Whether it was a premonition or a hunch, B.Joseph Pine II knew he was onto something when he wrote ‘Welcome to the Experience Economy’ with James H Gilmore back in 1998. In their article, they explore the idea of ‘staging experiences’ and argue that this is where the ‘competitive battleground’ lies.
Twenty-five years later it’s clear they predicted accurately the evolution of Customer Experience (CX) and the way customers would come to value experience over products.
Now 25 years later it’s clear one of the key priorities for businesses worldwide is CX excellence. It is no surprise when you realise that 86% of customers are willing to pay more for a great customer experience. Moreover, CX is the only way to differentiate your company from the competition today. Services and products can be replicated but experiences as Pine describes them, are ‘memorable’ and it is through these experiences that loyal advocates are born and your company can grow.
Why experiences have taken over the way customers make decisions and buy?
It all comes down to the ‘progression in economic value’. In their article, Pine and Gilmore describe the history of economic progress changing from customers simply paying for the exact commodities needed, to paying for made goods, then for delivered services, and ultimately for staged experiences.
As they describe it, many businesses already “wrap experiences around their traditional offer” however to really utilise the potential of providing a great experience for your customers you need to design a CX strategy to ensure that your customers become loyal advocates.
A well-planned out CX Strategy will include the when, where, how and why. It will ensure that every single one of your customers is receiving the same treatment and the highest standard of experience that your company can provide. It will eliminate the room for improvisation and will guarantee a higher profit.
As well as this, providing a great experience builds a strong bond between the customer and your company. It is only through this bond that your customers will become loyal advocates. A positive one-off experience will have zero value to your business. That’s why you have to plan and design a CX Strategy that will ensure a continuously high level of positive customer experience at every step of the customer journey.
Providing an excellent experience means:
- Building trust in everything you do with your customers
- Treating your customer as an individual and understanding their needs
- Making it easy for the customer to do business with you
- Understanding what it’s like to be in your customer’s shoes
- Managing, meeting & (where possible) exceeding expectations
- Fixing problems brilliantly
Customer experience is all about emotions, and you know you have a loyal customer when they have a strong sense of allegiance to your brand or organisation. They are not actively searching for alternatives from competitors offering similar benefits, even if the price could be lower. They trust that you can take care of their needs and meet or exceed their expectations.
Experience VS Price
The article’s authors’ argue that ‘you are what you charge for’, or in other words, companies who ‘stage’ experiences are still only charging for the products and services – not the experience itself. However, today we know that customers are willing to pay up to 16% more for products and services, provided they have an excellent experience. So while charging an admission fee for the experience itself may not be the way to go in most businesses, the amount you charge for the product/service may be higher.
It has to be noted that price does affect the overall interest in a product, however, if your customer becomes a loyal advocate they will be doing the marketing for you and even if the price is higher than your competitors, your business can have great results.
Remember: Customers will rarely complain about a high price, but they will often complain about a process or how a telephone call with a customer service agent made them feel.
The way customers feel as a result of doing business with you will be affected by many factors. Today, more often than not customers want to be associated with a brand. This means that they will choose brands they trust and ones with values they associate with. (For example, today customers will often choose brands that are environmentally friendly or that promote work equality etc.)
The Key Differentiator
“Even the smallest cue can aid the creation of a unique experience”
Experiences will only be memorable if they are unique. In their article, the authors provide this example,
When a restaurant host says, “Your table is ready,” no particular cue is given. But when a Rainforest Cafe host declares, “Your adventure is about to begin,” it sets the stage for something special.
CX excellence comes about from listening carefully to your customer’s needs and addressing them while helping them reach their goals. The article provides another great example of this:
Standard Parking of Chicago decorates each floor of its O’Hare Airport garage with icons of different Chicago sports franchises—the Bulls on one floor, the White Sox on another, and so forth. And each level has its own signature song wafting through it. “You never forget where you parked,” one Chicago resident remarked, which is precisely the experience a traveller wants after returning from a week of travel.
‘Staging experiences’ is happening all around us, and is part of a carefully thought out strategy. Another great example from recent years is Apple. Apple stores are a wonderland for people to touch and play around with their gadgets. But what makes their stores great first and foremost is that they have “an unrivalled commitment to building strong customer relationships” and second, they don’t actually think of their stores as stores.
Apple is removing the word ‘store’ from the name of their retail venues and is consciously trying to make their venues feel like a town square. They want to enhance their customers’ lives rather than just sell their products. In an interview with Fortune, Angela Ahrendts, Apple’s senior vice president of retail described their new spaces; “Accessories are avenues, and the huge digital screen in each store is the forum,”
And as Future Stores describes it, “The community aspect of the new Apple locations is key. Not only including boardrooms, which visiting entrepreneurs may use to meet up and discuss their ideas, the new stores also hold coding classes – called “Hour of Code” workshops – for kids, teaching Apple’s programming language, Swift. “Hour of Code embodies our vision for Apple stores as a place for the community to gather, learn and be entertained,” said Ahrendts.”
In a way, Apple has really taken to heart ‘staging experiences’ as they are really building a new way of experiencing their products for potential customers. So, “Welcome to the Experience Economy” the economy in which customers are seeking enhanced experiences and actively engaging with businesses like never before. If your customers aren’t, you need to ask why?
If you would like to learn more about Customer Experience and how to design the ultimate CX Strategy that will bring you long-term success, enrol in our Professional Diploma or Certificate today.
Source of the article this blog post was based on: https://hbr.org/1998/07/welcome-to-the-experience-economy