Experience Vs. Perception: How Digital Businesses Redefine Brand Value And Equity

Shelly Dutton

Every aspect of our lives is bombarded by a steady stream of universally recognizable logos, highly visual ads, earworm-worthy jingles, celebrity endorsements, and eye-catching packaging. All of which are designed to convince us that we need a specific product or service to inspire us to live healthier, wealthier, and wiser – as well as comfortably and stylishly.

Is constant brand exposure really resonating with today’s consumers? If you said “yes,” you may want to reconsider your marketing strategy.

That’s the lesson shared in the recent Harvard Business Review article “The Most Successful Brands Focus on Users – Not Buyers.”  Dissecting the results from their joint study with Siegel+Gale, co-authors Vivek Bapat, senior vice president and head of Marketing and Communications Strategy at SAP, and Mark Boncheck, founder and CEO (chief epiphany officer) of Shift Thinking, reported that digital savvy consumers tend to prefer exceptional user experiences over enticing perceptions when making purchase decisions. “On average, [consumers] were willing to pay a 7% premium, were 8% less likely to switch, and were more than twice as likely to make a spontaneous recommendation of brands that provided exception user experiences,” they wrote.

I caught up with Vivek to further discuss the motivation behind this evolving customer mindset and the strategies marketers need to pursue now to (re)capture shoppers’ attention.

Vivek, which major trends inspired Mark and you to study the connection between brand marketing and customer purchase behaviors?

For decades, marketers have been focused on gaining a favorable position in the mind of the buyer. They would create a perception of the brand over an extended period of time to encourage consumers to consider the brand when the need arises and ultimately purchase and use the product. Many iconic brands have followed this approach – and rightfully so. However, the more products and services become digital, the more I realized that, while perception is still important to brand definition, the core of what customers were thinking about a brand shifted toward the actual use of the product.

While the customer side of the relationship is evolving, many companies still invest significantly in the traditional way of building up brand equity to engage customers – only to lose it on the usage side when the brand proposition stops at the point of first purchase. A big disconnect between brand outreach and consumer desire for individualized engagement is emerging as linear, traditional best practices are being upended by digital next practices.

Digital brands are adopted with an entirely different mindset. They are first adopted by a small set of end users, delighting them with amazing utilitarian experiences. They rely on advocacy, word of mouth, and social referrals to drive traction. Ultimately the network effect of user advocates and their peers creates the brand perception

After talking to Mark [Boncheck] about this observation, we quickly realized this change was bigger than we originally thought and we set out testing our hypothesis in three dimensions:

  1. Engagement strategy: How consumers use more channels and digital outlets to engage with brands
  1. Investment strategy Why marketers are changing their mix of established marketing tools and tactics
  1. Measurement strategy: How brand valuation is impacted when the digital world places a higher premium on end-user advocacy and speed of adoption, instead of traditional metrics of brand value.

We wanted to decipher each of these new realities in the lens of the consumer to help all brands – new arrivals, long-established incumbents, and everyone in between – reconsider their current engagement practices and succeed in an economy that is only becoming more digital.

What separates the brands that resonate with today’s consumer from the ones that do not?

Based on our research, brands fall into one of two classifications:

  • Purchase brands: Companies under this umbrella are typically, but not always, legacy brands. This was an important observation. It told us that many traditional brands that are crossing over into digital – and, as a result, achieving success – are also shifting their approach to engagement, investment, and measurement. They now focus on creating demand for their products and services, rely heavily on promotions and messaging, and continuously concerned about consumer perception.
  • Usage brands: For the most part, digital newcomers, as well as service-oriented legacy brands, comprise this category. These businesses generate demand for the use of the product or service, depend on unprovoked consumer-driven advocacy, care about what people say to each other, and innovate new experiences across over touch point to wow their audience and keep them engaged.

One look at today’s economy will show that usage brands are on a growth trajectory that is just stunning – even surpassing the success of purchase brands. The reason why is quite simple: the initial consumer purchase is the beginning of the relationship, not the end. For example, the revenue of usage brands is fueled by repeat purchases and renewals as well as the buyer’s willingness to recommend the product or service to their friends, family, and social media connections that can reach every corner of the world in a matter of seconds.

How can marketers get out of the rut of traditional practices, mindsets, and strategies to re-engage consumers? 

While advertising is still useful when building awareness and bringing shoppers to the physical and online store for the first time, it’s the experience that counts most at the end of the day.

Think about the digital brands you use. They are not powerful because you use their products and services once. Instead, we use them repeatedly – sometimes multiple times in one day. Very quickly, these brands become part of our daily habits and possibly our main line of interaction with the outside world. However, if the experience of the first, second, third, or fiftieth time the product or service is used, we, like millions of other consumers, will inevitably go to a competitor.

In the same light, marketers must look beyond lead generation and the first sale to ensure that the experience of using the product or service is so easy and valuable that the consumers will keep coming back. Over time, that consumer will become more loyal and provide the best kind of marketing available – free, widespread, value-centric, and honest.

What makes a brand successful in the digital age? Find out by reading the Harvard Business Review article, “The Most Successful Brands Focus on Users – Not Buyers,” which details the findings of the joint research study by SAP, Siegel+Gale, and Shift Thinking.