Understanding the Experience Economy

What makes a concert-goer pay a premium price on an average T-Shirt, just because it has the artist’s name and the date of the concert imprinted on it? What is it that attracts millions of visitors to Disneyland all around the world? The answer is experience economy.

 

The evolution of the global economy has had a trickle-down effect that resulted in a subsequent evolution of consumer behavior. Now that quality is a universal expectation, people care more about spending money on a memorable experience: something that touches and engages them on a physical, emotional, intellectual and a spiritual level.

 

What makes experience different?

As a seller, you offer one of four things: a commodity (raw materials), a good (manufactured with an added value), a service (intangible), or an experience (personalized). While you extract commodities, make goods, and deliver services, experiences are staged.

Think of themed restaurants. People pay money not only for the food, but for a unique and memorable dining experience. More often than not, people actually go to themed restaurants primarily for the experience. The food here becomes a byproduct. If a company can provide something similar to what a themed restaurant has to offer it will gain two things:

  1. Their customer will be willing to pay a higher price for almost the same exact product.
  2. The company’s product, and hence the company itself, will be guaranteed a differentiated status amongst competitors.

 

How to create a full-fledged experience?

A rich, striking experience is built on 2 aspects: wants and needs.

A company needs to think: what else do we have to offer besides our product or service? How can we fulfill needs that our customers didn’t know existed? And most importantly, how can we fulfill those needs in real time?

Next, the company needs to tackle the wants. The secret is to know exactly what your customers want, which, in the case of experience economy, is a memorable experience. Something that engages all their senses, allows them to participate (whether passively or actively), gives them a souvenir or something to remember, and lastly, something that makes them feel connected and ideally immersed or absorbed in the activity of buying.

Customer participation is especially important due to its long lasting effect. Just like students learn best in classes where they are encouraged to participate in discussions, consumers remember services and products more if they feel immersed in their experience. So, let them be part of the show; have them share the “stage”.

It’s not hard to apply the rules of experience economy with business-to-business companies. There seems to be lots of room for innovation and imagination in business-to-consumer settings, but if we alter our perspectives, we will find it applicable to B2B as well. In fact, it’s not that different. We often forget that companies are made of people, and that experiences can cater to their needs.

We have previously discussed the concept of digital transformation and the multiple ways by which it can help develop businesses. One of its greatest benefits is the fact that it changes the relationship between the buyer and the seller. This is very important in the experience economy. Whether it’s a B2B or a B2C use case, digitizing the interaction between buyers and sellers can build a seamless, valuable and trustworthy experience for your customer.

Companies like Liferay offer an interactive service for companies to communicate with their clients through an efficient software. This is especially great for B2B businesses, because the client feels more in control and communication becomes significantly simpler: A seamless, fully-integrated experience.

All of these aspects add value to your products or service and helps you create brand affinity and loyalty amongst your customers, which differentiates you in the market.

Let’s take a look at Diwan Bookstores, and their case of applying the principles of experience economy. When you buy a book from Diwan you get a bookmark as a free gift. This is a souvenir that will forever remind the customer of Diwan, potentially triggering brand loyalty.

Diwan also has a website, where customers are able to check book availability from the comfort of their home without having to go their nearest store; accessibility increases desirability.

Additionally, many Diwan branches have a mini café inside them, because they know how much people love to read while sipping on a warm beverage. This adds another angle to Diwan: it is now not only a bookstore, but also a study area or a work space, differentiating it from any other bookstore in the country. This way it is able to attract more visitors, not just booklovers. Here, Diwan engaged all the senses of their customers and added value to visiting the store, besides merely buying books.

Lastly, always remember: the whole point of providing an experience is to make customers come back or buy your product again. But if every single time they get the exact same experience, even if it’s a great experience, at some point it’ll get too boring; and ultimately, they’ll start looking for another experience provider. So, the key is to constantly retouch and reinvent your experience, so that it doesn’t get boring or repetitive.

 

Bottom Line

A good experience is a good story. Someone who sells an experience is essentially a storyteller. Hence, companies need to think about the stories they want to tell their “guests”.

What image do they want to portray? How do they want people to perceive them? And most importantly: what is the memory they want to have implanted in their customer’s minds?

 

 

Leave a Comment