Find omnichannel focus with Peak End Rule
The Peaks of Shopping was written in 2015 and has since come to provide much of today’s lexicon relating to more emotional customer journeys. Its breakthrough thinking reversed years of commonly held truths such as the need to invest at every channel to the same degree. Our observation was then, as it is now, that investing everywhere results in creating powerful memories precisely nowhere.
Connecting the power of memories to revenue at retail
FITCH and global payments leader Worldpay teamed up to unpick the complexities of modern retail. Surveying over 2,500 UK consumers, we’ve looked at how retailers can use the ‘peak end rule’ to help generate greater in-store experiences.
The omnichannel landscape
It’s a jungle out there
Omnichannel retail has created myriad touchpoints to manage, but delighting audiences at every moment simply isn’t practical. Where and how do we find focus for retail budgets?
Our gaze has shifted online
Over the past 15 years, digital channels have accounted for two thirds of retail sales growth (PWC, 2015, Retail Trends)and this year online sales are expected to top £60bn. This has had a major impact on physical retail, with footfall in 2015 down an average of 10% compared with 2014.
We also face the task of digitising the store, streamlining everything from product exploration to pick-up and payment. More than 50% of retailers expect to spend more on technology in 2016, be it online or in-store.
The pace of e-commerce growth is slowing. But physical retail isn’t dead
Physical shopping will continue to reign. Despite the continued growth of e-commerce, it is projected that 80% of retail sales will still take place offline in 2019.
Similarly, brand behaviour in the US suggests ‘pure-play’ business models may be a thing of the past. Online retailers (including Amazon) are opening stores in a bid to lower online acquisition and delivery costs. A network of ‘experience’ stores has helped US fashion brand Bonobos reduce digital marketing costs from 25% to 4% of net sales, whilst maintaining site traffic and conversion.
The challenge is finding focus
Rather than shifting entirely from the High Street to the web, consumers will be driven by a seamless interplay of both, with mobile facilitating the blurring of channels. We need a means of defining how and where to focus investment in both physical and digital channels.
Finding focus is especially difficult when targeting the next generation of shopper, or Gen Z (14- to 20-year-olds), who have equally high expectations of both digital and physical channels.
Find focus with the peak end rule
Peak End Rule is a psychological theory developed by Daniel Kahneman and Barbara Fredrickson that challenges the way we judge past experiences. It proposes that we judge an experience largely on our feelings at the peak (the most emotionally intense point) and the end, rather than the sum of every moment.
This is a result of our brains trying to ease the decision-making process and avoid hard work. As a consequence, having a highly positive peak and ending will drive perceptions of the customer experience as a whole. Similarly, it will help to keep the brand top of mind, driving repeat visits both online and in-store.
Brands should focus effort on the journey’s peak and end.
Think like a film director
Avoid the logic trap
Retailers often fall into the logic trap of trying to make every touchpoint marginally more friction-free than competitors, evenly distributing budget with no peak and a forgettable ending.
Take a moviemaker’s approach
Imagine a peak scene from Rocky. For most of us, that’ll be the moment he runs up the steps and holds his arms up in victory. Filmmakers use the emotional response in signature scenes to drive the overall opinion of the movie/experience. To stand out in the category, retailers need to think like film directors and focus investment and effort on the emotional spike and finale.
Exploring the peak end rule in an omnichannel world
In light of the growing range of connected channels…
— Where can brands create the most emotionally intense peak?
— How does the customer journey end?
The PEAK of the experience
Where can brands create the most emotionally intense peak?
Triggering the right emotions is key
The key to creating a memorable peak is to trigger intense emotion through surprise and delight, because intense emotion activates the brain for memory encoding and recall (Lewis et al, 2010, Handbook of Emotion).
Mildly positive emotions such as contentment or relaxation are less likely to make an event memorable than intensely positive emotions such as surprise, amusement or excitement.
The emotional spectrum
Activating emotions such as excitement can make an event more memorable than neutral emotions like satisfaction.
The emotional spectrum is based on the arousal / valence model developed by James Russell and Lisa Feldman Barrett.
The possibilities for emotional engagement are greater in-store
Opportunities for emotional distinctiveness
In a bid to explore the sources of emotional intensity in an omnichannel world, Worldpay and FITCH asked 2,500 UK consumers about the sources of fun and excitement in shopping across the end-to-end experience.
Shoppers who considered online shopping fun and exciting largely focused on what is removed from the experience, be it cost, time or effort. These are areas that offer limited long-term standout against competitors.
Shoppers who considered in-store shopping fun and exciting largely cited what is added to the experience, be it socialising, atmosphere, product engagement, discovery or novelty. These traits offer far greater freedom for brand expression and distinction from competitor experiences.
The opportunity for attracting Gen Z (16- to 20-year-olds in our study) is particularly strong in-store, with 58% of this age group stating greater loyalty to the brands shopped for in-store compared with brands shopped for online (higher than any other age group).
The top sources of online shopping fun and excitement
Shopping from the comfort of home — 73%
Accessing wider choice — 55%
Uncovering great deals — 49%
Sourcing products quickly — 27%
The top sources of in-store shopping fun and excitement
Being able to try products — 51%
Browsing on a whim — 46%
Socialising with friends — 30% (48% for Gen Z)
The store atmosphere — 25%
Discovering something new & novel — 23%
What does this mean for retailers?
Identify your brand essence and bring it to life with intensity
Define the type of ‘movie’ you’re making. What do you want it to be remembered for and when?
Is it action or romance? Identify your brand’s essence and use emotionally intense moments to make desirable traits memorable.
Hamleys: Worlds of play
Hamleys is a brand associated with play on a grand scale. FITCH developed immersive worlds of play to create a toy destination in the heart of Moscow. Tree houses and secret pathways captivate the entire family as they are led on a journey through motor city, a safari zone, an enchanted forest and more.
PIRCH: Heightened sensations
PIRCH stores in the US offer customers the opportunity to test products and enjoy them before purchasing. This includes an in-store spa with a range of over 30 high-end showerheads for consumers to use. ‘Try before you buy’ becomes something new and powerful.
McLaren: Obsessive engineering
A story of engineering obsession, where every decision exists for a reason. FITCH brought this to life in-store by replicating the heightened precision of the car and making the McLaren F1 the hero.
The END of the experience
How does the customer journey end?
The forgotten end of the customer experience
In most cases, the final step of the customer journey is payment and it has a significant role to play in the end-to-end experience. However, payment has largely been neglected or deprioritised as an opportunity for retailers to make a good and lasting impression.
To understand the importance of payment in modern retail, you only have to look at the biggest pain point for consumers today — queuing. Almost 40% of consumers surveyed thought that the queuing and payment process was the most frustrating part of the entire in-store shopping experience, more than any other factor. Consumers won’t tolerate a long payment process, with 79% prepared to wait no more than 5 minutes to pay before they will leave.
The question is: why ruin a great in-store journey with a poor payment experience?
Approach payment strategically
It’s time to start looking at payment as the strategic end in the customer journey — redefining the what, where and when of payment to ensure a delightful ending. With queuing such a pain point for consumers, why should they have to queue up at the till? Why do they even need to pay at any specific location or indeed have the payment facilitated by a sales assistant?
Top five frustrations of in-store shopping experience
Queuing and payment process — 39%
Finding a product — 22%
Comparing products — 17%
Understanding or trying a product — 10%
Poor staff assistance — 10%
End the experience with a payment high
Key opportunities for payment innovation
Nearly half (48%) of consumers would find it more convenient to pay anywhere in-store, not just at a traditional checkout (i.e. if staff could take payment with a mobile device connected to a card reader).
Little more than a quarter (27%) of customers report having a flexible & convenient experience despite a clear appetite — leaving a huge opportunity for many retailers to simplify their in-store journey.
Pay through self-serve
This opens up opportunities for retailers to enhance the customer experience. An incredible 76% of consumers were ‘interested or very interested’ in being able to self-scan and pay for an item in-store via their mobile phone, never getting their card out, never visiting the checkout.
This in-store journey has yet to be realised, but it does highlight the consumer appetite for a frictionless payment experience — one that can ultimately help contribute to an ‘end’ that’s every bit as memorable as the ‘peak’.
Pay via smartphone
Mobile is not only driving greater personalisation both in-store and online, but it’s also opening up new ways for consumers to pay, whether that’s an online wallet or through NFC contactless payments (e.g. Apple Pay). In fact, more than half (54%) of consumers believe that within five years their phone will replace their card as the main method of payment.
Payment connected with other service
For Gen Z shoppers in particular, our research shows that consumers expect retailers to embrace technology to help them in-store. Making mobile part of a more connected in-store journey could pay dividends, whether it’s helping in-store navigation, assisting with purchase decisions or helping staff engage with customers. Payment can and should be a delightful end to all of these features.
Technology for a connected generation
81% of Gen Z would like to see retailers make better use of technology in-store to help with their shopping experience.
49% have used click and collect in the past three months. When doing so, 50% have ended up purchasing an additional item when collecting in-store.
Payment for a connected generation
62% would like to leave home without their wallet and pay for everything with their smartphone instead.
57% are interested in biometric payment and using a fingerprint, palm or iris scanner to pay.
Only 35% have ever had a sales assistant help them find and pay for an item with a mobile payment device. Those that had, 61% found it very personal and engaging.
Shopping with a happy ending
We’ve helped brands enhance the experience at the final step, using a range of solutions to create seamless payment experiences
Monsoon: Enhancing critical touchpoints
Mobile payments that minimise customer frustration. Monsoon can take customers’ orders anywhere in-store with a mobile reader and tablet, helping reduce missed sales as out-of-stock can be ordered, paid for and delivered to a location of their choice. 87% of Monsoon customers say it is an excellent experience.
Harris & Hoole: Delight through simplicity
Creating a seamless, invisible payment experience that could be leveraged by retailers. The Harris & Hoole app lets users load their payment card so that payment becomes truly invisible. After the card is loaded, the customer simply checks in, walks into one of the coffee chain’s stores and orders. They are then asked, “Do you want to pay with the app?”
They simply say, “Yes,” and they’re done.
World Duty Free: Driving speed and convenience
A slick payment journey when time is paramount. The mobile payment solution has reduced queues for travellers in a rush, empowered staff so customers can pay anywhere on the shop floor. As a result, the average transaction value has jumped 44% on the mobile devices compared with the main tills.
So as a retailer, ask yourself this: Is my customer journey flat, or does it have a peak and an ending to remember?
Retailers can create a more distinctive and intense emotional peak by harnessing the sensory and social nature of physical retail. Identify your essence and what your brand needs to be famous for, then bring it to life with novel experiences. At the same time, use digital to remove the ‘lows’ in the journey, creating a greater sense of speed, accessibility and simplicity.
Retailers can combat the two most frustrating parts of the entire shopping experience (queuing and finding a product) in one seamless piece of customer service by providing an added-value experience whereby sales assistants can help consumers find the product they’re looking for and allow them to pay for it on the spot without queuing. A seamless and invisible payment experience is the key to a happy ending.
Memorable brands are stronger brands, referred to more widely and discussed more frequently.
Designing a positive peak and end into the retail experience by focusing investment and attention is a great way to create such a brand, driving perceptions of the customer experience as a whole as well as repeat visits both online and in-store.
Download a PDF copy of the report from Slideshare.