Positive Brand Friction

The key to maximising growth

and value from Customer Experience

Nick Milne Founder and Director, Go Ignite Consulting Contents

Foreword 4 Author biography 5 About EffWorks 6 Executive summary 7 Why is Customer Experience (CX) interesting? 8 Do we need more research on Experience? 10 Research objectives 12 Methodology 12 Redefine Experience 13 Unlock the growth potential from Experience 20 Conclusion 33 Appendix 34 Acknowledgements 34 Reading/References 34

2 3 Author Foreword biography

Janet Hull Director of Marketing Strategy, IPA Nick Milne Founder and Director, Go Ignite Consulting This new research study for IPA EffWorks 2020 draws on the expertise of IPA Effectiveness Nick Milne is Founder and Director of Go Ignite Consulting, a marketing-effectiveness accelerator Leadership Group members as well as reaching out into the wider advertising ecosystem. With business set up in late 2019. Nick has also been a member of the IPA Effectiveness Leadership Customer Experience being the buzz phrase of the moment, we were curious to explore the role Group since 2016. of brand thinking and customer insight in this new discipline. Our contention was, at the outset, that Nick set up Go Ignite Consulting to provide marketing services to help brands and marketing Customer Experience needs to complement and build on brand marketing and communications agencies plan, measure and report marketing performance, to accelerate market effectiveness, to provide an integrated and memorable consumer proposition. Indeed, brand understanding lies and increase their return on marketing investment. at the heart of the Experience Value equation and can provide predictable incremental returns. Before founding Go Ignite Consulting, Nick was at Samsung where he had responsibility for This new work elaborates on previous IPA EffWorks R&D projects looking at the role of Marketing Customer and Marketing Analytics across Europe. Prior to this, he was at O2 where as well as a leader and influencer within the organisation. Nick Milne’s conclusions support the expanding as setting up the Marketing Effectiveness team, he was a driving force behind the Customer role of agencies as a partner in brand-experience understanding, creation and delivery, in addition Experience Insight programme helping identify where and when to improve Experience for O2’s to more traditional brand-communication services. Our aspiration is that it will provide a helpful 25million customer base. frame of reference for the growing number of client-agency conversations on this important topic.

4 5 Executive About IPA EffWorks summary

The IPA Marketing Effectiveness initiative seeks to create a global industry movement, to promote Customer Experience is complex, but this report demonstrates that getting Customer Experience a Marketing Effectiveness culture in client and agency organisations, and improve our day-to-day right is increasingly key to unlocking the growth potential of many organisations. When managed working practices in three key areas: effectively, it delivers value and distinctiveness that is seen in commercial performance. It doesn’t have to be just a cost centre. Marketing Marketing Developing the case for marketing, brand and experience investment in the short, medium and This report highlights the tensions which make Customer Experience a complex beast to master. long term, and promoting the benefits to internal and external stakeholders. • Customer Experience being designed around the parts of the organisation, rather than around Managing Marketing the customer. Providing awareness and understanding of how marketing works across organisations to maximise • Customer Experience being ‘owned’ by different parts of the organisation, making collaboration growth potential, write the best brief, develop the best process for planning and executing and agile decision-making increasingly important. marketing programmes, and motivate marketing and agency teams. • The commercial tension between identifiable efficiency gains through cost reduction, and more Monitoring Marketing variable returns through an effectiveness and value-growth focus. Delivering the best models, and guidance on tools and techniques, to plan, monitor, direct and measure the impact of marketing activity, using holistic approaches to return on investment. • Customer Experience investment differences between CAPEX and OPEX, meaning that it can be harder for Marketing to deliver longer-term value, if changes to commercial performance mean that OPEX (and therefore Marketing spend) is reduced. For more information contact In the process of segmenting Customer Experience, one of our key research objectives, we have Go Ignite Consulting EffWorks uncovered the concept of ‘positive brand friction’ and the value that this can bring to unlocking Nick Milne Janet Hull OBE growth potential. What do we mean by positive brand friction? We define it as purposefully slowing [email protected] [email protected] the experience down in a way that accentuates the brand and positively impacts the experience goigniteconsulting.com ipa.co.uk/effworks without making it harder for the customer. With this idea of positive brand friction in mind, we outline four focus areas to help navigate and overcome the identified Customer Experience tensions. • Experience Intelligence and Measurement: a measurement, reporting and insight ecosystem with the purpose of identifying areas of opportunity to improve the experience, predict the benefit, and measure the outcome. • Experience Collaboration: introducing organisational agility based around a strong customer focus, moving away from the concept of an individual owner of Experience to that of an enterprise-wide approach. • Brand Friction and Effort Balance: the evolution of experiences to ensure the right balance of positive brand friction without impacting negatively on customer effort. • Experience Leadership, Influence and Accountability: Marketing to develop its role as the Experience leader and influencer, helping the organisation deliver both customer and business value. This last point is critical. If we can make the case that creating moments of positive brand friction is indeed key to unlocking growth potential, then Marketing needs to step up and become more influential in their organisation’s Customer Experience programme.

6 7 Why is Customer Experience Figure 2. % of CMOs who ranked the following in their top three priorities*

(CX) interesting? Enhance Customer Experience

Drive revenue growth

Develop new products and services It would have been nigh on impossible to predict the impact of 2020 and the changes it has Increase operational efficiency forced upon organisations and individuals: from employees working from home long term; advertising spend predicted to decrease anywhere between 8.9% (Magna Global Ad Forecaster) Improve speed to market and 16.4% (WARC’s Global Advertising Trends, May 2020); retail stores temporarily closing and then being redesigned to be COVID-19 safe before opening again; manufacturers changing focus to Expand into new markets/geographies produce PPE … The changes are vast in quantity and scale and won’t end there. Deploy new business models The impact of all these events means that organisations, more than ever, need to be more aligned, more integrated, more agile, and really clear around how to best use all growth levers to aid financial recovery from COVID-19. From a Marketing perspective this throws open the challenge of whether organisations are being However, the impact of COVID-19 has drastically changed the risk equation, and for many as impactful as they can be in delivering the right distinctive key moments across all paid and organisations significant change has been necessary for survival. For those reliant on retail, they earned touchpoints with customers. CX is a major lever to that growth. have had to cope without the facilities to deliver tangible shopping experiences and focus on improving digital channels before reopening physical channels in a COVID-19 safe way. Whilst CX is multilayered, recent reports reveal that Marketing needs to play an increasingly central role in its delivery for two reasons. As commentators have stated, organisations have had to change Experience priorities in a • Marketing’s role is to create value. CX can deliver value. It is not just a cost centre. heartbeat and operate with greater enforced agility, focus, and leanness to keep delivering; a level • CX is an integral part of a brand’s distinctive assets which Marketing need to guide. of change that would have taken much longer to reach in a ‘normal’ environment. Looking at survey data from Deloitte Insights it can be seen that there is confusion around who owns Experience within the C-suite and, if Sales is seen as the owner, the lack of clarity about what Figure 3. Barriers: % of CMOS who ranked the following barriers in their top three* Experience is and isn’t. Again, this presents an opportunity for the CMO to take an increasingly influential role with regards to Customer Experience in helping define what Customer Experience Organisational resistance to risk means to the organisation and positioning it as a vehicle for growth. Inability to measure innovation impact

Limited human resources with necessary skills Figure 1. The C-suite is muddled about who owns Customer Experience: an opportunity for CMOs Limited technology to support innovation

Limited or lack of budget/funding

Lack of innovation culture

Insufficient leadership vision/strategic focus

None

The delivery of quality, brilliant experiences is going to be more important than ever to meet the changing consumer behaviours and for organisations to unlock or re-find their value potential. The role of Marketing within this is critical, as it looks to take a more influential role with Experience and forces greater collaboration across the organisation to be more aligned and integrated in planning, Indeed, the Gartner Brand Strategy and Innovation Survey 2019 shows that one of the top three delivering and managing key experiences. priorities for CMOs in 2020 is to enhance Customer Experience. (Figure 2.) In order to do this, Marketing needs to better step up to the Experience plate, become more Whilst trying to have more influence in the CX space, often as part of a series of marketing involved, take a leadership position in Experience and help drive their organisation’s Experience innovations, one of the issues that marketers are likely to encounter is the need for significant agenda. organisational change, which is often equated with risk. And as the chart (figure 3) demonstrates, The IPA EffWorks initiative decided to look at this further to help understand how marketers could this can be a major barrier for marketers. drive the changes needed.

* Source: Gartner Brand Strategy and Innovation Survey 2019 * Source: Gartner 2019 CMO Brand Strategy and Innovation Survey

8 9 Do we need more 3. CX alignment to commercial objectives Some research focus upon which Customer Experience metrics align best with research on Experience? commerical outcomes. For example, the excellent Harvard Business Review article suggesting a focus on customer effort to plan, manage and measure customer service (hbr.org/2010/07/stop-trying-to-delight-your-customers). 4. Impact of CX on brand consideration Existing Customer Experience research tends to be focussed on four areas. Some more recent studies look at the types of experience which deliver the best return for organisations, and the impact of not getting Experience right. For example, Fiona Blades from 1. The Experience economy Mesh Experience in her ‘Not all experiences are equal’ report evidences that in the Retail Banking These reports explore the ‘experience economy’ with brands focusing on creating distinction sector neutral paid experiences negatively impact brand consideration and neutral owned and through packaging products and services as part of a broader experience and being able to earned experiences do nothing to create consideration. charge premium prices as a result. Starbucks has been the most well-used example, being able to charge £4 for a cup of coffee when the beans would cost 3-5p because they provide a distinctive service and experience. Figure 6* 2. Measurement of CX maturity These studies examine the creation of maturity models which present good, clear frameworks of the practical steps needed to become better at delivering quality experiences for customers (see Forrester and Gartner Maturity Models below).

Figure 4. The path to CX maturity

Positive Differentiate Adopt practices that would reveal unmet customer needs, reframe customer problems, and re-think the entire Positive customer-experience ecosystem

Optimise Positive Adopt practices that give the organisation a

more sophiticated customer-experience toolkit Maintain

Elevate Adopt practices that make good customer- experience behaviour the norm Negative Neutral Neutral

Repair Adopt practices that enable you to find Negative Neutral broken customer experiences, fix them, and measure the results

Negative

Figure 5. Staying on top: head for higher levels of customer-experience maturity Create Culture Change

Key: Paid Owned Earned

Execs However, there is a gap. Many organisations are still considering Customer Experience as a function Engaged which is resource hungry and simply a cost. The more enlightened organisations realise Customer Experience can be an engine for value and growth. Marketers, who are the creators of value within VOC Validated the organisation, should therefore be considered pivotal to developing, building and measuring Customer Experience. Fragmented Focus The IPA Effworks initiative decided to create a project to help understand the changes needed to CMO Developing Managed Optimising deliver greater effectiveness from Customer Experience and how marketers could take a more influential role in driving this.

* Source: Blades, Fiona. 2019. All experiences are not equal: How to build positive experiences for brand growth. Admap Magazine

10 11 Research Redefine objectives Experience

To understand how to unlock the value/growth potential of Experience, we believed we needed to There are four clear themes that help define what Experience is and help us better understand the deliver on the following six key objectives: challenges and opportunities in maximising the growth potential a focus on Experience presents. • Redefine and segment Customer Experience These are: • Identify the key tensions restricting growth • Experience segmentation • Clarify the role of the brand within creating experiences • Experience ownership • Analyse how to best measure Customer Experience • Commercial focus of Experience • Maximise collaboration across the organisation • Experience investment • Recommend how to grow Marketing’s role in Experience Experience segmentation Experience means different things to different organisations. The types of experience we have seen and the definition of each is dependent on three factors: Methodology • Industry sector • Level of organisational Experience collaboration To understand how best to unlock the growth potential of CX, we have conducted 26 in-depth • Agility in Experience decision-making interviews with CX consultancies, marketing, media, advertising and marketing-services agencies, and brands. These have provided us with the key themes and findings. With these factors in mind we believe a more useful segmentation of Customer Experience as follows: Where we needed to explore an idea, a concept, or an opportunity further, we also ran a number 1) Brand experience of online workshops to accelerate our understanding and flesh out our research. 2) Customer experience Thank you to the wonderful people from the following organisations who have opened their doors 3) Product/service experience to share their thoughts and experiences with regards to opportunities, challenges, and ways of 4) Employee experience working in Experience. When you put this all together, it’s quite a mouthful … It could be defined as: For the rest of this report, we will not be using the label ‘Customer Experience’ to describe the “Uniquely recognisable moments of ‘positive brand friction’ across paid and owned touchpoints, overall experience. As we investigate the different Experience segments, it will become clear why. allowing customers to functionally/effortlessly interact across all touchpoints, in the process by which to purchase, service or use what the brand offers, designed and often delivered by the CX consultancies brand’s employees (HQ, office and front-line).”

Figure 7

1. Brand 2. Customer 3. Product/service 4. Employee Marketing, Media and Marketing services agencies experience experience experience experience

Uniquely ...allowing customers recognisable to functionally/ ...designed, and moments of positive effortlessly interact ...they purchase or often delivered by What brand friction across across all touchpoints use what the brand the brand’s amazing paid and owned during the process by offers which is... employees (HQ, office touchpoints... which... and front-line) Brands

12 13 When Experience is defined this way, then it highlights Experience ownership the tension particularly between Brand Experience From our conversations, the individual elements of Experience (brand, customer, product/service, and Customer Experience; the importance of creating “People talk and employee) tend to be manufactured distinctions based on the departments of an organisation, moments of ‘positive brand friction’ which don’t negatively about frictionless even more so in organisations with strong silos. The size and complexity of the organisation is also impact the perception of how effortless the experience is. and efficiency, a major factor. What do we mean by positive brand friction? We mean but friction can be This means that Experience tends to be split into the following ownerships: purposefully slowing the experience down in a way which good as it is accentuates the brand and positively impacts needed for the Figure 8 the experience. experience Perhaps positive brand friction is best explained by to be noticed” bringing it to life through a couple of examples. 1. Brand 2. Customer 3. Product/service 4. Employee CXO, Tribal Worldwide experience experience experience experience Example 1: National Lottery online ticket purchase In redesigning the online National Lottery ticket purchase experience, CX Labs evidenced that the smoother Uniquely ...allowing customers ...designed, and the process, the fewer repeat-purchase occasions were sold. By slowing down the purchase recognisable to functionally/ moments of positive effortlessly interact ...they purchase or often delivered by experience, and introducing moments of positive brand friction, customers were more likely to What brand friction across across all touchpoints use what the brand the brand’s amazing paid and owned during the process by offers which is... employees (HQ, office remain loyal and make repeat purchases. touchpoints... which... and front-line) Example 2: Hotel Chocolat store experience Hotel Chocolat offer free samples of chocolate when customers walk into the store, purposefully Product slowing customers down in a positive way. This allows staff to start a conversation about the origin Owner Marketing Operations, development, HR and the quality of the chocolate, thus delivering standout from a standard retail experience to a Channels Operations. distinctive premium one. Example 3: IKEA furniture build We identified a few IKEA examples. However, the most clear example of positive brand friction is that customers have to build the furniture themselves. This slows down the moment of returning Within this Experience ownership model there will normally be an overall leader for Experience and home with the product and being able to use it. As long as the instructions are clear and there are who that is will vary on the organisation. The following three examples give: a marketing-led view; a no missing pieces then the positive emotion from building the furniture itself, versus buying pre- product and channel-led view; and an example where Experience leadership is transitioning. made, is much greater. Example 1. Eve Sleep: CEO and marketing-led Experience Alongside introducing the concept of brand friction when segmenting Experience, our research • Founded by marketing-focused owners and led by a CEO with a marketing background, helping identified two important points. position Marketing and the CMO at the centre of the organisation. • Customer Experience is a segment of Experience. • Experience within Eve Sleep is fitted and designed around a very clear brand strategy, customer - As an output of our research, we have defined Customer Experience as ‘the way in which insight, and positioning. customers functionally/effortlessly interact across all touchpoints’. • If at any point there is a need to change an experience then it comes back to the CMO as the - Customer Experience, defined this way, then sits alongside the other broad buckets of final decision-maker, although 95% of decisions can be made autonomously without referral to Experience (brand, product/service, and employee). the CMO since everyone is clear on what they need to do. - This is why we will use the term ‘Experience’ for the rest of the report as the catch-all Example 2. Samsung: operations/product led name for Experience, not Customer Experience. • The product is the experience, mobile innovation having been a core driver behind the success • User Experience (UX) is an element of Customer Experience rather than a separate segment on of Samsung’s mobile business. its own. • In a simplistic view, Marketing is the vehicle for brand growth and creating demand for the Why is this so complex? Because this is Experience defined by organisations rather than by products. There is limited, but growing, influence on Experience. customers. Does it really feel effortless? • Call centres are seen as service centres and not as opportunities to bring the brand to life. On the other hand, there was the introduction of Samsung KX in 2019, an experience store where To better understand why, we need to look at who ‘owns’ Experience. consumers can’t purchase products directly. Example 3. Centrica: Experience leadership transitioning into the Marketing/customer function • Experience leadership is transitioning into Marketing under the Chief Customer Officer, having previously been owned by propositions or pricing. • It will be the role of the Chief Customer Officer’s team to have end-to-end accountability for Customer Experience and influence all of the touchpoints across the organisation.

14 15 By looking at Experience in this way, we start to identify the challenges of delivering multiple Experience focus experiences by different experience owners. We can now see how the theme of organisational With each part of Experience having a different owner, it collaboration and agility mentioned earlier starts to really shine through. comes as no surprise that the primary focus of each area “Cost cutting If we take two of those examples, Eve Sleep and Centrica, we can bring to life where they would sit can differ. In fact, the focus splits. Marketing’s focus for is dead. Growth within an Experience alignment and agility model to explain what that really means: Experience is usually on building the brand through the is never ending” experience, and therefore on growth and value creation, Global VP Digital, L’Oreal whereas the focus in other departments tends to be more on cost neutrality or reduction. Figure 9

Figure 10

1. Brand 2. Customer 3. Product/service 4. Employee experience experience experience experience Can act quickly but at a departmental Organisation highly level, little collaboration across the collaborative with an ability organisation to act fast Uniquely ...allowing customers recognisable to functionally/ ...designed, and moments of positive effortlessly interact ...they purchase or often delivered by What use what the brand the brand’s amazing brand friction across across all touchpoints offers which is... employees (HQ, office paid and owned during the process by touchpoints... which... and front-line)

Product

Organisational agility Organisational Owner Marketing Operations, Channels development, HR Operations. Low levels of collaboration, and slow Organisation highly to act at an organisational collaborative, but unable to and departmental level act fast Focus Growth Cost reduction Cost reduction Cost reduction High Low Low High The benefit of a cost-reduction focus is that it is easy to quantify Organisational experience collaboration and predict. While there are only so many costs that can be cut, the only gain can be efficiency. “Cost reduction The benefit of a growth focus is that there is no limit to the value is certain, growth that can be created. While it is hard(er) to predict, Experience with Eve Sleep – Highly collaborative, high agility a growth focus is a true effectiveness lever. is often harder to • When lockdown was initiated, Eve Sleep changed their 100-day mattress trial period to 200 predict” days based on the changing perception from consumers on whether 100 days was long Sometimes, however, Experience can have both a growth and a Partner KPMG enough, given the prospect of a 12-week lockdown. cost-reduction mindset. Take an example from the CMO of TSB: Centrica – Highly collaborative, low agility “There are fewer branches than there were previously and you • Transformation around customer journeys is creating high collaboration. However, there is a could argue that there was a cost-reduction lens across the persistent difficulty to quickly change the 10-week period it takes from a customer signing up closures. The reality is that consumers weren’t using branches as much so the experience to the gas switch being turned on. Also there is a challenge with legacy data systems impacting was misaligned to what consumers wanted. A shift in channel enabled TSB to better serve how easy it is to keep new customers informed all the way through the sign-up process. their customers.” This having been said, it points to the need for a conversation change about Experience, so that When Experience is done well, a focus on changing consumer needs and how customers want to people are talking less about ownership and more about leadership. There will be more to come operate can bring the growth and cost-reduction mindsets together. on this when we explore how to release the value potential from Experience. The impact of each area of Experience having a different owner becomes even clearer as we start to delve into ownership further by looking at the commercial focus of Experience, and where Experience investment comes from.

16 17 Experience investment There are two types of investment within organisations: OPEX and CAPEX. Capital expenditures Figure 12 consist of the funds that companies use to purchase major physical goods or services the company will use for more than one year. Operating expenditures are the ordinary and necessary expenses a company spends to operate its business each day. CAPEX OPEX Marketing tends to be the only department whose funding is OPEX. All other departments tend to Assets purchased with a useful life Purpose Ongoing costs to run the business be funded by CAPEX. (Figure 11.) beyond the current year

When paid In full, up front Monthly or annually recurring Figure 11 When accounted Over 3-10 year lifespan while asset In the current month or year 1. Brand 2. Customer 3. Product/service 4. Employee for depreciates experience experience experience experience

Listed as Property or equipment Operating cost

Uniquely ...allowing customers ...designed, and Deducted over time as asset recognisable to functionally/ Tax treatment Deducted in the current tax year moments of positive effortlessly interact ...they purchase or often delivered by depreciates What use what the brand the brand’s amazing brand friction across across all touchpoints offers which is... employees (HQ, office paid and owned during the process by and front-line) Buildings, IT equipment, vehicles, touchpoints... which... Examples Marketing, rent, salaries, utilities machinery

Product Owner Marketing Operations, Channels development, HR Operations.

Summary of Experience tensions Focus Growth Cost reduction Cost reduction Cost reduction To recap the tensions our research has identified with Experience: • Experience segmentation – Experience is being designed around the parts of the organisation, rather than around the customer Funding OPEX CAPEX CAPEX CAPEX • Experience ownership – Experience is being owned by different parts of the organisation making collaboration more complex, and agile decision-making increasingly difficult • Commercial focus of Experience – there is a tension between different mindsets: growth versus cost reduction; effectiveness versus efficiency Given the immediate impact that OPEX has on an organisation’s balance sheet, by either increasing • Experience investment – OPEX versus CAPEX; the short term will always win, making longer- or decreasing OPEX Marketing is put in a potentially uncertain position as the department with the term growth more difficult most flexible budget within the organisation. As we know, marketing budgets are vulnerable when meeting short-term targets dominates the agenda. So what can organisations do better to combat the Experience tensions we have identified?

“The short term always trumps the long term. So how do you get yourself in the right headspace and with the right resource levels to be able to build for the future whilst still delivering for today?” CMO, Centrica

18 19 Unlock the growth potential from Experience “Plenty of brands have a strategic

So we have laid out the themes around and examples of the Experience tensions through tracker, then segmentation, ownership, commercial focus and investment. Next up is to understand how to prevent an operational them restricting the growth potential. We will suggest a clear framework to deliver this. one and limited To improve commercial impact from Experience there are four key elements: evidence of the two come Figure 13 together” Managing Director,

Experience Quadrangle collaboration

• predict the value of improving a particular experience, both in Experience terms (e.g. NPS, satisfaction, customer effort, etc) and financial (revenue, market share, churn, etc) Experience • quantify the results of the improvement intelligence and • capture the context of why changes to Experience have or haven’t worked measurement • help employees understand the value of their contribution to that improvement • provide confidence to the C-Suite that the investment delivered benefit, or if not, being able to explain why not Experience Brand friction leadership, and effort influence and In doing each of these, the ecosystem will help tackle our identified tensions, as long as the balance accountability intelligence is actionable. Integration is key In most organisations, the required platforms/surveys/tracking etc. will most likely already exist but may be owned and operated by different parts of the organisation. This can result Experience intelligence and measurement - A measurement, reporting and insight ecosystem in multiple recommendations of where the critical and most commercially beneficial parts of with the purpose of identifying areas of opportunity to improve the Experience, predict the benefit, the experience need improving. This will result in confusion and lost opportunity. Indeed, an and measure the outcome. example was cited at the 2020 MRS Conference where the Brand Tracking and Experience Tracking studies were not aligned. Experience collaboration - Introduce organisational agility based around a strong customer focus, moving away from the concept of an individual ownership of Experience to that of an enterprise- This isn’t about creating new data. There is an opportunity to be smarter with existing data and wide approach. unify platforms to create a single voice of agreement as to where best to invest to improve experiences in order to maximise growth potential. Brand friction and effort balance - The evolution of Experience to engineer in the right balance of positive brand friction without compromising negatively on customer effort. Above everything else, organisations need to have the intention and ability to act on the intelligence created through Experience leadership, influence and accountability - Marketing to develop its role as the Experience such an ecosystem. We will come back to this when we look leader and influencer, helping the organisation deliver both customer and business value. “There is shed at organisational alignment. loads of data but Experience intelligence and measurement not enough insight, With all of this in mind, let’s break down the possible component parts of the Experience intelligence ecosystem, An Experience intelligence and measurement ecosystem can be the bedrock which holds all intelligence, or and highlight key areas of opportunity. the components of Experience together. It provides the critical ability to show how all the parts of actions being taken” Experience work individually, collectively, and drives improved commercial benefit. Within the Experience intelligence ecosystem there are CMO, Centrica a number of opportunities which will help create better Such a system should be able to: alignment and agility around Experience. (Figure 13.) • help identify the parts of the experience that need improving

20 21 Using first-party data does present one question to answer: how do you capture feedback on Figure 14 the experience of consumers who don’t purchase? They may be early in the journey of buying

CX linking Other main KPIs a TV, walk into a store to get a better understanding of the available TVs, and walk out without Definition KPI (not exhaustive) purchasing. How do you best capture feedback on that experience to understand why there was focus Strategic Brand image no purchase today? Answering this will be critical for increasing value through retaining customers Continuous measurement statements and converting prospects. of how consumers Brand NPS Awareness, Brand percieve the brand consideration, The best solution to this at the moment is to blend this research approach with retail exit interviews purchase intent to make sure the non-purchase experience is captured. NPS drivers Continuous measurement of Relationship (billing, delivery, Relationship how consumers experience Opportunity 4: Understanding the context to help identify the right actions NPS communications, the brand value for money) Don’t just think about the ecosystem quantitatively, think about how best to capture what consumers are saying about the brand and about individual experiences. End-to-end measurement Customer effort, of how a customer completes Customer expectation, This is best brought to life through the example of the TSB IT glitch. The percentage of negative Customer journey their desired action e.g. journey NPS satisfaction, End-to-end measurment mortgage purchase, fixing a experiences coming from the IT glitch was three times that of a branch closure or fraud. TSB could engagement, cost boiler (ad hoc or continuous) see that it needed to stop advertising whilst it was resolved. Mining feedback in terms of how consumers had reacted to previous marketing activity, TSB were able to pinpoint Pride of Britain as Measurement of a customer’s Channel NPS (online, a route to starting to communicate again and rebuild trust. Touchpoint Product individual product or channel Touchpoint/ retail, call centre) measurement measurement experience e.g. app product NPS Product (app, mobile usage, website visit phone, mattress) Opportunity 5: The opportunity to unify Brand and Experience

Operational focus Research company Quadrangle has stated brands are now more focused on understanding Part 1: Measurement of an employee’s attitude to working Employee drivers of NPS, e.g. touchpoints, pain points, and analysing the links between Brand and NPS for their company Trust in leadership, Employee Experience in greater detail. Anecdotally, in some cases the impact of the brand is having more Part 2: Feedback collection manager support, Employee etc of an impact on driving NPS than Experience. Particularly when you look at ease (experience and measurement of how touchpoint an employee delivers an NPS measure) and trust (brand measure), there is less of a boundary between the two. experience This makes us question whether there is a unifying measure that can better help measure Opportunity 1: Be clear on the main KPI and elevate this to board-balanced scorecard Experience, and better bring Brand and Experience together? In this framework we have selected Net Promotor Score as it is a measure which is widely Enter the ring: Excess Share of Experience. used and understood. There may be a more relevant Experience KPI for different organisations Much has been written about the value of measuring Share of Experience, and the increased (satisfaction, customer effort, etc), but when selecting one, it is best to be one that: correlation that Excess Share of Experience has with market share compared to Excess Share of • is easily understandable and explainable as to why it is changing. Why? Because it will increase Voice (as evidenced in figure 15 below) accountability for Experience in the C-suite by knowing what is changing, why, how to improve the experience, and who is responsible for delivering that experience improvement • can help predict commercial performance. Why? It helps Experience from being seen as a cost Figure 15. Correlation between Share of Voice/Experience and Share of Market* reduction/efficiency drive to become a growth engine Opportunity 2: Measure that main Experience KPI across every part of the ecosystem This enables modeling of how all the experiences work together and provides better understanding of what is a lead experience and what is a lag experience. For example, if someone A calling the call centre has a bad experience (the lead experience, measured through a call- D A F D F centre touchpoint survey), how much will individual experience impact the overall relationship the J J customer has with the brand (lag measure, measured through the relationship survey). C B G A lead and lag measurement system allows brands to fix or resolve the touchpoint experience C G B

before the customer’s relationship with the brand suffers. % Market of Share E Opportunity 3: Use first-party data, where possible, as the source for asking customers about their experience E This has two impacts. I I • Monetising NPS: it is easier to link any improvements in Experience back to an individual and H H measure resulting behavioural changes (increased purchase frequency, increase in basket size, increase in revenue, profitability and lifetime value). Share of Voice/Experience % • The feedback provided using first-party data can be used as a filter within one-to-one marketing

campaigns. If a customer has a negative experience with the brand then a decision may be R2 = 0.58579 taken to exclude them from marketing campaigns for a period of time. Key: SOV SOE R2 = 0.15706

* Source: Mesh, The Importance of Measuring Experience, May 2018

22 23 We think that measuring Share of Experience has legs and it should be investigated further regarding how it could work either alongside SOV or as an alternative. This will have the benefit of bringing the Experience and Brand measurement worlds together. But should Share of Experience replace the favourite Experience measures of NPS, satisfaction, customer effort, etc? Probably not at this stage; it should sit as part of an Experience balanced scorecard until there is better understanding of how it can be better used to: • better predict commercial returns • diagnostically identify where to improve an experience (e.g. helping explain a call-centre experience) as well as strategically (e.g. using Excess Share of Experience for setting investment levels) We will be taking the opportunity to further investigate this in future research under the IPA EffWorks programme. Taking all the opportunities that an Experience Intelligence and Measurement ecosystem present can enable better understanding of how to create balanced experiences, those moments of positive brand friction, without impacting the ease of completing the journey.

Balancing brand friction and effortless Experience The concept of creating positive brand friction was a recurring theme within our research, from understanding what it is, where to introduce within an experience, and then measuring its impact. As described earlier in this report in Experience segmentation positive brand friction is the act of purposefully slowing the experience down in a way which accentuates the brand and positively impacts the experience. It is different to creating ‘wow moments’, which aim to surprise and delight, and stronger than moments of brand distinction, which make an experience recognisable to a brand. Helping marketing evolve from Share of Voice as a planning and measurement approach is Comparing positive brand friction to Customer Effort, which Gartner describe “as enabling service critical given the changes in media spend towards digital. Share of Voice can fall down in accuracy organizations to account for the ease of customer interaction and resolution during a request” as Google and Facebook media spend is hard to track accurately within the external media- (gartner.com/smarterwithgartner/unveiling-the-new-and-improved-customer-effort-score/), the monitoring and benchmarking tools. two concepts seem in direct conflict with each other. Share of Experience steps up as the helpful additional measure to SOV because it measures Striking a balance between the creation of an experience that creates positive brand friction, yet exposures through the consumer’s eyes, bringing Brand and Experience together. It allows for doesn’t negatively impact the perception of how easy the journey is for the customer, will be tricky measuring and understanding the impact of positive, neutral and negative experiences across all but key to maximising the growth potential. paid, owned and earned touchpoints. The best way to look at how to strike a balance, and maximise the value of the resulting We touched on this in the introductory section of this report, highlighting the evidence that a experience, is through understanding: negative or neutral experience does nothing to support brand consideration. In fact, a positive • the value of the positive experience experience has three times the impact of a neutral one. This sits nicely alongside our concept of • how much increased perceived effort the customer has to make by going through that experience positive brand friction. • the number of customers that have that experience This approach also enables better understanding of the experiences that aren’t directly owned • the amount of times a customer is willing to go through the same experience by a brand. For example, Mesh Experience worked with LG in the US and evidenced the impact a • how much the experience costs retailer ad featuring a LG TV had on the perception of LG’s brand; it was more powerful than LG’s Or to put this formulaically: own ad for that TV. There are potential pitfalls if Share of Experience isn’t understood properly. Having a single measure around it could be interpreted as suggesting brands need to increase the quantity of experiences they give, whereas, evidence has shown that it is quantity (excess share of experience) and quality (positive experiences having three times the impact of neutral ones) which is needed.” There are two limitations that we see at present with a Share of Experience approach. Firstly, there are only a couple of Experience research agencies that provide Share of Experience tracking. Secondly, in comparison to other Experience tracking methodologies, it is expensive to run as ‘always on’.

24 25 Two examples bring this to life: one focusing on the removal of part of the experience which or with the product at home. With the growth of social delivers little value, and one which is truly transformational in introducing new direct-to- media, L’Oreal Group saw the opportunity to build a direct “If customers buy consumer touchpoints. relationship with consumers and, in return, build more understanding of consumer needs, collect more data, and experiences, we have the opportunity to tell their story directly to consumers. need to organise Figure 16 Augmented reality ( AR ) was hard in the beginning. The initial around them, not Make Up Genius app was the first play into AR. With growing products, functions, interest, it gained traction. Following the initial success, L’Oreal or channels” acquired Modiface, which had been a tech start-up Fiona Blades, Mesh The results demonstrate the positive change in Experience value: • increased cost through the delivery of new consumer touchpoints • increased positive friction through customers being able to try new products or take health assessments before purchasing • increase in the number of customers using the AR app • increase in first-party data enabling L’Oreal to obtain better consumer intelligence and develop the ability to act on it in marketing programmes The Virgin Atlantic and L’Oreal examples show the benefit of getting positive brand friction right. However, it isn’t straightforward to identify where the right moments are to introduce it within an experience and, even if you do know where to introduce it, to be able to physically deliver it due to organisational constraints. Take for example the creation of a mobile banking app which is built on a single technology platform at Group level. How do you create brand distinction for each sub brand when the app will look and feel the same? Or how do you create differentiated call-centre experiences as an insurance provider when the script for each sub brand is exactly the same and the KPIs for measuring the experience are the same? Maybe the risk aversion that seems to be disappearing as a result of COVID-19 may be what helps organisations turn the questions around. What happens if organisations don’t create these Example 1: CX Labs and Virgin Atlantic moments of positive brand friction? Is the opportunity lost through missed growth opportunity by Virgin Atlantic were looking to reduce the costs of their Upper Class service and asked CX Labs not delivering positive brand friction in experiences? to identify the non-valuable elements of the flight experience which were appreciated least by its customers and could potentially be removed. The first attempt to identify the importance of each of the elements of the experience, measured through claimed response, and traditional regression analysis were met with scepticism by Marketing. Using claimed response does not always bring the truth out; consumers will sometimes tell you what they think you want to hear, or what is of perceived importance, rather than the reality. Using unconscious measurement techniques (e.g. shadowing consumers as they go through the experience), the head massage element of the experience was identified as the least important part of the experience, having previously been in the middle of the pack for importance. (Shown in figure 16.) This is not to say that customers’ perceptions of value are not important. It is more that a new dataset offered a more compelling truth. Removing the massage experience resulted in increased Experience Value: • £10m saving per annum • no detrimental effect on passenger numbers • no impact on customer satisfaction Example 2: L’Oreal Paris digital transformation and the introduction of their AR app Transformation in L’Oreal started in 2014. L’Oreal never had a direct relationship with consumers before, particularly with regards to their mass-market brands. The experience would be instore

26 27 Some organisations are grasping the opportunity with a shift to a longer approach to sales which will creative teams, so everything looks and feels the same way and is cohesive in representing the open up the opportunity for increased positive brand friction. Connie Nam, CEO of Astrid & Miyu, is brand values of Eve Sleep. quoted in a July article in The Times ‘Steering through uncertainty with purpose’. The challenge for organisations like this will be to keep the organisational focus, collaboration and “We’re now more geared for a soft sell and that will continue for the time being. In future, how we agility as they grow in value, size and complexity. approach our retail locations will be less sales driven and more a combination of supporting online sales, becoming showrooms and a hub for click and collect, with brand ambassadors hanging out Creating agile teams based around customer journeys with customers. It will be much more of an experience than it was.” If experiences are designed by the siloed departments of organisations then the customers will feel this in the disjointed deliver of the experience. Creating agile teams from rigid structures This change will also impact what brands look for in their agencies, as demonstrated by Cathay can be an organisationally empowering change to help move away from silos, politics, and Pacific GM of Brand, Insights and Marketing Communications Edward Bell in his July keynote address departmental Experience ownership challenges, and customers will feel the benefit in the at the Mumbrella Asia Travel Marketing Summit, highlighting the mix of data and brand needed resulting experience. for the future of its communication strategy. The focus on data and brand was particularly relevant considering the companies that Bell wanted Cathay Pacific’s service experience to be benchmarked against – Netflix, Apple and Uber. He said: “In the past, we had the goal of being the world’s greatest airline, and we’ve been that many times. But we want to acknowledge the relationship between the Figure 17* business and the customer by becoming the world’s greatest service brand.”

“It is not just about competing with other airlines but with Netflix, 2. Creating difficult to Apple and Uber – not on product, but to be a great service 1. From rigid structures... navigate experiences... “Organisations experience. That’s where the best service these days is coming that tend to from and it helps to have those brands as our competitive set.” succeed are ones This plays to the principles of behavioural economics where brands are further understanding the types of experience (or

that see CX as an Marketing enterprise-wide moments in an experience) that work hard to deliver value for both the consumer and the brand. capability” Customer So if this is highlighting the types of experience that organisations Partner KPMG should be delivering to unlock growth potential, we now need to look at how organisations need to work to best do that. Service Experience collaboration As already identified in Redefining Experience, the four buckets of Experience are often a result of Experience being designed around the organisation, rather than around the customer, particularly in complex siloed organisations. If Experience was designed first, around the customer, and then the organisation built around that blueprint, organisations would probably look very different. 3. To agile teams based around Seeing Experience as an enterprise-wide opportunity for value and growth is the key, plus seeing it customer journeys as a true capability. In organisations that are seemingly better at Experience design, management and measurement there are two approaches to better alignment and both centre around the principle of Experience being an enterprise-wide responsibility. Journey 3

Experience as part of the organisational DNA Organisations that have Experience as part of their DNA tend to be in the top right-hand quadrant of our Experience Agility and Collaboration framework; they have high collaboration in Experience Journey 6 across the organisation and have the agility to act fast. What seems to make these organisation stand out is that they are relatively young, have very clear principles and guidelines around what it is they do and how, with clear accountabilities across the organisation. Example – Eve Sleep In conversation with Cheryl Calverley, then CMO at the time of the conversation and now CEO at Eve Sleep, she was clear that Experience has got to be in everyone’s DNA and in their soul. The biggest impact work that Eve Sleep have done on CX is on company values. They now have a really clear set of values which were led by the Head of People working incredibly closely with

* Source: Wunderman Thompson

29 Working in agile teams allows organisations to focus on tackling Experience challenges as a agile team. Customer journey maps can also help highlight the key parts of the journey which can be whole, with the most relevant people working in an integrated fashion to provide the best solution simplified and where to add the most value through creating positive brand friction. to improve the experience. One of the examples we came across in our research, which builds on the traditional customer Example: Centrica Customer Journey Case Study journey map, is how Airbnb uses storyboarding, taking a customer journey and presenting it Centrica’s pre-COVID plan was to put in a Chief Customer Officer (CCO) to own CX. It would be through the eyes of the customer. In the words of Airbnb co-founder Joe Gabbia: the role of the Chief Customer Officer’s team to have end-to-end accountability for Customer “Storyboards show you things that words can’t. And they help bridge words to experience ... Last year Experience and influence all of the touchpoints across the organisation, acting as the arbiters we embarked on an ambitious journey to map the whole host and guest journey on Airbnb and we between CX and the commercial teams. did it through illustration. We looked at the key emotional moments of the journey and we drew them The Chief Customer Officer was to own each of the journeys and in order to ensure consistency – we visualised them. And what it has done for us is allowed our entire company to achieve a new of branded experience within each these customer journeys, the CCO arranged for marketers, level of empathy with our customers. It has allowed us to align around a common vision.” copywriters, CX practitioners (the relevant people, for example) to sit as part of each journey team. Two things struck a chord about this. Firstly, that this is an organisation-wide approach and covers But this isn’t just about the creation of agile teams for Centrica. It is about how they were set up every single experience that Airbnb delivers, including the interview experience for potential to work on problem solving. This included the setting up of Team Nucleus, a collection of WPP candidates. Secondly, it is much easier to show the emotion that consumers should be feeling agencies responsible for content creation, from social, PPC, SEO, advertising campaigns, CRM and through the experience by showing them within it. Customer Experience. Team Nucleus were to work as part of the planning process at Centrica. We can’t leave looking at customer journeys without identifying the need for contextual Every project started with an Ambition Session run by the Customer Journey teams, defining “What understanding the why somebody is on a particular journey and the implications of this on are we trying to achieve? What does success look like?” etc. Consequently, at the start of the creating personalised journey experiences. Without yet finding the answer through our research, planning process for campaigns CX teams were sitting at the table as part of an integrated team/ the question has been raised a number of times, “Where do you draw the line at personalising an solution. With these different contributions, the answer to a business challenge may not just be a individual journey?” brand campaign, but also an improvement to a customer journey pain point. Let’s reuse the example of National Lottery introducing the moment of positive brand friction in Alignment around customer journeys however will not be simple and straightforward because the online ticket purchase. Is there a case to say this should be removed if it is five minutes before customer journeys are complex. (See figure 18 as an example of a customer journey map.) the entry closes to the next lottery draw? Does the need for a faster purchase completion at that particular time trump the value that a moment of positive brand friction can bring? This will most Organisations may have – as in the case of Lloyds Banking Group – up to 40 customer journeys, and likely be easier to personalise if the experience can be adapted according to a set of rules customers may be on more than one at any given time. Take for example a house-purchase journey (e.g. time of day, time left until the draw). or a bereavement journey. Both are very different journeys needing very different experiences. But what if a customer is already frustrated as they had been trying to purchase their ticket on their Customer journey mapping is, of course, now very common. but it can be incredibly useful and often commute but the mobile signal was poor so they had failed to choose their lottery numbers multiple enlightening to organisations. Mapping often helps disparate parts of an organisation understand times before the connection disappeared? Is there enough data to identify this had happened, how this how they fit together in delivering a journey and, therefore, helps identify who should be within an would make the customer feel, and then personalise the experience better as a result?

Figure 18*

* Source: Wunderman Thompson

30 31 Experience leadership, influence and accountability The fourth key to unlocking the growth potential from Experience is leadership, influence and accountability. If we have successfully identified that creating positive brand friction without Conclusion compromising customer effort is key to delivering value through Experience, then it naturally suggests that Marketing should have a bigger role as the Experience leader and chief Experience influencer in organisations.

We have seen in the research that this can play out organisationally in a couple of different ways. This report aims to shed a light on the complexities and tensions surrounding Experience and to Example 1: Marketing as the influencer: TSB show, through examples, how to maximise the value potential from a focus on Experience. Experience sits in a few places but Marketing is the most influential partner across the organisation. Each organisation will be at a different stage of Experience maturity and, although the tensions we Experience, and Marketing’s role, breaks down into the following: have identified will resonate, identifying the priority actions needed to tackle these tensions should Customer banking division – including branches. Marketing owns collateral in branches. How be taken on a case-by-case basis. partners act and behave is run by the customer banking team and is in line with the brand Our focus on the key four areas (figure 13) provides a suggested framework of where organisations purpose, so what the customer banking division team does works in line with Marketing. should look to unlock the value potential. Operational division – call centres and service of app and website. Scripting in operations – Overcoming the Experience tensions is about changing the culture of the organisation so will be messaging, social media, AI with IBM – is done by Marketing no small effort or quick fix. Marketing - owns digital sales environment. Anything which is on .com and within the sales The IPA EffWorks initiative is committed to helping organisations grow in both the long and short funnel is owned by Marketing. Once a customer logs into the members’ section, ownership term, and will continue to support the re-imagining of Marketing as the leader and chief influencer moves over to Operations. in helping organisations increase value through a focus on Experience. Product development. Any propositional development is led or done in consultation with Marketing. Pricing. The CMO is part of the pricing committee. The challenge has been for the TSB Marketing department to understand everything that is happening across the organisation, and then get to know the right people at a working level to influence and ensure the brand principles are being adhered to. But starting with the elements of the experience that Marketing control has been key to building trust and collaboration. Example 2: Marketing as the leader: Hotel Chocolat Marketing in Hotel Chocolat was previously done by the owner, but the introduction of CMO Lysa Hardy in September 2018 added “Don’t tell me a bit more structure, order and measurement to the process. This you are funny, means that when they do find something that works, they can tell me a joke” apply it at scale, enabling things to be done faster. CMO, Hotel Chocolat There is the belief held within Hotel Chocolat that Marketing should lead the organisation as it has the vision, the customer, and the commercials at its heart. The biggest challenge for Lysa was to get the CFO onboard with the vision of what the Marketing function needed to be by demonstrating that Marketing was a growth engine, not a cost centre, and there to drive the business. Transparency was key to building reassurance with the CFO. By repeatedly reporting on marketing performance to a profit level, she helped build confidence that Marketing is doing activity to drive profit. In both examples, the key factor in determining an increase in Marketing’s role has been through building trust; in the case of TSB, with the wider organisation, and in the case of Hotel Chocolat, with the CFO. The importance of a healthy relationship between Marketing and Finance is a topic which has been well investigated and reported on in the 2019 IPA EffWorksBuilding Bridges with Finance and in 2020, Marketing to the CFO, both publications authored by Fran Cassidy.

32 33 Appendix

Acknowledgements A big thank you to the marketing and CX leaders from the organisations listed on page eight who gave their time and wisdom in helping unearth and answer some meaty Experience challenges. I would also like to thank fellow marketing-effectiveness researcher Fran Cassidy for her help and guidance in devising this report.

Reading/References Armstrong, Sarah, et al. (2020) ‘Modern marketing: What it is, what it isn’t, and how to do it’ USA: McKinsey & Company Blades, Fiona. (2019) ‘All experiences are not equal: How to build positive experiences for brand growth’ USA: Admap Magazine Cassidy, Fran. (2019) Building bridges with finance 1st edn. London: IPA EffWorks Clapp, Rob. (2019) ‘CX as important as revenue growth but companies are risk adverse’ London: WARC Data Points Dixon, Matthew, et al. (2010) ‘Stop trying to delight your customers’ USA: Harvard Business Review Econsultancy and Oracle. (2020) ‘Thriving in the experience economy: Priorities of a CMO’ London: Econsultancy Reports Forrester. (2019) ‘Predictions 2020: on the precipice of far reaching change’ USA: Forrester Harrington, Connie. (2016) ‘How mature is your CX program? A Review of 3 CX maturity models’ USA: Customer Think McCann, Mike & Neil Dawson. (2019) ‘Experience works, and here’s how’ USA: WARC Netbase. (2019) ‘The 2019 Consumer Experience Analytics Report: EMEA’ Schmidt-Subramanian, Maxie, et al. (2019) ’How customer experience drives business growth’ USA: Forrester Smith, David. (2017) ’What’s next in marketing’ UK: The Financial Services Forum Wilkins, Jon & Lisa de Bonis. (2019) ‘The house that strategy built’ USA: WARC

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