home Customer Experience, Digital Competing in the experience economy

Competing in the experience economy

At the heart of the customer experience is the concept that people no longer buy products or services. They are, in fact, looking for outcomes and experiences. The brands they are loyal to consistently provide them with the outcomes they desire. It’s something that digital natives such as AirBnB and Netflix understand. It’s something, however, that many organisations are struggling to come to terms with.

The experience economy has taken over from the service economy. In 1998 the Harvard Business Review explained that in the experience economy, “a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.”

Advances in digital technologies have fueled the growth and reach of the experience economy. Consumers today, particularly the younger generation of millennials, are very digitally aware creatures. They are constantly on their phones and the Internet, connecting with others, sharing advice, researching or asking questions about the topics and activities that interest them.

Experiences versus things

Mckinsey stated in a report, “In recent years, faced with the choice of buying a trendy designer jacket or a shiny new appliance or of attending a show, consumers increasingly opt for the show and, more broadly, for experiences with their friends and families”.

The report highlights that expenditure on entertainment, travel and dining out is growing exponentially compared to spending on actual products. The reason for this growth is that shared experiences with friends and family, has a strong long-term psychological connection to happiness.

Experiences and our memories of those experiences contribute far more significantly to our identity then the purchase of products. Even in terms of purchasing products it’s not so much about the features or service associated as it is about the outcomes and experiences these products deliver.

Social media plays a critical role in the growth of the experience economy. Social media is all about sharing experiences and staying connected with family and friends. It allows people to document and share their experiences.

Keeping your brand strong in the experience economy

For marketers and the organisations they work for this presents a significant challenge. As the digital revolution marches relentlessly forward, the outcomes and experiences customers expect are constantly changing. To stay competitive in the experience economy requires more than advanced technology and clever digital marketing campaigns.

According to consultancy and research firm Prophet, digital transformation and competing in the experience economy is about being committed to three key areas:

• Developing transformational marketing strategies
• Creating seamless customer experiences
• Building smarter, faster, more flexible organisations.

The modern consumer is very skeptical of the promises made by marketing. Instead of promoting the benefits and the value proposition of their products and services, businesses need to understand what outcomes and experiences their customers are looking for.

The digital revolution has dramatically reshaped the way customers view brands. It’s made them more critical and demanding. Organisations can ill afford to stand still for too long. They need to change and evolve to stay relevant to their customers and deliver the outcomes they expect.

Mark Atterby

Mark Atterby has 18 years media, publishing and content marketing experience.