IKEA Represents a New Wave in China, a Branded Experience
This article originally appeared on Customerthink.com. I had two unpleasant buying experiences at stores in China a few years ago. One was at Ikea, where I went to buy office furniture, and the other one was at Staples, whose online store I visited to buy a magazine rack. One was an example of how most businesses operate in China, and the other—which turned out to reinforce my loyalty—is a new style for the market: a branded experience. Most businesses in China are delivering no-brand and de-branded customer experiences. A lot of companies in China are providing standardized good customer services, and they do not earn any loyalty from their customers. Staples is a good example of this. Ikea, however, is an example of where business in China could go. The hassle The shop floor design of Ikea forces you to walk through every single display area. You have to spend hours there, even you just want to buy a single piece of furniture. Customer services are very limited, and once you’ve selected items from the huge storage area, managed to put them in or on your cart, waited in the long queue to check out and arranged any delivery and installation, you still wait for another week to get your furniture fixed and ready for use. In China, there’s even another stop if you need an official invoice of your purchase. It is an inconvenient and time-consuming in-store experience. Now consider my experience with Staples. Two days after my purchase at the Staples web site, I received phone call saying the store could not deliver the goods as promised because of a stock shortage. Not long after we got off the line, someone from Staples delivered the magazine rack to our office. We were all puzzled. But we unpacked the goods, only to discover that the magazine rack was not the color we ordered. Moreover, a few screws were missing. We called the hotline, and the customer service representative said she would check with the manufacturer. Two days passed with no reply. We could only call again. This time the CSR said all the hassles might have been because of incomplete information and miscommunications within Staples. Lucky us. We fix the magazine rack ourselves with screws from the company toolbox. Every time I shop at Ikea, I swear I won’t be back again. But I keep coming back. On the contrary, it seems unlikely I will buy again at Staples. Why, if both delivered unpleasant experiences, does Ikea still win my loyalty? "Peak-end rule" In what has come to be known as his "peak-end rule," Noble prize-winning psychologist Daniel Kahneman pointed out people could remember only two things during an experience process: how we feel at the peak (no matter whether the ultimate experience was good or bad) and at the end. These peak-end feelings summarize our whole experience process and are stored in our brain at a subconscious level. These feelings will eventually direct our next buying decisions; whereas, the proportion and duration of pleasure or pain throughout the whole experience process do almost nothing to our memories. We remember only the peak and the end. Think about my experience at Ikea. Though my disappointments make absolute sense, it’s actually my peak-end experience that takes charge and drives me to go back again. So what’s my peak-end? To me, it’s the value of the products for the money I pay, the free-to-trial shopping experience and the effective display that demonstrates practical and efficient use of the products. What’s more, Ikea’s canteen is good, as is the 10-cent ice-cream I buy at the exit counter! In my case, my peak-end memories override any unpleasant feelings and evolve into a positive experience that drives me back. What do I remember of the peaks and end of my Staples’ buying experience? My peaks—all bad—are the last-minute, out-of-stock notice; the unexpected delivery; the discovery of the wrong color; the need to install it myself; the missing screws; and the company’s poor problem-solving capabilities. But "peak-end" does not explain the whole picture. It’s the branded and de-branded customer experiences that Ikea and Staples delivered that eventually lead to my entirely different psychological and behavioral responses. Ikea is one of the few exceptional businesses in China who are creating branded customer experience. A branded customer experience works to amplify your brand through intentional and consistent delivering of on-brand experiences across all touch-points. Only when you’re branded can you differentiate; only when you’re differentiated can you have loyal customers. There are three essential elements: the peak and end (most memorable) experiences; brand values; and consumer needs. To optimize the branded experience, you have to deliver your most unique brand values and meet (or exceed) the most critical needs and expectations of your target customers through peak and end experiences. If Ikea’s brand values are its competitive pricing; the product value; effective and practical product applications; and a unique shopping environment, then the company has maximized its branded customer experience by integrating all of these in the customer experience process. Staples’ brand values are its product varieties; a one-stop solution; and easy and convenient shopping. And, yet, my experience was anything but a one-stop solution or easy and convenient shopping. So, at the peak-end, the experience contradicted Staples’ brand value. That’s an "de-branded customer experience." A lot of companies in China are providing standardized good customer services, and they do not earn any loyalty from their customers. The problem is they do not have differentiation at all. Doing what everybody is doing cannot help you to differentiate from your competitors. These "no-brand" customer experiences will not enhance your brand equity but, instead, just waste your company resources. Or even worse, with an de-branded customer experience, you may actually raise false hopes through promising high-quality products and services in your advertising and, in reality, delivering well short of that. Then you damage your brand and customer equities.