Get ready for the experience economy

hit450 get ready for the experience economy
“The experience economy is now supplanting the service economy, which overtook the industrial economy in the latter half of the 20th century, which superseded the agrarian economy before the industrial revolution.”

That at least is the view of telecommunications equipment maker Ericsson, which it sets out in a white paper ‘The Experience Economy’.  Ericsson argues that the evidence is all around us: it can be seen in the rise of themed restaurants, boutique hotels, experiential retail and the newfound focus on patient experience in health care.

“Experiences are not a new economic offering – just a newly identified one,” Ericsson says. “They have been around for centuries in the form of theatre, sport and dining, among many other events. The difference today is the rapid diversification of this experiential innovation.”

As an example, Ericsson cites the distinction between a coffee shop, which provides a ‘service’, and an outlet that is part of a well-known chain of coffee shops, “where the ordering, creation and consumption of the product embodies a heightened sense of theatre or ambience – and consumers will happily pay $2-$5 per cup.”

It argues: “Businesses that ascend to this fourth level of economic value establish a distinctive experience that surrounds the purchase of the coffee, increasing its value several times over compared with the original commodity.”

The experience economy is changing the language of marketing, according to Ericsson: “Marketers are more focused on ‘experience marketing’, technology experts talk about the ‘user experience’, and operational leaders are going after the ‘customer experience’.”

Each of these, it says, reflects the shift from goods and services to experiences, but they do not go far enough. “They do not recognise that experiences are now a distinct economic offering.”

“With the term ‘customer experience’ in particular, what most people mean is that they want their transactions to be pleasant, easy and convenient. However, this is just good service. An experience must involve a truly memorable event – one that is personal to each individual – to be considered part of the experience economy.”

That seems to be setting the bar very high: not every experience is going to be truly memorable, especially in a positive way – many of life’s most memorable experiences are anything but pleasant.

Ericsson argues that ubiquitous communications has commoditised goods and services, in both consumer and B2B industries. “Consumers now think of [goods and services] as something to be purchased at the lowest price,” it says. “One of the biggest catalysts to this commoditisation has been the Internet, allowing people to instantly compare prices from one vendor to another. While this commoditisation initially applied more to goods, it is now also the case with services, such as hotels, airlines and banks.”

If Ericsson is right about 'The Experience Economy' businesses that want to succeed will need to ask themselves how they can offer not just a product or a service that is differentiated from those of their competition, but how they can build that into a differentiated experience for their customers.

This email address is being protected from spambots. You need JavaScript enabled to view it.