Embrace The ‘Experience Economy’ Or You Won’t Be Able To Compete

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During the 1950’s, as the western industrialised world became richer, and products became more commoditised, we became a ‘service economy’. That is, more people were employed in the delivery of services than the making of products.

This is because, in a world where there was little to tell between products, companies differentiated themselves on service. For example, a TV retailer may have sold the same televisions as the competition. Therefore, it differentiated itself by offering extended warranties, free delivery and price guarantees. These, however, were services around the television. The actual product itself was the same as every other supplier.

This service based approach, however, is no longer enough, as the web has commoditised service. It is not that good service is not wanted, it is just that now it is expected. Today, a lot of companies have been able to automate much of their service. For example, many online retailers offer a fantastic range of stock at competitive prices. They provide reviews and other rich information about the items. Orders can then be placed easily, tracked through the process and delivered anywhere in the country, without any human interaction whatsoever. Of course, there are times when this can be frustrating. However, when service can be automated to this level, it has become a commodity.

It is not that service is no longer important. The point is that a business can no longer differentiate itself using service. Every company today claims to provide it, even when they do not. Of course, in such a case, a customer only finds out after the fact. With service, there is nothing you can offer that your competition cannot also claim, even if they don’t do it as well.

The big revolution of digital technology, and the web, is that for the first time in history everyone owns their own media channels. The consequence of this is that we are increasingly becoming active rather than passive. For example, TV used to be a passive activity. For many people today, however, it has become an active one with people tweeting and posting messages on Facebook while they are watching.

The result is that we are leaving the ‘service economy’ behind and entering the ‘experience economy’. The difference is simple. A service is done ‘to’ you, an experience is done ‘with’ you.

For example, a football match has always been an experience. The sense of occasion is not just delivered by all the star players but also the crowd. In other words, if the footballers showed up but none of the spectators bothered to be there, the game would be flat. This is because, for there to be a real sense of occasion, both the star players and the crowd have to be in attendance. Moreover, home teams statistically get awarded more free kicks and penalties etc., than away sides. Why? Because home crowds have an influence on refereeing decisions etc. As a spectator, the football match is done ‘with’ you not ‘to’ you.

Every business today has to address this issue. How does it move from being a product or service business to delivering an experience? It does not matter whether a company is a very popular and exciting ‘business to consumer’ organisation, or whether it sells a very boring ‘business to business’ product. Ultimately, the customers care. If they are buying products or services, they matter to them. Therefore, for its particular client base, an organisation will need to be able to turn its offering into an experience.

It matters, because we inhabit a world where information and search is becoming social, and where social proof is so much more accessible. In this environment, the companies whose content and offering is ‘shared’ more will do better. In other words, businesses’ best marketers today are their suppliers, customers, partners and prospects: the ‘engaged’ community around the business.

In the main, we share stories, emotions, and outcomes that matter to us. We don’t share products and services in the same way. Therefore, the more of an experience your business can offer, the more likely you will garner the social proof and social sharing that is so important to every company’s success.

Moreover, companies need to differentiate themselves. This is increasingly unlikely to happen through the product or service itself. The real opportunity for differentiation is in the experience a business provides. Experiences, by their very definition, are three dimensional. They offer a much richer array of touch-points with which an organisation can stand out from the competition. ‘What you do’ may be the same as everybody else, but ‘how you do it’ can set you apart.

Failure to turn your product or service into an experience will mean it is less likely that:-

• Your offering will be different. This, ultimately, puts pressure on price as it becomes the only factor with which a customer can tell you and your competitors apart.

• Your company will be talked about and, therefore, able to take advantage of social platforms and the opportunities they offer to every business.

• Your organisation will truly engage your customers as people, become more active, and demand more of an experience in all facets of their lives.

In short, if you want your business to be able to compete effectively, it is time you embraced ‘the experience economy’.

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