How to Quantify Physical Experiences

Photo by Neisan Massarrat

Originally published April 10th, 2019 on Medium.com (account now deleted).

There was a time when my most important investment decision was whether to spend my $20 allowance on the latest Sims game or save it for a larger future purchase of an mp3 player. I had to think about what was more valuable to me. Ignorant of the reality of the smartest decision — saving it for the long-term — I made a decision based on immediate gratification. As we get older, and on a day-to-day basis, what we value evolves due to the ever-growing knowledge we acquire. The tunnel view of what life encompasses is stretched out by the force of wisdom. Eventually, allowing us to view the bigger picture.

In today’s digital reality, the data we collect is parallel to that wisdom. It allows us to define the value of not only products but physical brand experiences. Yet, there is a challenge in figuring out how to utilize that data to tie revenue to a physical experience.

The importance of the physical realm lies in its ability to create incredible experiences. The more joy derived from being in the space, the more we value it. That’s why 74% of Americans value experiences over products. And brands are creating incredible physical experiences, but due to the vast selection of online shopping, those experiences tend to be separate from the transaction.

Historically, retailers have never had to think beyond the four walls of the store.

The value of the experience wasn’t separate from the transaction; we went into a department store during the holidays for the uplifting environment, but also to do our holiday shopping. And today, they’re not. We experience brands in one place and purchase in another. Not always, but quite often.

That separation of experience and fulfillment makes it more difficult to quantify the investment — there is not always a direct way to tie a sale to the experience of the store.

For instance, the concept of a showroom — a place where you display products, but shoppers can’t walk out with products or simply the desire to purchase in-store is lower. Showfields, Batch, and Burrow are some examples of brands that provide great store experiences, but where sales may not happen within the four walls of the store. The unknown revenue influenced by the store’s presence makes it difficult to justify the investment of having the store. In many ways, the showroom is a billboard for the company — a marketing platform that influences sales outside of the space. It may not be until those brands pull back and look at the bigger picture of how the physical space affects total revenue across all channels, that the justification of the investment is evident.

We can’t change the fact that the way we shop and consume has evolved, but we can become more creative in how we measure the return of the investment. It’s not straightforward or clean-cut or quite frankly what any finance professional is going to love. It involves some maneuvering of numbers. And no, it’s not that it isn’t accurate, it’s that we must look at the numbers through a different lens.

To effectively quantify the return of a physical experience, look at the return of the total investment; the total P&L.

Omnichannel has been a term thrown around forever, and more so today. We want shoppers to have a holistic brand connection across all channels. Yet, we still measure the success of each channel separately.

A social post may have an effect on the store traffic, and the store traffic may influence web conversion or wholesale conversion. It requires viewing the total revenue and tracking how each additional investment (store or other) affects it.

How? Be smart with the data. Track your shoppers, but in a way that improves their overall experience. And be transparent about it. 75% of consumers are willing to share data in exchange for a product or service they value and a trustworthy brand.

From a consumer perspective, I know that having an amazing customer service experience and the ability to continuously access that, makes me more likely to return and purchase more. I also understand that the store experience is better when they can track my behavior. I’m willing to share that info for the greater good of my happiness as a customer. I can also tie the value of purchase beyond just the product. For example, I shop at Warby Parker quite frequently. I love the design of the glasses, but I also am aware that the price I pay for the product alone is not worth it (I know they likely have high mark-ups). I consider it a good investment because of the customer service I receive (e.g. free adjustments). In other words, the bigger picture of the total reward.

Brands & Retailers

Zoom out and look at the bigger picture. Don’t single out store sales. If you want to create an omnichannel experience, then measure it the same way.

Consumers

We subconsciously tie value to experiences, yet don’t always think it through. Taking the time to really understand what you value, will allow you to make smarter, valuable purchase decisions.