Brands Create Customers

Apple Insider quotes a Piper Jaffray report on reasons for the continued success of Apple retail stores. It’s a testament to how the Apple brand platform creates and grows customers using the Apple retail space.

From the report:

Why Are The Apple Retail Stores So Unique?
The difference between Apple retail stores and other stores is that Apple is hoping the real relationship with the customer starts when the customer is buying the product and is at check-out, while with other retail stores, the relationship with the customer ends at check-out. The goal of the Apple retail store is to move customers from making a one time purchase into becoming ongoing participants in the store. Apple wants people to keep revisiting Apple’s offerings. Pro Care is an example of this: at $99 a year Pro Care is essentially a membership to the Apple store and all the resources that are available at the store. While the company does not disclose attach rates, we estimate about 25% of people who buy a Mac in an Apple retail store will buy Pro Care. If you assume that Apple will sell 200,000 Macs in its retail stores in CY07, that is 50,000 members at $99 a year, or $4.9m in income from store memberships. We believe the retail strategy gives customers the ability to go deep (Genius Bar and Studio) and, ultimately, buy more Apple products. It is the strong Apple service element that is really driving more revenue per customer.

At the retail brand level, there is much more going on than alluded to in the Piper Jaffray analysis. To grasp the importance of what Apple is doing, we have to examine Apple’s brand platform, and how it functions within the confines of the Apple store itself.

Leveraging the brand platform

What we see at Apple retail is tightly focused execution in leveraging the brand platform. As we define it, a brand platform is “a structure of integrated brand components architected to create focused customer growth.” Apple’s brand platform drives the Apple retail experience. The Apple store is designed (physically, emotionally, functionally) to create Apple customers and to grow them into more proficient users of digital technology. This goal separates the Apple store from computer stores which aim no further than the sales transaction. Such stores usually treat their customers as commodities: “purely to be sold to.” They invest in the sale, not in the customer—and it shows.

Apple identity and values anchor the platform

Apple doesn’t try to “differentiate” itself in the retail sphere, as if “differentiation” were a separate marketing exercise. Apple just works to infuse its identity and values throughout the store space. Apple retail raises customer experience to a higher level because it embodies the same values that drive Apple design and innovation. Apple challenges itself to produce digital technologies that increase the scope and depth of personal interaction, and individual expression. In Apple’s view, digital technologies should make one more empowered and more proactive, not more dependent and marginalized.

Product displays are invitations, not “inventory”

When you enter an Apple store, the electric vibrancy of Apple’s mission—and their serene confidence in pursuing it—are immediately apparent. Apple’s retail brand platform is centered on you, the customer. The store is a hands-on heaven. Apple products wait for your touch, turned on, ripe with full sets of applications and Web access. In their elegant, minimalist displays Apple products are not “inventory.” They are invitations. The retail environment “opens up” to you, ready to unlock that buried you in you.

Brand platform elements

We can list some of the key brand platform elements in the Apple store. Each one, in its own way, helps create or grow a customer.

1. Hands-on, interactive product displays. Everything is at your fingertips: hardware, software and accessories. You, the customer, are in control. Apple facilitates you.
2. Web access, so you can test performance and look and feel of Web-based apps. The store connects you to the online world, where you’ll be spending most of your time anyway.
3. “Solution zones” where products are grouped by customer interests/function/activity, i.e., music, digital photos and movies. These let you go deeper into workflows that span multiple products.
4. A “Genius Bar” where staff experts diagnose problems and help customers resolve hardware, software, maintenance and repair issues. This is a featured area of the layout, not hidden away in some back room. (At a PC-only store, this would presumably be called the “Idiots and Dummies Bar.”)
5. A “Creative Bar” or Studio Bar where staff experts help customers use Apple’s various creative apps. In some stores these areas also host tutorials. If you’re having problems timing the jump cuts in your son’s’s birthday video to Ride of the Valkyrie, this is where you go.
6. Apple ProCare, an in-store service which provides personalized assistance for system setup, operations and maintenance, and expedited repairs.
7. Well-trained staff assistants. In my experience, they are several cuts above what you find in other computer stores.

Beyond “brand experience”

The goal of the Apple brand platform in the retail store is to deliver much more than a “unique brand experience.” The platform is designed to create and grow customers. The reason behind this purpose-driven platform is simple: Apple lives and dies by its innovation, both functional and aesthetic. By creating customers (instead of merely creating sales) the Apple brand platform forges deeper and more lasting connections with users. By growing customers, Apple ensures that its customers will be ready for the next round of innovations that Apple is planning for them. They can align their customer roadmap with their product roadmap.

(For history and details on the Apple store, see this account in the invaluable ifoAppleStore.)

This entry was posted on Monday, May 8th, 2006 at 10:42 am and is filed under Creating Customers, Brand Platforms. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.