You check into your hotel and are promptly greeted by a receptionist with a fresh-baked chocolate chip cookie. Also included in your stay is a roof-top mixer at 4pm, and they’ll help get you dinner reservations to that swanky new restaurant. Or instead of making a cake and playing yard-games for your child’s birthday, you book an event at ‘Complete Kid Party USA.’ Congrats! If you have been “sold” a packaged experience in return for your hard-earned money, you have been initiated into the Experience Economy. What’s more, the company that “sold” you gained a lot of data from you in return.
The Experience Economy is more than just a free cookie. It’s a progressive way of looking at your interactions with your customers and examining how the future of business looks in the 21st Century.
Not every company wants to change from a single product provider to a bundle provider, then to a pre-made package provider and then again to an experience provider. But what’s at stake? Where the single product provider makes $1, the bundle provider makes $4, the pre-made provider makes $12 and the experience provider makes $100. The catch is to make sure your costs do not scale proportionately and profits grow exponentially at each evolutionary stage.
This next-economy evolution, which is sometimes in the form of subscriptions, is happening now and it may be smart to have a plan to become more ‘experience-focused’ in order to compete. New technology makes this easier than ever before and chances are that if you don’t embrace the change, your competitors will.
Many companies are reconsidering what their customers value the most and what they will need beyond the core product. It starts out with small things—free delivery, discounts on a related items, etc. But some companies realize that the more ‘experience related services’ they build, the more data they acquire, and therefore, the more competitive they become. Eventually a company that builds the best experience, builds the most data. This data becomes a very, very powerful tool. Eventually making it very, very difficult for a competitor to compete. This data increases likelihood for new success in new services and products, saves on expenses, scales efficiently and propels profits like a rocket. (see Google).
Will all customers subscribe to or purchase a complete experience over a one-off purchase? Not always. And a small portion of your customers never will. That’s why many times we recommend a ‘loose-fitting experience strategy’. Allowing buyers to choose the commodity or the experience or both. Brands can even use their commodity products as a beachhead. For example, luxury buyers have proven they will choose affordable indulgences like a B&B mansion over a cheap motel room, but companies can also map a journey for both. Now you have a plan for bringing motel users into your deluxe vacation service. Younger demographic audiences also are very open to this model and this audience is only increasing. It doesn’t matter if you’re in Manufacturing or Entertainment, it’s coming.
Your company should consider how, when and in what manner they will join the Experience Economy. Or if not, how they will compete with the competitor who does?
Luckily you do not have to turn your business into Walt Disney World to enter the Experience Economy. Many cornerstones and technologies are not out of your reach. Personalization of goods, services, and attitudes can set you on your way. Ask us about our approach to experience strategy… we have created a condensed program that has been eye-opening for our clients.
If you believe your current and future customers will be living and feeling the Experience Economy, click on the link below to set a time to talk.