The Experience Economy
Experiences, you see, are inherently personal. No two are the same. But what does that really mean, and how does it affect you and your business?
- What characterises an experience?
- How to turn your goods or services into an experience empire
- Using AI to create your experience
- How a remarkable experience can translate into remarkable profits
The air has a bite to it that comes with the change of seasons. A vibrant burnt orange leaf floats past you as you zip your jacket up to your chin and shove your chilly hands in your pockets. The warm, caffeine-scented air hits you as you step inside the cafe. Patrons sit on plush sofas and chairs chatting with friends over a cup of coffee. You take your place at the back of the long line for coffee orders. A friendly smile greets you as you approach the counter. The barista’s name tag reads Jackie, a perky name that matches her perky ponytail. You order a Pumpkin Spice Latte. It costs you €4.50, which you happily hand over. Vapour rises from the coffee machines as they roar, squeal and hiss, making cup after cup. Finally, another barista sings your name, and your latte is placed on the far service counter. You grab it and make your way to an available seat, nestled over by the wide bay window that looks out onto the bustling street. Your body melts into the sumptuous armchair, and you bring the mug to your lips for a taste of the hot, delicious potion. Your first sip sends a shiver down your spine, as you look around and take a long, deep inhale, followed by a soft sigh that ends in a smile. This is the Starbucks Experience, and it’s the reason why you paid almost 20 times more than the actual price of your coffee.
In the past 300 years, our world has gone from Agrarian, where the economy was based on commodities, to Industrial, where the economy was based on goods. Thereafter, goods became commoditised under the service economy. And now, we’re seeing these commodities being customised, in order to give the customer an unforgettable experience. It’s called The Experience Economy, and we’re well and truly in the thick of it. But what does that really mean, and how does it affect you and your business? Let’s dive in deeper to find out.
The Starbucks Experience is a perfect example of this because you’re paying for so much more than a cup of coffee when you go to Starbucks.
According to the Harvard Business Review, “An experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.”
The Starbucks Experience is a perfect example of this because you’re paying for so much more than a cup of coffee when you go to Starbucks. You’re paying for the cozy ambiance. You’re paying for the skilled, happy-go-lucky employees (Starbucks spends more on staff training than it does on advertising and more on staff healthcare than it does on coffee). You’re paying for the comfortable furnishings and interesting wall art. You’re paying for free WiFi for as long as you like, particularly since Starbucks doesn’t set a time limit on how long you can retain your seat. You’re paying to be surrounded by other people who are also enjoying their Starbucks Experience. And yes, a small portion of what you pay does actually go towards your coffee (€0.24 per cup).
Experiences, you see, are inherently personal. No two are the same. They engage customers on so many levels, from emotional, to physical, intellectual, and sometimes even spiritual. And it’s this full-body sensory engagement that makes experiences so much more memorable than any commodity, good, or service alone ever could.
Of course, Starbucks isn’t the only company that offers a remarkable experience -- not by any stretch. You probably fork out more for experiences than you realise. Who among us hasn’t seen the viral video of the South by Southwest Airlines flight attendant who turns the normally dry-as-a-bone safety spiel into a comedy sketch?
With customers in stitches, Southwest created a fun flying experience that those passengers (and the 25 million people who viewed the video) won’t soon forget.
What other brands offer top-notch experiences? There are plenty. Dove, Delta Airlines, Stella Artois, Sephora, Airbnb, Amazon, Ritz Carlton, BufferApp, Trader Joe’s, Harley Davidson, Costco, Dollar Shave Club, and Disney all offer their customers superior experiences worth emailing home about.
To discover how you can do this with your offering, start by thinking about how your product or service should make your customers feel.
Then, there’s customer service that goes above and beyond, creating an experience for an individual customer, and a captivating story for other customers to share (which works great with social media). Look at Zappos. The footwear giant used social listening to provide one of their customers with extraordinary customer service experience: when a customer was late returning a pair of shoes because of a death in their family, the Zappos customer service team offered to take care of the return shipping and even arranged a courier to pick up the shoes at no extra cost. The company then took things one step further by sending a bouquet with a note offering their condolences.
These are two examples of ways that your team can transform your product or service offering into an experience. To discover how you can do this with your offering, start by thinking about how your product or service should make your customers feel. Swatch, for example, is so much more than just a watch. Known for its designs and infinite colours, Swatch watches act as a “talking piece” that allow their wearer to show off their unique personality.
Another way to help you brainstorm how to create the ultimate user experience for your brand? As Harvard Business Review suggests, think about what you would do differently if you charged admission. This, of course, really only works for those companies with physical stores, but it can be useful to think about how your website could be improved if users paid a membership fee.
With the incredible advances in AI, technology is being used by brands around the world to enhance their customer experience.
Mattress industry disruptor Casper, a company that has based their brand around the culture of sleep, spent months developing a chatbot “designed to keep you company when you just can’t sleep.” The chatbot is free to use and actually responds pretty naturally to topics that are most likely to come up at 3 am... which the company found, all normally centered around things that were keeping the user up that night.
Netflix is another example of AI technology being implemented to create a personalised customer experience. The media services provider and production company uses predictive analytics to guess which shows you’ll want to watch next, based on your viewing habits, on a beautifully designed, user-friendly UI. Not only are its suggested shows likely to be something you want to watch, but the scrolling experience is second-to-none.
That late-night chatbot Casper developed? The company pulled in $100 million in sales the year it was launched. Netflix, meanwhile, reported revenue of $4.52 billion USD in Q1 2019, up 22.2 percent year-over-year.
It’s not surprising that companies are investing big time in their user experiences, given that 88 percent of customers are less likely to return to a website after a bad experience. Not only that, but 46 percent of consumers have been found to see a website design as a top indicator of credibility. Mobile matters, too. A 2014 study showed a 41 percent increase in unique page views, and a 50 percent decrease in bounce rate after mobile optimisation.
The most oft-quoted statistic about user-experience ROI, though, is this: every $1 invested in UX brings $100 return.
With increasing numbers of brands investing in their customer experience, the Experience Economy is growing rapidly. Customer experience, it seems, is what will separate the men from the boys and the women from the girls, in this new era. So rather than digging your heels in, dig deep and get creative, and start thinking about how you can take your customer experience from ho-hum to remarkable, making your brand absolutely unforgettable.
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