchase journey, isolate the touch points and factors that drive experience, and then invest more in the parts of the company that will move the needle on those interactions and yield measurable results — or return on experience (ROX). ROX also needs to address whether the company is driving the behaviours in the organisation that are key to designing and delivering better online and physical experiences.
PwC’s 2019 Global Consumer Insights Survey — the results of which will be published soon — highlights the need to focus on both ROI and ROX. For example, we asked more than 21,000 consumers in 27 territories around the world what they thought was the most influential type of advertising. About 35 percent said traditional TV ads, the highest percentage among all of the choices. This might seem like good news for the world’s biggest companies, because that’s where they still spend the bulk of their advertising dollars. But dig a little deeper, and you’ll see the desire for experience staring us right in the face.
Millennial survey respondents preferred social media ads that allow interaction with the brand. And although many companies partner with athletes and entertainers to market their products and services, respondents said that testimonials from real people who have authentic experience with a brand are more influential. Just 17 percent of survey respondents bought a product because of a celebrity endorsement, but 32 percent did so because of positive reviews on social media. If you pay attention to these statistics, which are indicators of ROX, it’s clear that investment in traditional advertising campaigns needs to be supplemented by enhancements to customer experiences along the purchase journey. My PwC colleague Matt Egol expresses it this way: “Word of mouth has always been more valuable than advertising, but now there are billions of opportunities for word of mouth — through social reviews and sentiment — to make an impact.”
There are other ways you can balance your focus on ROX versus ROI, including with your physical retail space. Retailers, banks, and auto dealerships invest enormous amounts of resources and time in their stores, branches, and showrooms. Yet, in today’s harried world, where so much product research is done online by consumers, creating the best customer experience is often more about getting patrons in and out as quickly and efficiently as possible. How do we know this is true? Because when we asked our sample of global consumers which attributes would improve their in-store shopping experience, the most common answer was, “ability to quickly and conveniently navigate the store.” Furthermore, one-quarter of respondents are making “micro-trips” — defined as lasting five minutes or less — to grocery stores or supermarkets.
Under our ROX microscope, then, retailers should be asking if they are actually investing in and delivering the experience their customers want: speed and convenience. By contrast, a traditional ROI focus may lead a retailer to position “fill-in” products at the back of the store, so shoppers seeing those high-demand items would have greater exposure to more products to potentially fill their basket. An ROX approach, on the other hand, would suggest including a selection of popular items in the front of the store to improve customer experience and loyalty.
When we first started conducting our Global Consumer Insights Survey a decade ago, we asked about the role of price in the purchase journey. A couple of years later, we asked about price versus convenience. Still later, we delved into more intangible factors, such as origins and supply chains, which hint at the value customers place on sustainably made goods and locally made products. But the reality today is that while the economics of prices and convenience are still important, consumers are enabled by technology to curate their own experience, balancing additional factors such as quality, social approval of friends, environmental impact, and any number of features important to them — whatever dimension they see as providing value to their experience. With consumers focused more than ever on those attributes that make up the totality of their experience, it’s time for all types of companies to lose the ROI blinders and begin focusing more on ROX.