There is an economic change that business owners need to be aware of: the shift from a “Service Economy” to an “Experience Economy.” If adequately taken advantage of, this shift can dramatically impact how your customers perceive, value and talk about your business.
The nature of our economy continually changes. Often, this change is driven by innovation and availability. Raw goods drove the original economy: crops, minerals, and other basic needs. Eventually, the economy needed to adapt, and things became product-driven. From there, those who took raw goods and produced a product were able to profit. But, innovation (in particular, the industrial revolution and Henry Ford) made products so easy to create that many became commodities. This caused the economy to move towards service offeringsthat add value and differentiate once company from another. We have been in a service economy cycle for quite some time and the value of service is fading.
A SHIFT
We are now in the midst of an economic shift. Because many services are easy to replicate, there is increased competition and reduced profits. The economy must shift to continue to produce profits. The result of this shift is the experience economy. Companies that can provide a pleasurable experience along the customer journey will be able to drive sales back to their services and products. However, companies need differentiators to separate themselves from the pack. Providing the right experience, whether it is digitally, environmentally or related to customer interaction is crucial. This is not necessarily a new concept as some companies have been doing this for years to gain competitive advantage. In the social/mobile/ local world in which we currently live, there is almost nothing more valuable than a customer sharing a positive experience with your company with their personal network.
According to a CEI survey cited by Forbes, 86 percent of buyers will pay more for a better customer experience, but only 1percent of customers feel that vendors consistently meet their expectations.
EXAMPLES OF EXPERIENTIAL VALUE
- Walt Disney has been leveraging experience as a differentiator for decades. The company pioneered animated feature films and then expanded their offering in creating Disney Land and Disney World. These amusement parks were the only ones of their kind, not only in the services they provide but also more importantly in the experiences that they provide. People come home from Disney parks talking about the “magical feeling” they felt when visiting a Disney theme park – not the value they received in exchange for a tangible product.
- Trunk Club, a Chicago-based personal shopping service, has really nailed customer experience. Any number of clothing retailers online can offer you garments at competitive prices. What Trunk Club offers is a personal stylist who hand-selects clothing for you based on preferences you select when setting up your profile. This unique characteristic of the service not only sets Trunk Club apart, but also helps to attract a higher-end client base willing to spend more money for a personalized experience.
- Chick-fil-a offers chicken sandwiches like any other fast food company. Where they differ is in exceptional customer service, pleasant associates and innovative, speedy service to the point of being in complete contrast to their competition.
According to the Accenture Global Consumer Pulse Survey, in 2013, 62 percent of global consumers switched service providers due to poor customer service experiences, up 4 percent from the previous year.
TAKEAWAY
Your company must strive to provide the best experience possible to your customers. Not an experience that is as good as your competitors but an experience that is noticeably better.
The change has already begun but most companies will be late to adopt an experience focus. Thinking about your business and service offerings in terms of experience will give you company a leg up on your competitors that lasts much longer than any priced-based promotion.
Areas in Your Business Where You Can Focus on Experience:
- Customer Service
- Personal Touch
- Environment
- Packaging
- Professionalism
- Cool Factor
- Cutting-Edge (Website, Collateral, Office)
- On-Boarding Process (Customers and Employees)