It’s Time to Shift Money Away From Upfronts and Into Experiences

According to PwC's survey, brand interactions are more influential than advertising

Customer experiences yield higher returns than upfronts have.
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We’re in the midst of a highly anticipated time in the marketing world: the season of Upfronts. But before you get all excited about your ad buys, you may want to reconsider where you spend your money.

Those dollars you’re putting toward multi-million dollar sponsorships, paid search campaigns and banner displays—how much are they really getting you? Probably not as much as you think.

The data is clear. Great customer experiences are a tangible business advantage, resulting in up to a 16 percent price premium on products and services, increased loyalty, willingness to try new products and openness with personal data, according to PwC’s latest Consumer Intelligence Series survey. Moreover, 65 percent of consumers say that a positive experience is more influential than advertising or marketing.

And yet, stand in front of a room full of people whose job it is to win customers and ask, “Do you have a customer experience budget?” They look at you like you’re speaking Belter Creole. Companies have marketing budgets. They have sales support budgets. They have product development budgets. They have advertising budgets. Silos rule. There is no customer experience budget. But companies destined to lead their industries are seeking to change that.

Think about that for a minute. This clue about what matters most to consumers changes the entire dynamic. It indicates a need to shift from a model that favors intense spends on advertising and marketing to one that favors bolstering spend on experiences.

The Mad Men fantasy for advertising is over. You'll never have enough dollars to buy enough customers. But you can win them with experiences.

When I was in the agency world, urgent calls for us to shift more money into advertising were constant. Why? Customer acquisition. It was a short-term panacea focused on buying customers, but in the long term, it does nothing to add to the experiences your customers and employees demand.

The Mad Men fantasy for advertising is over. You’ll never have enough dollars to buy enough customers. But you can win them with experiences.

Let’s do the math. Gartner’s 2017–18 CMO Spend Survey showed companies with $5 billion in sales commit more than 11 percent of their annual revenue, or $550 million, to marketing. What if you took just 10 percent of that, or $55 million, and dedicated it instead to strengthening the customer experience? Now factor in a 16 percent price premium for superior customer experience, and you get three times the return you would on an identical spend on advertising—even ads that tout how wonderfully marvelous you and your products and services are.

That’s an $800 million payout. Not bad for a simple budget shuffle.

We worked with a national luxury beauty brand that saw this play out. Advertising and marketing was pulling customers in, and the company had grown to hundreds of locations. But quick growth left the experience lagging. Guests were booking through call centers, appointments weren’t attached to profiles, preferred stylists weren’t tracked, customer information wasn’t shared between shops, employees wasted time tracking things down.

The company made a wholesale shift, setting aside short-term marketing gains and instead making every single moment, every interaction a customer has, front-and-center. By fixating on and spending on every moment and touchpoint a customer has, the company isn’t thinking about customer acquisition or competitors or their next ad campaign, but about what really matters: customer and employee experience.

Experience isn’t just one thing. It’s comprised of sales, customer service, order entry, human resources, quality assurance, shipping, billing, collections, maintenance—a hundred parts of an enterprise. Therefore, a successful initiative dedicated to experience requires a leader with enough professional standing, acumen and political weight to drive reforms across multiple departments simultaneously. It’s an executive function. But the payoff is worth it.

Quantifying the price premium gained by improving customer experience brings into sharp relief questions of where and how much to invest. Those equations inevitably lead away from paid media and toward developing and improving the multiple touch points your company has with its customers.

In the experience economy, you’d have to be crazy to take advice from a Mad Man.


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