Tue Jun 26 2018
The music industry has had a rollercoaster ride in recent years. Tech struggles, disappearing markets and – with the advent of streaming and downloads – its business model going through a revolution.
But what can businesses in sectors like retail and food and drink learn from it?
For many businesses, opportunity lies in one of four areas:
Every rose has its thorn, and for many years the internet was a painful one for the music biz.
It threatened the whole model, and the industry itself was slow to capitalise on its potential as a new method of accepting payments. That’s a crucial lesson for other businesses too, across all sectors.
The record industry didn’t realise that the internet would replace CDs, and it’s only in the last few years it’s got its head around it. You need to be alive to what’s happening in the world, and embrace change.
That means having an ear for how your customers are experiencing your product or market. There’s a good chance there’ll be a strong digital hook. That might mean tying together several channels, making sure customers have the same great experience no matter what device they’re using, what channel they’re on or how many different channels and devices they use in one buying journey.
Digital and mobile channels have changed the way people discover music and buy tickets. Businesses need to put the opportunity to buy in the hands of consumers whenever and wherever they want.
Let’s say you’ve got a high street store and you’re seeing decline in footfall but a rise in online traffic to your website. How can you use one to make the other more successful, and vice versa? For retail businesses with time and money to invest, taking an omnichannel approach could be the answer. This enables shoppers to click and collect, buy in store and return by post, and browse in store but buy via an app rather than queue at a checkout.
Even online-only retailers are experimenting with physical spaces in the face of increasing consumer demand for live experiences. Demand for the things they can’t do online, like meet their friends, rub shoulders with celebrities, or simply be involved in something exclusive (an event, content or experience) to boast about on social media.
According to a recent report, less than 15% of all retailers are confident that their online shopping experience is strongi. That’s shockingly low when you consider the rapid rise in popularity of online shopping in recent years. And it means retailers are potentially missing out on around £18.6bn of revenue, lost to basket abandonmentii.
Having said that, the numbers point to physical brand experiences still being the lifeblood of British retail. The same retail report found more than 50% of medium to large retailers say in-store experience is their strongest retail platformiii. Another found that 59% of consumers prefer to buy in store, with 30% of all shoppers ‘showrooming’ (visiting a shop to check out a product) before they buy onlineiv . There’s life in the old-world yet.
One of the reasons the music business was slow to respond effectively to the internet is because the people in charge thought they could run the new era as they did the old.
For retail and food and drink businesses, it’s the same. By surrounding yourself with like-minded, inspirational people, you’re set to always innovate and never stand still.
Don't ignore digital
Have employees that can move with the music
Put on a show
Talk to your fans
Give people what they want
Artists used to tour to promote an album, now they record an album to promote a tour.
The music business has realised how important the experience is to fans, so it's taking the music to the people. That’s something that businesses in other sectors can do, too.
After all, research shows that 78% of millennials crave experiences over material things. And that 55% of them say they’re spending more on live experiences than ever beforev. Barclaycard consumer spending research showed an 8.6% growth in spend on entertainment from February 2017 to February 2018, compared to 1.7% growth in spend on clothingvi.
Not only that, but 77% of UK consumers don’t think retailers are working hard enough to make in-store shopping more enjoyable. 61% of those asked want a real in-store buzz; they want things like augmented reality, smart mirrors, interactive screens and personalised offersvii. It’s not just about jumping on the bandwagon, though.
Long gone are the days of aspiring musicians and pop stars being able to see what’s popular and replicating it. Now, it’s all about finding a niche where no one else is, and understanding that you have to be the whole package, not just a great talent.
For businesses, that means thinking outside of the traditional website or high street store environments. Maybe trying a pop-up shop, diversifying into festivals, collaborating with another brand or simply taking the checkout to the customer with an mPOS option.
“Being able to go up to a customer who’s ready to pay and allow them to do so on a tablet or a mobile terminal can make the whole experience much nicer,” says Jo Simpson, Barclaycard’s Strategic New Business Manager.
Whatever the direction, the focus should be on giving the customer an overall better experience, from first contact to taking payments, to customer services, returns and rewards for loyalty.
It’s probably not enough to run a website, shop or restaurant in the same way as you always have. Customers want to associate your brand with things they’re interested in. That’s why high street food and drink brands are starting to appear at live events, alongside smaller food truck vendors who are agile and inventive but may not yet have a recognisable brand.
The music business has excelled in communicating with and selling to its consumers by building engaged communities of fans. It’s a great way of maximising spend per head.
That message is backed up by Nick Stacey, Director of Corporate Customer Solutions at Barclaycard.
“A lot of businesses do the ‘customer experience work’ by numbers, but they don’t really spend enough time understanding if they’re delivering what their customers actually want,” he says.
Once you know what they want though, you still have to make sure your instruments aren’t clashing.
If you try to upsell at the initial transaction, you’ll annoy your customers. But once you’ve got data, you can provide offers that enhance their experience. Be seen to be adding value, and don’t make it feel like you’re selling.
Social media has, in many ways, made it easier to make these connections. Yes, it’s a noisy place where it’s hard to be heard, but create relevant, single-minded content that evokes an emotion and you’ll gather fans. Those fans will hopefully become engaged and loyal customers when you combine your online activity with offline experiences that consumers will enjoy, remember and share.
The music industry has its fair share of established acts that have been around for decades, but how do you make sure your business is more than a one-hit wonder?
For some artists it’s about reinvention, while others have a simple focus on what they do well.
For businesses, it’s about recognising that while you might be serving a local area incredibly well, that popularity might not scale up. The temptation is to take what’s working and simply roll it out to other locations, for example.
But recognising that creating demand at a larger scale can be difficult is something business can definitely learn from the music industry. The chance of a highly successful pub singer heading to the big time is very slim. As a business, look at what you’ve got that could help you diversify, whether that’s into a different channel, pop-up commerce or new products and experiences based on customer insight and feedback.
For a small business, playing in the middle ground is where you can get lost. Be a rock star or a pop star, but don’t try to be both because that’s when you confuse the customer.
Please note that the views expressed in this article are personal opinions. Barclaycard cannot accept any responsibility or liability for reliance by any person on this article or any of the information set out in it.
i Links to a retail report from 2017
ii Barclaycard research that shows retailers are missing out on £18bn
iii Links to a retail report from 2017
iv Internet Retailing article about online vs in-store shopping
v Hills Balfour research into millennials driving the experience economy
vi Barclaycard consumer spend report March 2018
vii Vista Retail report on making in-store shopping enjoyable