This blog post comes to you live from the second annual Forrester Research 2010 Customer Experience Forum at the Grand Hyatt in New York. Research Director Harley Manning sets the stage by asking, What exactly is customer experience? Answer: how customers feel about their interaction with your company. To that end, Forrester surveys 133 companies in 14 industries to create a Customer Experience Index that tracks how consumers feel about their customer experience.

The most recent index shows Barnes & Noble coming out on top with retailers in general scoring higher than other industries. At the low end of the scale: health insurance plan providers. And on average, companies who score high on the index also have customers who are willing to buy more products and services from them.

The key to improving one’s Customer Experience Index score: creating breakthrough experiences, the theme of the event.

The first speaker, Principal Analyst Ron Rogowski, discusses the connection between emotional experience design on websites and creating a great customer experience. His premise: online experiences define the brand. As John Thompson, senior VP at Best Buy said, customers are first experiencing the Best Buy brand online.

But there’s a problem: today’s web experiences leave an emotional void. They are, frankly, boring. The website for retailer Fry’s is a boring catalog of inventory, according to Ron. And Canon, which touts “moving photography” in its advertisements, provides a boring catalog of products on its website. In all, more than 90 percent of websites reviewed by Forrester fail to engage the consumer emotionally.

So how do you create interactions that engage consumers by catering to their emotional needs?

1. Address customers’ real goals. Understand customers’ latent needs through research. Anticipate and answer customers’ questions before they ask them, which is the key to creating an intuitive website. For instance Sallie Mae’s Education Investment Planner focuses tightly on goals like giving parents investment information during a time of uncertainty (e.g., planning and saving for family college needs). By using persona design to define customer goals, Sallie May created an online tool — a breakthrough customer experience — that gives parents a benchmark for knowing how they compare with their college savings program. The Sallie Mae online that meets an emotional need (worry and uncertainty about planning for college).

2. Develop a coherent personality. Lady Gaga and Elton John have talent — but they have personality, too. So what does personality mean to your brand? Personality is about being consistently recognizable. Aligning your online experience with your brand attributes. And, perhaps most importantly, adopting a human tone. Example: Progressive Insurance has created a personality for itself though the character of Flo, the fictional cashier on TV who also guides you through the Progressive website

3. Engage a mix of senses. The more senses you engage, the more memorable the experience. And how? Invest in the site’s production values. Provide a purposeful, tactile experience. Heighten the effect of your website with audio and video. Example: Armstrong Floors presents an attractive site that makes you want to hire the company to stain and finish your hardwood floors. Tazo Tea uses sound and motion to make you want to buy its tea products ( so long as you’re willing to install Flash 7).

Undertaking those three steps means making a more serious investment in rich media in your website budget.  Documenting your brand attributes and making those attributes meaningful to consumers. And orchestrating your customer’s emotional experience journey from awareness to consideration to purchase.

In short, make the experience its own reward.

Have you noticed U2’s gutsy distribution strategy for the newly released No Line on the Horizon? I don’t mean the predictable release of the album on MySpace prior to its March 3 launch in stores — but rather the heavy reliance on an allegedly dead medium, the compact disc.  At Best Buy, you can find the album available in five formats:

• Regular CD

• Limited edition digi pak that includes CD, color booklet, poster, and exclusive downloadable film access.

• Limited edition magazine that includes a CD, 60-page magazine, and exclusive downloadable film access.

• Vinyl LP

• Limited edition box set that contains a digi pak CD, DVD of an exclusive film by Anton Corbijn, a 64-page hardback book, and a fold-out poster

At a time when digital downloads have all but rendered the CD an afterthought, what gives?  Here’s what U2 is doing:

• Leveraging the power of the brick-and-mortar retailer.   We’ve recently seen the Eagles and AC/DC successfully move CDs through Wal-Mart.  And Prince just struck a deal for Target to be the exclusive retailer for a disc set to be released March 29.  Why?  Not because the CD is obsolete — but rather the old ways of distributing content are dead.  The Best Buys, Starbucks, Wal-Marts, and Targets of the world can act as DJ, distributor, and marketer rolled into one.  During the release of Black Ice, AC/DC provided the soundtrack for the Wal-Mart shopping experience, and well-placed displays opened up the band’s back catalog  to shoppers, too.  All told, Black Ice moved 2 million units in 2008.

• Fighting the commoditization and degradation of music.  Rock has always been as much about image as it has the music.  Sleek packaging creates an experience that helps build image and differentiate one band from another.  By contrast, digital marginalizes a band’s image and degrades the quality of its product through inferior downloads.  It’s well known that MP3 compression causes a loss of sound quality, and the slightest glitch in your broadband connection is a total buzzkill for streaming songs.  Superior packaging and well-produced sound captured on disc are two weapons in favor of a band like U2, which understands the power of image and the relationship between its image and sonic power.

U2 isn’t the only band embracing the “old.”  In 2008, David Gilmour released at least five versions of his Live in Gdansk, for instance.  Both Radiohead and Beck have released music in playful packages with stickers that consumers can use to deocorate the CD sleeves.

Soon I’m going to learn more about how artists are seizing more control of content distribution when musician and producer David A. Stewart appears at the 9th annual Razorfish Client Summit April 21-23 in Las Vegas.  (I’m putting together the agenda for my employer Razorfish.)

He’s going to discuss how artists like himself are dropping “a neutron bomb” on the current entertainment distribution model.  I can’t wait to hear him speak.  And I hope we see more bands like U2 giving us experiences we can touch and feel.

With the U.S. economy reeling, holiday shoppers have been the focus of heightened scrutiny. Will they turn out in droves in the wee hours on Black Friday and spend lavishly, or will they cave into recessionary fears and pinch their pennies? What are retailers doing to woo this exotic species of American shopper during a downturn? On Black Friday 2008, I decided to do some investigating of my own, which is why I found myself standing in line at a Downers Grove, Illinois, Kohl’s department store at 3:30 a.m. the day after Thanksgiving — the first of many early morning excursions that also included visits to Circuit City, Target, and Toys R Us.

I’ve endured Black Friday before. It’s not an experience to be taken lightly at least in Chicago, where getting a decent place in line to buy a door buster at Best Buy can mean camping out overnight in frigid weather. But I was downright curious to see if Black Friday would be a tamer affair this time. Would I find the shopping lines longer? What kinds of bargains were consumers seeking during an economic downturn — would they buy budget DVDs instead of DVD players?

Answer to the first question: definitely no at least based on my unscientific observations. By 3:45 a.m., the line to get into Kohl’s for a 4:00 a.m. opening was as long, if not longer, than it was last year. And at Toys R Us, it took me nearly an hour to stand in line at 6:30 a.m. to some goodies for my daughter, with nearly every person in front of me pushing carts filled high with toys and expensive electronics. (A family biding their time with me in line reported that a fight had erupted in Target for iPods on sale.)

Answer to the second question: bargains are not as important as you might think. Black Friday is really all about the social experience and shared tradition. As teenaged-shoppers Jamie, Alyssa, and Kelsey told me in line at Kohl’s, “We do Black Friday for the fun of staying up all night together.”

Jamie, Alyssa, and Kelsey’s sentiment was typical of what other Black Friday shoppers told me. At Kohl’s, I also interviewed shopping moms Laura, Ellen, and Katherine, all of whom were wearing sweat shirts that read, “Power Shopping Team.” I asked them point blank what was so important that they needed to sacrifice sleep for Black Friday?

“Power shopping is a tradition!” They all chimed in at once. Laura gushed about doing Black Friday for 14 years and enjoying the ritual of plotting their shopping visits over coffee, then driving from store to store and catching up on gossip and family news. And, boy, they had their morning planned more carefully than the Normandy Invasion. They seemed be adopting a contra-shopping strategy, buying lower-profile items like curtains at JCPenney and wash cloths at Kohl’s while the rest of the shopping mob focused on the more predictable door busters like cameras, clothing, and clicker caddies.

Clearly, Laura, Ellen, and Katherine reveled in each other’s company. They shared photos of their kids stored on their mobile phones. Ellen fielded a phone call from a friend in Missouri who reported on the action at a Wal-Mart. I found shoppers like them throughout Black Friday — mostly women gathered in twos, threes, and fours, joking about the bitter coffee they brought with them from 7-11, helping each other compare product features of digital cameras, and lending a mobile phone to a shopper who needed to call her husband lost somewhere in a nearby throng. They all told me the same thing: We just enjoy the experience. Together.

Inevitably, shoppers asked each other (often total strangers just marking time in line) how long they’d been awake that morning. I thought I was pulling off a minor miracle by waking up at 2:30 a.m. to prepare for the day, but a young couple in line with me at Toys R Us never went to sleep Thanksgiving night, starting their Black Friday at an Aurora outlet mall that opened its doors at 11:00 p.m. Thursday. They smiled victoriously as shoppers around them acknowledged their stamina with compliments.

As I watched dawn break with a middle-aged woman from Florida and her daughter near the check-out station at Toys R Us, I remembered a presentation I heard Forrester analyst James McQuivey deliver at the October 2008 Forrester Consumer Forum. In analyzing the wants and needs of consumers, McQuivey argued that being connected is a basic need worthy of Maslow. In fact, McQuivey argued that Maslow needs to be revised to account for the intrinsic human need to share and belong, a theme that also surfaced in Consumer Forum presentations by Paco Underhill and Forrester’s Lisa Bradner.

I think Forrester got it right. On Black Friday, the bargain hunting is really a means to an end. The real motivator? The shared shopping experience.

Next year I suggest that retailers tap into the social nature of Black Friday and remember the Lauras, Jamies, and Ellen who wield economic clout. Promoting sales is important, but how about offering coffee, treats, and entertainment to enrich the tradition and the fun that consumers obviously seek from the morning? Imagine Best Buy offering prizes to shoppers who travel the farthest or having customers submit their own favorite Black Friday experiences for possible door prizes.

Anyone else experience Black Friday? What was it like?

Social media influence consumer purchase behavior far more than you might think.

That’s a key finding of new Razorfish thought leadership, FEED: The Razorfish Consumer Experience Report. The report is available in Flash and PDF download here: http://feed.razorfish.com and on the Razorfish Digital Design Blog. FEED, launched on 20 October 20008, helps marketers design better consumer experiences by uncovering insights into consumer behavior in the digital world. The report documents the results of a 2008 survey that Razorfish conducted of more than 1,000 “connected” consumers (a coveted group who spend money online and have access to broadband). Here are a few key findings from FEED that marketers might find noteworthy

1. Social media increasingly influence purchase decisions. Four out of 10 consumers surveyed by Razorfish have made a purchase based on advertising they saw on a social media site, and 76 percent welcome advertising on social networks. Consumers’ purchasing behavior reflects the larger influence of social media on their lives. About 75 percent of consumers surveyed spend at least one hour a week on social media sites like Twitter and Facebook. More than 68 percent of connected consumers are active on two or more social media sites.

2. Consumers are adopting social media and web 2.0 technologies with startling regularity. Nearly 7 out of 10 connected consumers have customized their home pages with content feeds, scheduled updates, and other features. Sixty percent use widgets on websites. The widespread use of widgets is the most surprising finding. We believe the uptake of widgets, mobile devices and social media means that marketers need to design experiences for consumers across a world of fragmented digital media.

3. Video explodes as an advertising format. A whopping 94 percent of consumers surveyed say they watch interactive video with some level of frequency, with nearly a third watching video on a daily basis. We also find that consumers are open to advertising through interactive video, with the majority preferring companion banners to pre-roll as well as new, emerging forms of video advertising such as tickers and interstitials.

4. Personalization and loyalty sway consumers. Razorfish reports that 65 percent of connected consumers say that retail loyalty programs highly influence purchasing decisions. According to Razorfish, loyalty services like Amazon’s Prime or Best Buy’s Reward Zone are essential for retailers to succeed on the eve of the holiday shopping season. Moreover, websites that give personalized recommendations strongly influence connected consumers. Of the total surveyed, 65 percent said that they have made a repeat purchase on a site that issued an automated recommendation based on their previous purchase.

FEED also consists of a series of essays that examine the ways consumers interact with digital media. A few of my favorites are “Putting Jakob Back on the Shelf” and “What’s in a Game?” Both of these firmly assert that simply designing functional websites isn’t going to please a broadband-enabled audience that expects an interactive experience. Instead, designers instead need to ask how to employ concepts like gaming, storytelling, and interactivity to create the next generation of consumer experiences. For instance, “What’s in a Game?” challenges marketers to imagine how consumers could experience one’s product or brand in a playful, game-like fashion. The essay cites Razorfish client work with Lipton tea, where we designed “BrainTrain,” a collection of mental alertness games that engage the consumer while branding Lipton in a subtle way.

Other notable essays include “Twitterific,” “Life after the iPhone, and “Designing Experiences for the Facebook Generation.”

I welcome your feedback.

Engagement-based marketing is all the rage. Forrester Research, Gartner, and JupiteResearch have all published major commentary on engagement in the past 12 months. Agencies like my employer Avenue A | Razorfish are talking about the importance of building brands through experiences that engage consumers, online and offline. David Polinchock of the Brand Experience Lab publishes a popular blog, The Experience Economist. In reality, marketers have been pursuing the holy grail of engagement since Starbucks proved that you could charge a premium rate for a cup of coffee if you provided a memorable experience (probably even before that). So why all the talk now – and why will agencies like mine continue to talk about engaging experiences? I can think of three reasons:

• We live at a time where consumers suffer from a massive case of ADD. We skim content briefly all over the digital world, snacking on small morsels of information and entertainment from digital video, blogs, websites, and portals. And we’re distracted – we’re answering emails on our laptops while we talk on our PDAs and watch interactive videos online. How can even the most smartly crafted 30-second message reach us anymore? So ironically marketers are going in the opposite direction by creating entertaining and fun destinations where we won’t mind spending time with their brands. And they’re asking for help from agencies like Avenue A | Razorfish

• Marketers are responding to a cluttered environment of their own making. Consumers face a bewildering set of purchase choices now – what Barry Schwartz calls “an overwhelming abundance of choice” in his book The Paradox of Choice. Marketers are under pressure to find a more compelling way to rise beyond the clutter, which is where memorable experiences come into play. More products, more messages, and more services are not the answer. Experiential marketing just might be.

• In the digital world, broadband adoption continues to increase, which means more consumers can realistically expect the interactive experience that digital promises. Gartner announced July 24 that in five countries, broadband penetration of consumer households has exceeded 60 percent, and worldwide consumer broadband adoption will grow from 323 million connections in 2007 to 499 million by 2012. As more offline agencies embrace digital, and as more companies really start to figure out digital, you’ll see even more discussion about engaging broadband-enabled consumers.

Maybe we need a different way to talk about experiential marketing, but I do know that “engagement” is more than a buzzword as I look at our client work and the direction of Avenue A | Razorfish.

Client work

Sometimes a client uses rich media to create an experience. Sometimes the client acts as host for a social media experience among consumers. Either way, the client builds its brand through an experience, not by plastering messages on banner ads. Last month, for instance, I blogged about the Best Buy Summer Hub, which employs rich media, snappy graphics, and a related Facebook application (the Digital Trip Journal) to help consumers learn how consumer electronics devices can make summer more fun.

The Summer Hub helps to make the Best Buy brand stand for valuable advice and a fun lifestyle. The difference is that Best Buy doesn’t tell you. It wants to convince you through a digital experience.

Meantime, in France, Nike ACG worked with our Paris office (known locally as Duke) to launch the Sweetspots website. Nike ACG specializes in outdoor gear. Instead of simply displaying its inventory, Nike ACG lets you experience its products in action through crisply produced videos that depict Nike ACG-sponsored athletes doing everything from kayaking to climbing mountains. In one scene, a kayaker crashes through the Bujagali Falls of Uganda, while in Slovakia, skiers tackle Lomnicky Peak. As related in the enclosed presentation (which you are free to use publicly), Sweetspots has a social media component, too. Using a “submit your sweetspot” tab, any athlete can submit a sweetspot he or she has achieved personally (defined as the moment when effort and talent converge). The winning user-generated videos will be unveiled later this year. Moreover, for people who want to participate in a sweetspot even if they are not athletes, Nike ACG sponsored a contest on Facebook where you can compete for the chance to join a team filming a sweetspot in Patagonia. The winning team will be announced soon.

The number of unique visitors per month has quadrupled over a pervious version of the website. The 200,000 monthly unique visitors spend about 5 minutes per visit. The website was also a finalist for a Cannes Cyber Lion award.

Avenue A | Razorfish direction

At the Avenue A | Razorfish Client Summit on May 14, our CEO Clark Kokich identified experiential marketing as one of the two or three major trends affecting our agency’s direction. The Client Summit is an annual gathering of about 1,000 clients and Avenue A | Razorfish account executives from around the world. Through case studies, panels, and keynotes, we assess our mutual journey through the digital world. At this year’s Client Summit, Clark revealed how we’re changing to be more of a builder of consumer experiences instead of designer of websites or digital ads – experiences that connect with people emotionally and leave impact. You can see Clark’s presentation here: http://www.avenuea-razorfish.com/clientsummit08/. (See “opening session – welcome” by Clark Kokich.)

We’re also making experience-based marketing a part of our operations. For example, in the U.S. Central region, Avenue A | Razorfish is changing our approach to client account planning and delivery. As regional president Dave Friedman told me, “Usually account planning for an agency is about defining a message for your client. The message is still important, but we’re also now asking, What experience do we want to create for the client? So we’re replacing account planning teams with experience planning groups that cut across marketing, strategy, technology, and user experience.”

Dave went on to tell me that in his region, we’ve also created a new team called “Experience & Platforms,” headed by a general manager who is charged with figuring out how to assemble the right talent to design and deliver captivating experiences that span the worlds of digital advertising and website design.

“We’re moving from a campaign mentality to a relationship mentality,” Dave told me. “Experiences are longer lasting than campaigns. The Postopia gaming site we built for Post Cereals is an experience that builds a brand over a long period of time, not a one-time campaign.”

You also see experiential marketing in many other places, even a more transaction-oriented site like Breville.

How are you talking about experience-based marketing? Where are you finding it work well and not so well?

How does a retailer like Best Buy build build awareness in the digital world for consumer products like cameras and GPS devices? It’s not like you can test a camera on a website.

Enter the Best Buy Summer Hub.

Built with my employer, Avenue A | Razorfish, the Best Buy Summer Hub employs rich media, snappy graphics, and a Facebook application to help consumers learn how consumer electronics devices can make summer more fun. The hub provide vacation tips relevant to six primary categories that people enjoy during summer: the beach, hiking and camping, the backyard, travel, sports and activities, and the road trip.

For example, in the “backyard” section, a brief video clip explains how you can create an outdoor theater in your backyard by using a bedsheet for a screen and a video projector with a built-in DVD player. I like how the tip is shared, too. A member of the iconic Best Buy “blue shirt nation” team quickly shares the tip accompanied by an image of the type of projector that would work best. She doesn’t perform a hard sell, either — she suggests you can borrow this equipment from your office, not just buy it.

(One suggestion: I realize it’s probably too expensive to do, but I’d love to hear some authentic songs of summer playing in the background as I visit the site, like “Soak up the Sun” by Sheryl Crow or the classic “Summer” by War.)

I think the digital trip journal is pretty cool, too:

Just click on the icon running at the top of the Summer Hub screen, and you are taken to Facebook, where you can load this application on your profile. From there, you can create a customized journal of a vacation and invite your fellow Facebook friends to keep track of your experience.

Of course, you can upload digital photos, too, which sounds like standard operating procedure at first blush. But think about it for a moment: instead of trying to sell you a digital camera, Best Buy creates a fun reason for you to want to own one and use it.

I actually just started a digital journal. Trust me: if I can do it, anyone can.

So why should you care about the Summer Hub? Because it’s one example of where marketing is headed: not pushing a message or a product at consumers but providing a captivating experience, usually one with emotional appeal.

We live in a world where consumers suffer from a massive case of ADD. We skim content briefly all over the digital world, snacking on small morsels of information and entertainment from digital video, blogs, websites, and portals. And we multi-task, too. (In fact, I’m toggling between email and a video while I write this bog.) How can even the most smartly crafted 30-second message reach us anymore? So ironically marketers are going in the opposite direction by creating entertaining and fun destinations where we won’t mind spending time with their brands.

That’s where experiences like the Summer Hub come into play: they’re not about overt messaging. The company branding is more subtle. Best Buy is banking on the chance that we’ll be engaged enough to spend some serious dwell time with the Best Buy brand and eventually buy a product online or in-store. Sure beats getting beat over the head with a loud banner ad.