EXPERIENCE INDEX

Unlocking superior brand and business performance. It’s been well researched that Share of Experience will play a central role in marketing measurement in the future. The Experience Capital Index quantifies the positive financial impact of creating compelling brand experiences.

We partnered with Millward Brown and BrandZ, the world’s largest brand equity database, to decode brand experience into four critical and measurable components. The findings show that the highest performing brands are able to integrate design, business model improvements and new technologies to create powerful customer experiences that unlock new revenue streams.

Brands that deliver innovative experiences outperform competitors by up to 166%

Accelerating business growth through customer experience innovation

The CEOs who will be successful in the future focus on two burning questions: how to grow topline revenues and how to generate greater bottom-line profits? The first requires identifying future opportunities with more valuable customer groups, accessing latent markets and creating category shaping products & services. While the second requires joining the dots across their operations so that people, products and processes are optimised together around the customer.

New data analysis by Group XP has led to a breakthrough in how the most valuable brands drive both revenue and profit growth. This reveals that higher performing businesses focus on creating and delivering extraordinary brand experiences that uniquely engage customers to build enduring and highly profitable relationships. These brands are able to integrate business model improvements, new technologies and design to create innovative customer experiences that unlock new revenue streams. While facilitating better cross functional team work and binding the entire organisation cohesively around the customer and their needs. It is this holistic approach to creating customer experiences that delivers on CEO’s needs for increased business growth and efficiency. Building on thinking done at Brand Union, the Group XP Experience Index quantifies the financial impact of creating compelling brand experiences. These data results are reinforced by Harvard Business Review’s study: “The most important marketing metric going forward will be Share of Experience”.

Creating the Group XP Experience Index

The BrandZ team worked with Group XP to decode brand experience into 4 critical components; applying a BrandZ metric to quantify each one:

  • Impression – “Stand for something unique”
  • Interaction – “Deliver on your most important needs”
  • Responsiveness – “Have better online services & engaging content”
  • Resilience – “Strive to make people’s future lives better”

By combining the 4 components equally we are able to create a single score for each brand and create an Experience Index for all brands in the BrandZ database. We also proved this had a strong relationship with current consumer demand. We were then able to examine the relationship between brands with High, Medium and Low Brand Experience Capital scores and their trended brand value over a ten year period.

‘Working with the team at Group XP has helped diagnose and quantify the role of brand experiences in building financially successful brands’. Martin Guerrieria, Millward Brown

Winners & Losers: key findings in brand value growth

Ultimately brands with High Experience Capital scores were MUCH more likely to experience value growth than those with Medium Experience Capital. While those businesses with Low Experience Capital scores actually declined in value over the same period.

  1. There is no evidence of geographic or sector bias in the study; brands across all major markets and sectors from high tech online only brands to long-established hospitality, retail and financial services brands are represented in each of the three levels of Experience Capital.
  2. The data shows that brands with high Experience Capital outperform the market by up to +166%. These brands score highly across all four of the components. However, one of the distinguishing strengths of these brands is their stronger scores on the “Resilience” component. Consumers recognise that these brands have a higher brand purpose beyond their immediate product category and exert greater impact on the wider society. This has helped these brands turn customers into devoted fans and reaped the financial benefits of that.
  3. The data shows that brands with medium Experience Capital outperform the market by up to + 66%. Brands in this group may have scored highly in one or two components but not consistently strongly across all four components resulting from adhoc customer experiences that are not united around a holistic experience strategy and have therefore only gained average brand value growth.
  4. Brands with low Experience Capital actually DECLINED in value over the ten years by around -0.4%. These brands scored poorly across all the four components with a slight focus on more traditional brand building components of Impression & Interaction. Their use of more traditional marketing techniques and transactional customer service has resulted in brand experiences that provide some functional but little emotional attachment for customers.
  5. Brands with low Experience Capital actually DECLINED in value over the ten years by around -0.4%. These brands scored poorly across all the four components with a slight focus on more traditional brand building components of Impression & Interaction. Their use of more traditional marketing techniques and transactional customer service has resulted in brand experiences that provide some functional but little emotional attachment for customers.
    ‘The data proves that building higher Experience Capital helps CEO’s deliver value growth.” Iain Ellwood, Strategy Director at Brand Union & Group XP.

For CEOs & CMOs the results are clear; creating a superior customer experience accelerates business growth. The most valuable brands exhibit a profound customer centricity that enables more innovative approaches to business models & technologies and this results in customer experiences that can generate completely new revenue streams.

Iain Ellwood, Strategy Director, Brand Union & Group XP.
Iain.ellwood@brandunion.com

To receive a copy of the report or for any further questions on the Group XP Experience Index please contact Ksenia.starikova@group-xp.com

To access the full BrandZ 2016 results click here