Enabling the Experience Economy
There is a book that I read in business school in the early 2000’s that has become the foundation of my point of view on the role brands play in our lives as consumers. The Experience Economy by B. Joseph Pine and James H. Gilmore written in 1999, discusses the evolution of business moving beyond simply providing a product or a service, but crafting experiences to draw people into a more immersive relationship with their brand.
In the Progression of Economic Value chart below, you see that the way to continue to differentiate a brand while building the ability to charge a premium is to “Stage Experiences.” This idea of staging experiences, has even more impact in today’s digitally connected world than it did in 1999 before smartphones and Web 2.0 advances (especially as we get into 5G speeds and expanded IoT connectivity).
In the book, they classify each stage of evolution of products as:
A commodity business charges for undifferentiated products.
A goods business charges for distinctive, tangible things.
A service business charges for the activities you perform.
An experience business charges for the feeling customers get by engaging it.
A transformation business charges for the benefit customers (or "guests") receive by spending time there.
As I reflect on the insight from The Experience Economy, I have to bring the context of the book into a 2020 mindset. Experiences will become the key driver for a purchase decision for consumers and the brands they buy. To bring the Experience Economy up to speed, we still have to keep the mindset of staging experiences, but we need to consider a few things to ensure those experiences are impactful and valuable.
Connected Consumers & Products
Many industries aren’t just battling disruption from tech-enabled startups, but they’re experiencing a completely connected consumer audience and product expectations. Industries like automotive, media, entertainment and retail are all trying to make sense of the connected consumer and how that changes their products and services. Simply providing a product or service in these industries will be lost in the expectations of the consumer. These companies now have to stage an experience that creates quick transaction, increased value and fits into the lifestyle of their consumer.
Brand Promise > Fulfillment Loop
The companies that are succeeding in the tech enabled experience economy are those that understand how to fulfill their brand’s promise at each touchpoint. Companies like Uber, whose brand promise is “Where To?” has the ability to fulfill that promise millions of times each day. This tight loop of promise to fulfillment is crucial to staging simple, valuable experiences for consumers.
As consumer expectations continue to rise and technology continues to advance, companies will have to innovate to stay ahead of their consumer. This innovation will happen within the experience of the brand to find new ways to deliver value within current products and services as well as find new products and services to offer consumers. The fact of the matter is that as consumers evolve, so must the experience. It’s the company’s responsibility to continuously make this happen.
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