[MUSIC] Welcome to Module 2. Last module, we finished talking about three drivers of value creation. One was efficiency, one was effectiveness, and one was the experience. All of them matter, but what I've try to argue is that experience is gaining in importance when it comes to creating value for customers and as I'll try to argue in this module is also in terms of building the brand image in the minds of consumers. Let me give you a simple example where companies can sometimes go wrong in understanding how value is actually created for the consumer. So this is a product which is a drug application for multiple sclerosis which is a debilitating muscular disease. And in an advance stages actually is very difficult for the patient to self inject, at least with the old technology which was a 12 step process. If you think about unpacking the medicine, loading the needle, and giving yourself the injection. So this new product was developed, Rebif, which simplified the process. It even took away the pain. You couldn't see the needle. Lots of innovations. And the engineers thought they had a really winning product here. What they found out though is that many of their existing patients refused to switch. It wasn't because this new product was more expensive. So they tried to find out what it was about their resistance to switching. And this is quite an important message here when it comes to experiences. It's often very difficult for consumers to express the experience they have. So what they did, they took a technique which is really based on images. And they asked consumers to bring their images when it comes to how they feel about their disease, how they feel about giving themselves the medication, and then they had a trained kind of story tellers and graphics artists put these narratives into an image. And what struck the company was actually there were several reasons why patients weren't switching. The first is maybe most obvious. If you think about it, if you now have a nurse give you an injection because you're not able to perform that 12 step procedure, but the company is now saying hey, look at this new product. You can self inject. Well, for many of these patients, many of them elderly, it meant we're now going to leave you on your own. Emotionally, that's a pretty lonely place to be. No wonder patients resisted switching to the product. Maybe the more interesting one were images brought in where the patient had the US Marines with their guns and bayonets. And what they were explaining through their narratives is that this application, this 12 step procedure, was much like preparing your weapon and to go to war with this silent killer inside of them. And the pain they felt that was taken away with the new application was kind of the only feeling they had when it came to that disease. And what you were taking away was their weapon. And in many ways they felt you're giving me a toy. Now, these are not the kind of things the engineers would have thought about in the first place, but why I'm telling this story is to really illustrate the difference between what we think might be quality and what quality actually is when it comes to products. And of course, every product is an experience in its own way. You might think of products like an Nespresso, which has really taken the art of coffee making into a whole new dimension. And we'll come back to Nespresso when it comes also to the digital experience that surrounds it. Nespresso is a coffee making machine. Which has really been ritualized compared to the solutions that were there earlier. Or you might think of an American brand called Build-a-Bear shop where what you've done is, you no longer put teddy bears in the stores where kids can go and pick out their teddy bear, but you've basically outsourced the whole production process. You've got the skin of the bear hanging, you've got the filling, and they've created a whole set of experiences, a whole ritual around making those bears. Now imagine I came to you, and I said, I'm going to engage child labor. These kids are maybe six years old, they're making their own bears. And the children and their parents will be happy, you would have probably laughed at me. But it's a very successful concept. So when it comes to products, there are experiences. And everything that surrounds them, us shopping for the products, using them, disposing of them, getting service, all of those are separate experiences which add up to an experience overall. So let me just briefly define an experience for you. An experience you can think of as an occurrence, an event, an episode. Something that happens to you and that engages all of your senses. Now, our senses are not just, sight, smell, touch, hearing. It's also our perception of time. It's maybe how we relate to others, certain thought processes that we might have. So it's how all of these add up together. And these episodes, they leave impressions on us, sort of indelible impressions on the mind. And that's what really what the brand image is. So, if you think about how we build a brand image, well, it's that combination of many, many different experiences. It's not how we thought about brand building in the old days, if you will, where you had a mass advertisement, where you had a big bang about your product or service. It's much more about that collection of many, many different experiences. Many of them might seem rather mundane, if you will. Now, experiences when it comes to building the brand image, are also very, very powerful, and they also are a part of the self definition. And if you build a brand with which customers identify, those tend to be the more powerful brands. Let me give you an example for that. Some years ago, there was this movie called The Bucket List, and it was this movie about two patients with terminal cancer. They escaped the cancer ward and they create this bucket list which comes from the notion of you're going to kick the bucket, or die. And on this bucket list were all kinds of experiences. It was visiting the great pyramids, going to Paris, skydiving, all kinds of unusual things that people wanted to do. And that's really the focal point, it's what we do rather than what we have in terms of possessions. And when we look back upon our lives and when we think about what enriched us, it's more the things we've done than the things that we have owned. And there's a lot of research that shows this, and many of you might have a bucket list too, and you might want to take a look at your bucket list. So, if experience is so important in our lives, then the challenge really is, well, how can we surround our brands with these experiences? How can we use experiences as a way to build our brand and maybe to prevent some of the not so good experiences from destroying our brand? Now marketers tend to know this. And there's some research that shows that experiences are increasingly the way brands are trying to differentiate themselves. And that other levers like product quality or price are increasingly less effective at differentiating the brand. So if you think about, for example, why do I want to stay with a company, what drives my loyalty? It turns out that experiences, by far, are the biggest driver of loyalty. And this is across different segments, in business-to-business or business-to-consumer. They're less the reason you might join a new company. They're still important. But of course, you would not have experienced the brand before you've tried it. So switching is not driven as much by the experience, but certainly leaving a brand. People leave because of bad experiences. And if you think about, you might want to ask actually your customers or consumers what were the things that really delighted them about your brand? What are the things that are memorable and stick with them in a positive way? What are the things that upset them, maybe? And that made them switch brands, or consider switching. Think about what kind of aspects those are. And also think about who stands behind those aspects. And I'll come back to this. They are very often people who stand behind those experiences. Not just products, but people. So this really gets into the realm of customer satisfaction. And the way I tend to think about satisfaction, satisfaction is actually when you've met my expectations. Now customer delight or surprise is when I've exceeded those expectations. And disappointment of course comes when I've failed to meet them. Now if you think about that simple equation, that satisfaction is the difference between what I expect and what I experience, whatever that might be, then think about the role traditional marketing plays. Which is often communication is led. To what degree does advertising build the experience versus the expectations? Well, I think it's an obvious answer. It raises the expectations. Now imagine, let's take this MOOC for example. Now imagine somebody said, you're going to see the greatest MOOC ever. You're going to laugh, you're going to cry, you might even wet yourself laughing during this MOOC. Now, then you experience this MOOC, and you come away and say, eh, I didn't laugh, I didn't cry, and I certainly didn't wet myself. Maybe you're not as satisfied as you were when you said, this is just going to be some other MOOC. It's going to be somewhat dry, there's going to be a talking head, this one. And your actual experience might be more positive as a result or certainly the satisfaction with the MOOC. And that's the equation. And so that's the challenge, in this MOOC. How do we switch marketing, or brand-building, from focusing on building expectations, to building the experience? And that's really a step change for the marketing function and the organization as a whole. >> [MUSIC]
