2010: THE YEAR OF EXPERIENCE BRANDS

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At the dawn of a new decade,
amidst a proliferation of new ideas and opportunities, we believe
marketers can set their course guided by one overarching principle:
that the brands that lead in the 21st century will be experience
brands. The more that marketers can build experience brands, the
more they will succeed.

This begs the question: what exactly is an experience brand?

This article is the first in a series on experience brands to be published

by Jack Morton in 2010.

We start with the essentials on the pages that follow:

* Definitions: What makes an experience brand an

experience brand?
The brands that
* Examples: What are notable experience brands today? lead in the 21st
century will be
* The business case: What do companies stand to gain by
becoming experience brands? experience
brands.
Liz Bigham
Director of Brand Marketing
Jack Morton Worldwide

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The 5 fundamentals
of experience brands 2010: THE YEAR OF EXPERIENCE BRANDS /3
EXPERIENCE BRAND?
WHAT’S THAT?
Defined literally, a brand is the identifying marks, names and words
that distinguish one company’s product or service from another’s.

But more meaningfully, a brand is a promise—a distinct value

offered.

And in the most meaningful sense, a brand is a promise kept—

through experiences that deliver on that promise at every point of
interaction with the brand. The first fundamental
of being an
experience brand?
Following are five fundamental truths about experience brands.

The first fundamental of being an experience brand? Delivering on

your brand promise at every point of interaction.
delivering on your
brand promise
Because you can talk all you want, you can spend all you want on
carefully crafted messages, but at the end of the day, what people
at every point of
remember is what they actually experience. interaction.

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 Your brand is
formed primarily,
not by what your
company says about
itself, but what the
company does.
Jeff Bezos, Amazon

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You’re defined by what you do—not what you say. So…

* Ifanswer
you say customers are your top priority, but your call center can’t
their questions, that’s an experience that defines your
brand the opposite of “customer-focused.”

* Ifforyouyoursay customer
you value customer loyalty, but you haven’t made it easy
community to connect with each other and
influence your next generation of prospects? Again, your
experience contradicts your promise—and your brand will suffer.

Every interaction is an opportunity: those aspiring to be experience

Every interaction
brands should holistically assess all the touchpoints that comprise their is an opportunity.
brand for stakeholders. In theory, no experience is too small to qualify,
but different companies will weigh touchpoints depending on needs,
resources and whether they’re a product or service-based brand, B2C
or B2B.

2010: THE YEAR OF EXPERIENCE BRANDS /6

The second fundamental of experience brands: they’re true “people
brands.”

Experience brands don’t just say that people matter—they take a

“brand2everyone” approach that puts that commitment into action, at
every level in the organization. Think of US apparel retailer Patagonia.
The passions that motivated founder (and Let My People Go Surfing
author) Yvon Chouinard—outdoor sport, environmentalism, global
good citizenship—are authentic to its staff and proved out in its HR,

The second
operations and CSR practices. Or online retailer Zappos, whose
CEO Tony Hsieh is the “cheerleader in chief” behind its zealous
customer service ethos. According to a New Yorker profile, “He talks fundamental of
about being the architect of a movement to spread happiness, or experience brands:
‘Zappiness’,” and inspires that in employees.
they’re people
The third fundamental of experience brands: they build relationships
brands.
The third: they
based on values of authenticity and the “three R’s”—what’s real, right
and relevant when the brand comes together with its communities.

That authenticity really comes through because experience brands

value authenticity
promise values that are truthfully delivered by people across the and the “3 Rs”---
organization, from the CEO on down. They feel authentic to customers what’s real, right
and end-users because they are core to the brands at the level of and relevant for
corporate and cultural DNA.
their brand and its
The belief this inspires is one reason why you’ll find, among the
ranks of experience brands, so many that you’d also describe as fan
people.
brands, community brands, tribal brands, brands that have and are
embraced by communities that not only buy, but also talk, promote
and share their experiences with others.

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That’s a great set-up for the fourth fundamental of experience brands:
they aggressively seek out the participation of their stakeholders.

Experience brands invite participation in three key ways:

* they welcome ideas from the outside

* they empower people to adapt the brand to their needs

*Theythey’re truly engaged with the social web

think of social media not as the channels—Twitter versus

Facebook—but as a strategy of interaction where their people (even
c-level people) both talk and listen. Above and beyond their digital
footprint, they invite customers, users and staff across functional
areas to share their input and ideas as part of a cultural commitment
to innovation. Google is an exemplar: the very first of their famous
“9 Notions of Innovation” is: “Ideas come from everywhere.”
The fourth
fundamental of
And finally, experience brands are not afraid to empower users to
adapt and play with the brand. NIKEiD and Vans customized shoes
experience brands:
are familiar examples of how this plays out thanks to the power they aggressively
of mass customization; Google invites users to create fan logos; seek out
and more recently, following the devastating earthquake in Haiti,
CNN.com gave site visitors the ability to control camera angles as
participation.
online footage was playing.

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Experience brands recognize:
ideas come from everywhere.
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An important complement to all this active participation and outside
thinking: experience brands are famously good at inventing new
ways for people to interact with them, above and beyond the
products and services they sell.

So that’s the fifth fundamental of experience brands: they invent new

experiences beyond their core offering that differentiate them from
their competition.

In some instances, companies can add new revenue streams by

going into the experience business, creating physical destinations
or transactional happenings that are so great, so different, people
will pay for them.

Yet incremental experiences do not have to fit this literal interpretation;

there are robust opportunities to create new experiences that aren’t The fifth
dependent on a physical destination or so costly to undertake. For fundamental
example, smart companies transform corporate social responsibility
(CSR) initiatives into new experiences—think of Nike+ Human Race
of experience
or Google.org’s PowerMeter. brands: they
Ultimately, every experience brand is unique—and they’ll tailor these
invent new
incremental experiences accordingly. experiences, new
ways to interact.

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3 GREAT EXPERIENCE BRANDS
Experience brands are not all B2C, lifestyle-driven brands—they’re
B2C and B2B, product-based and service-based. Truly, any brand
can be an experience brand.

Whatever the industry sector or customer profile, there are overarching

principles that hold true for all experience brands. Every experience
brand must optimize the following core elements:

* The discovery experience (how people learn about you)

* The digital experience (since mobile devices and computer screens

are today’s default shopping mall and town square)
The experience
* The customer experience (what happens in store or when customers
are in market) they create
around their
* The user experience (what happens after the sale)
products or
* The community experience (how stakeholders connect with you
and one another beyond what you sell) services is as
carefully thought
* The employee experience (how staff and potential recruits align
around core values, culture and vision) through as their
So what does that look like, in action? Sketched out on the pages that products and
follow are three exemplary experience brand. Radically different in services.
their business models, they’ve all transformed experience from a
marketing channel to a point of differentiation from the competition.
The experience they create around their products or services is as
carefully thought through as their products and services.

This isn’t a ranking of top experience brands, but an effort to define

by example. We’ve purposely left off some of the more obvious
qualifiers for experience brand status—brands like Apple and
Starbucks. Look for our experience brands ranking in a future article.
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Experience brands
understand and optimize

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ZIPCAR
Tiny compared to the other experience brands cited here, Zipcar
introduced car sharing to the US with its 2000 launch—and has
built an hourly car rental brand so distinctive that giants like Avis
and Hertz are moving into its core market. Still, Zipcar’s CEO told
CNNmoney.com they’ll be a $1 billion company in under five years;
they’re growing at about 30% a year. Here’s what makes them an
experience brand:

*it’s convenient,
Zipcar is crystal clear that what they are selling is an experience:
web-enabled and so simple it can be expressed in
four simple steps. Fortune calls it Netflix for cars.
Zipcar is crystal
*delivering
Zipcar is flawless at the first fundamental of experience brands: clear: it’s selling
on its brand promise at every point of interaction. Its
voice threads through everything from the reservation process to its
an experience.
iPhone app to the emails users get if they return a car late. Voice
and personality are so strong that customers are made to feel they’re
part of a community of like-minded people—despite the fact that
it’s possible to be a frequent customer without ever seeing a Zipcar
employee or another customer (rentals are handled online and pick
up is self-service).

*expanding
Zipcar has consistently added new experiences to its business—
from its initial presence in heavily urban US markets to
universities and programs for business, and more recently leasing
its proprietary technology to city governments that need it to better
manage their sizable car fleets. Others are looking to Zipcar to help
prepare for a future of plug-ins and electric car grids. Even big car
brands like Toyota and Ford are talking to Zipcar about how the
experiences they create might be complementary.

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IBM
One of the most respected companies in the world, IBM is ranked
among the most powerful brands in the world by BusinessWeek and
Interbrand—one of just three B2B brands that consistently number
among the top 10 (the other two being Intel and GE). What’s truly
exemplary about IBM is how it has maintained that brand and its
core promise even as it has continuously evolved its business. Behind
this evolution lies great experience brand thinking:

*culture
IBM staff—“IBMers”—are its front-line brand advocates. Its
is famous: according to its Chairman & CEO, Sam Palmisano,
“[IBM’s] revolutionary idea was to define and run a company by a
set of strongly held beliefs.” It is consistently ranked high on Fortune’s
Best Places to Start a Career and has an authentic commitment to
social media as part of its corporate culture and communications.
Conversations
like IBM’s are
*decade
IBM’s “Smarter” campaign takes a core idea—“welcome to the
of smart”—and extends that to create “a global conversation
hallmarks of
about how the planet is becoming smarter” across an array of industry an experience
sectors and communities. What IBM can do to make cities smarter, or brand.
healthcare smarter, or energy smarter—conversations this compelling
are hallmarks of an experience brand. IBM has also done a great
job of extending them through high-level events like its Smarter Cities
conferences around the world.

*conversations
IBM has consistently innovated the platforms through which it hosts
with its communities—resulting in new experiences that
may counter conventional wisdom. It has been called a “pioneer
in what today might be called open or crowd-sourced employee
innovation” for a staff innovation program it founded in 1928. It
made an early stake in Second Life with its IBM Briefing Center, a
virtual presence it has maintained.

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LEGO
Children around the world spend 5 billion hours a year playing with
LEGO’s trademark plastic bricks, famously dubbed the “toy of the
century” (the last one). After some rough years, LEGO is being hailed
by the Harvard Business Review for a comeback that’s (arguably)
fueled by experience brand thinking and that sets it up for great
success in the years to come. Here are some of the reasons LEGO
wins our vote as a great experience brand:

*seekers
LEGO sees a strong link between its brand and employees. Job
are advised that no matter the role they’re seeking, they
should understand and embrace its vision—because it’s “values
that make the LEGO brand unique—and give us an edge on all the
others.” LEGO constantly
innovates how its
*with LEGO constantly innovates how its passionates (kids) can connect
the brand and each other. They’ve created a vibrant social passionates can
networking site for kids as well as LEGO Universe, a multiplayer connect with the
online game environment, all while maintaining their most robust
model and game products, not to mention Legoland theme parks
brand and each
and destinations. other.
*become
LEGO has innovated new experiences that invite consumers to
creators—like LEGO Design byME, where consumers create
their own LEGO design online and then receive a custom kit (right
down to the box and building manual) in the mail.

*It’s LaEGO is commited to kids as future innovators, not just customers.

title sponsor of The FIRST LEGO League, an international
organization that gets kids engaged in robotics. Over 150,000 kids
in scores of countries solve hands-on competitive challenges that
empower their creativity and inspire them to careers in engineering
and technology.
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THE BUSINESS CASE: BEING AN
EXPERIENCE BRAND PAYS OFF
$ Improved employee performance and retention

More efficient use of marketing spend

Speedier customer acquisition and more lasting loyalty

Increased revenue from better educated customers

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WHAT’S THE ROI OF BEING
AN EXPERIENCE BRAND?
There are a lot of ways that being an experience brand can pay
off for the companies that achieve this status. Here are four core
metrics:

1. Employee performance and retention

Because experience brands understand and leverage the impact
employees have on customers, they invest in employee engagement
that creates better alignment and performance in support of brand
and business goals. Because employees feel valued and engaged,
they want to stick around. The combination of these two factors
increases staff impact while lowering costs due to attrition and Experiences may
retraining. be experienced
2. Efficiency of marketing spend by few, but they
Experience brands do things that people talk about and share. They are witnessed
provoke conversation. They have stories that people want to spread. and talked about
And when they make an investment in creating an experience for
the people who matter most to them, those experiences may be
by many.
experienced by few, but they are witnessed by many.

3. Customer acquisition and loyalty

Because they promise and deliver a great experience, experience
brands win customers more quickly and keep them long-term. Because
they invite interaction and engagement, they are able to take people on
a journey from relative indifference to commitment and advocacy more
quickly than other brands.

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4. Customer revenue
Because experience brands do a good job of inviting participation and
sharing information, their customer communities are better educated—
making them better and higher-value customers.

Experience brands can measure impact both ways: what happens

when they improve their experience, and what happens when their
experience declines.

BusinessWeek has reported that Best Buy’s improvements in employee

engagement are directly tied to store profits.

Starbucks, which innovated a “third space” experience brand but

“For every
suffered from over-expansion and extensions that weakened its core one tenth of a
brand promise, has recently achieved a comeback that Forrester point increase
customer experience guru Bruce Temkin has described as follows:
“Nearly two years ago I wrote that Starbucks had lost its soul. That’s
in employee
why Schultz returned to his role as CEO in January 2008. Shortly engagement,
after his return, Shultz took the unprecedented action of closing each Best Buy
7,100 stores for three hours to ”retrain” employees on the Starbucks
store increased
profits by
experience.”

Imagine a CEO shutting down the business to retrain employees

on the brand experience. That sums up just how much ROI he feels
$100,000 a
Starbucks can win (or lose) on the basis of their experience brand. year.”
(BusinessWeek)
Not every brand is Starbucks. But every brand can be or become an
experience brand—and reap the benefits.

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2010: THE YEAR OF
EXPERIENCE BRANDS
We believe that this year will mark a new ascendancy for brands that
are or seek to be experience brands.

We’re committed to doing our part to contribute to the conversation

about experience brands in a series of forthcoming articles that
expand on key topics.

Look for upcoming articles including:

* employees
Experience brands are people brands: Engaging and leveraging

* Experience brands and the social web

* reanimate
Back from the dead: How experience brand thinking could
a dormant brand

* Gotta love it: Experience brands and their passionates

* The experience brand index: ranking top performers

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SHARE THIS EXPERIENCE
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For more information, contact Liz Bigham at

liz_bigham@jackmorton.com or 212-401-7212.

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Jack Morton Worldwide is a global brand experience agency.
We create experiences that strengthen relationships between
brands and the people who matter most them—thereby helping
our clients become talked-about experience brands. Rated among
the top marketing service agencies worldwide, we integrate live
and online experiences, digital and social media, and branded 3D
environments that engage and inspire consumers, business partners
and employees. Our staff work across the US, Europe and Asia-
Pacific as part of an idea-led agency culture.

© Jack Morton Worldwide 2010

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