The following is a guest post from Dave Bruno, retail market insights director at Aptos. Opinions are the author's own.
After nearly two decades of premature buzz, the long-anticipated experience economy is now a full-blown phenomenon. The sense of "fear of missing out" (FOMO), fueled and intensified by social media, has driven millennials' experience spending to unprecedented levels. In stark contrast to their parents, millennials would much rather take selfies at Cadillac Ranch than take out a loan to purchase a Cadillac.
Much of their disposable income is spent on experiences that help them connect with their community, and they show no signs of changing this behavior soon.
While these trends may strike fear in the heart of most retailers, they actually point directly toward new and unprecedented opportunities to differentiate. For perhaps the first time in my lifetime, price is no longer the defining factor in purchase decisions. In fact, just the opposite is now the norm: Millennials are consistently willing to pay premium prices for products when accompanied by engaging experiences.
Taking full advantage of this unique opportunity requires more than the occasional loyalty perk, trunk show or Instagrammable moment. Building a dedicated community of loyal customers requires one to become an active part of that community. And there really are no shortcuts. Joining a community takes time, dedication and persistence. If retailers ultimately want to bring the community to their brand, they first have to bring their brand to the community.
To date, a few retailers have capitalized on this rare opportunity to differentiate on something other than product or price by investing in mobile engagement strategies that extend far beyond the smartphone. Those who have succeeded at becoming a meaningful part of their communities have done so through innovative content and engagement tactics that engage people who share a core set of interests, beliefs and behaviors:
- They develop a sense of purpose for their brand, and they design brand experiences that reflect that purpose to create connections with people who have similar lifestyles and values.
- They consistently go where their customers gather and activate their brands through pop-up experiences and shopping opportunities.
- They develop a mindset and culture that embrace mobile engagement first and then design each experience accordingly.
Develop a sense of purpose to connect
In a world of endless choices filled with new competitors around every corner, brands that have lived by the "one-stop shop" mantra are being picked off one by one. Meanwhile, more focused niche brands are thriving. These brands — which typically have a clearly defined sense of purpose — understand that "finding your tribe" is critical to developing meaningful connections.
Finding your tribe requires that you identify a community based upon shared interests, values, beliefs and behaviors. Doing so can reap both short- and long-term benefits for the business:
- Developing and nurturing a tribe can help brands identify, establish and design experiences based upon a value proposition that's relevant to and resonates with their target community.
- Identifying with people of similar values and lifestyles can help nurture authentic relationships that tend to be durable and long-lasting.
- Relationships built upon common beliefs and shared values typically engender feelings of loyalty that can lead to greater long-term recurring revenue.
Brands that will thrive in the long term will do so by recognizing that they must continually contribute to and empower their communities, which may result in deeper, more meaningful relationships.
Go where communities gather to nurture relationships
Nurturing relationships requires a commitment to being an active part of the community, and retailers can no longer rely solely upon their stores as the centerpiece to their community-building strategies. Once again, we can learn from emerging niche brands. Most emerged as digital natives, but they quickly learned that physical, "in real life" (IRL) connections are critical to nurturing community, particularly with millennials. Many have looked to pop-ups as a key element of their IRL engagement strategies, and now the pop-up industry is booming.
As the experience economy continues to expand, the number of opportunities to connect where your community gathers grows exponentially. Festivals, for example, exist to bring like-minded people together. Today, people — particularly millennials — gather in large numbers at themed festivals for Harry Potter, craft beer, cat videos, yoga, chocolate, "The Big Lebowski" and even FOMO itself.
From portable canopies at local events to elaborate temporary storefronts in city centers, savvy retailers are investing in imaginative pop-up experiences that bring their brands directly to where people gather. By their very definition, pop-up shops — temporary, soon-to-disappear experiences — are perfectly suited to capitalize on millennial FOMO. Unsurprisingly, pop-ups have grown into what some analysts estimate to be as much as a $70 billion industry.
A mobile-first mindset connects best with millennials
While thinking mobile-first may seem obvious, far too many brands have yet to fully embrace the fact that the majority of customer journeys begin on smartphones. As marketers, we simply must adapt everything about our processes to design for mobile preferences. Mobile "accommodation strategies" will consistently fall short on every measure. "Responsive" experiences may, in fact, respond when consumers interact on mobile, but they are far from optimized.
Responsive web design is self-limiting, as it assumes a desktop-first approach. To successfully connect with millennial communities, we must do so on their terms. Their terms are clearly mobile.
If retailers want to capitalize on millennial FOMO — and there's never been a better time than right now — they must resonate with their values, go where they gather and master the art of mobile marketing.