Today’s consumers are more informed than ever about their purchasing decisions. They are constantly connected, constantly searching for information, constantly sharing their brand experiences on social media and constantly demanding that their needs are instantly gratified. There is immense pressure on brands to meet rising consumer expectations. Customer loyalty is a fickle thing at the best of times, and they’re more willing – and more able than ever – to vote with their money when they have a poor experience.
Simply having the product or service is not enough; it is no longer even a differentiator. Consumers want a positive and personalised experience to sweeten the deal. They want to feel like brands are listening to them, that they understand them. This has necessitated a shift in value delivery. As a business, you cannot rely purely on only your product or service any longer.
Let’s say you are looking to buy a wedding gown and you are standing in front of two stores, both selling quality gowns. The first one is a simple store with gowns hanging on rails. The prices are cheap, so you could go in, choose a dress, and pay for it and leave, job done. The second store is much more expensive than the first, but it is beautifully decorated, there are uniformed sales assistants ushering you around and pampering you with champagne and delicacies, music is playing, there’s free WiFi, and best of all, they know you by name and even know your personal preferences.
Which one would you choose? Some people might say the first store, but research shows that more and more people are choosing the second store – where the experience is superior.
Why experiences matter
Ever since the term Experience Economy was first coined by Pine and Gilmore roughly 20 years ago, researchers have explored how consumer buying decisions are increasingly determined by experiences. Pine and Gilmore make the case that in today’s economy, consumer buying decisions are greatly influenced by the quality of the experience they receive from the brand, and not just by the brand’s product or service.
The Experience Economy was birthed out of the increased desire of digitally native Millennials, who now form the largest purchasing group, to spend their money on experiences they can share on social media platforms rather than products and services. This has even led to the FOMO (fear of missing out) phenomenon taking off, spawning new job types such as influencers who command cult-like followings and are able to incite action by merely lending their support to brands.
One of the biggest challenges brands have had is differentiation and uniqueness in their value proposition. Traditionally, businesses primarily derived economic value from extracting commodities that were basically undifferentiated and could easily be copied. Thereafter, the focus shifted to developing products, which initially provided some form of competitive position, but with the advent of technology, was not sustainable as a differentiator in the long term.
The next wave to hit was the delivery of services using developed products. Today, in order to differentiate and present a unique value proposition to consumers, companies are focusing their efforts on staging memorable experiences.
A little bit of magic
Disney was one of the first to truly provide customers with a unique experience, mainly through their Disneyland resorts. When other brands caught wind of the value that these experiences hold in the minds and hearts of consumers, they quickly jumped on the bandwagon. Today most types of businesses have realised that the value needle has shifted. Customers are willing to pay more for experiences instead of just products and services because experiences are memorable and when shared through social media builds valuable social capital.
One example of this can be seen with traditional bookstores, which have seen a massive decline in sales and have had to embrace the notion of providing experiences to attract and retain customers. In Japan, maid cafes catering to Anime lovers offer their customers the ability to be served by servers dressed in frilly maid outfits acting like anime characters. The examples of businesses shifting focus to optimising experiences are increasing but the shift is simply not happening quick enough.
Build experiences with Intelligence
With our environments gradually becoming more intelligent, mostly thanks to advances in technology, businesses are facing a tough question: how do they win in the experience economy? How can they accelerate value delivery to their customers, and give them memorable experiences in this exponentially changing world? The answer to these questions lies in becoming an Intelligent Enterprise, which gives businesses an edge in the Experience Economy and helps accelerate time to value.
The Intelligent Enterprise is also what enables organisations to deliver unique and differentiated experiences to customers while fostering trusted relationships. This notion of the Intelligent Enterprise focuses on embedding intelligence into every part of the enterprise, much like electricity today is embedded in every part of our homes. Intelligence is most valuable to a business when it is embedded directly into the processes of that business. Those processes are then integrated, leveraging a consistent, trusted source of data across the enterprise. With artificial intelligence (AI), businesses can then extend their capabilities in ways that were once unimaginable; and it is through technologies like AI that businesses can truly deliver a holistic customer experience that intelligently connects all enterprise processes and business, operational and experience management data to provide an exceptional, hyper-individualised customer interaction that is not soon forgotten.
AI will give birth to the Intelligent Experience Economy. In the Age of Intelligent Experience, companies effectively use exponential technologies such as AI, Internet of Things (IoT), Cloud Computing, Mobility, Augmented and Virtual Reality while leveraging a unified, trusted source of data with intelligence infused business processes. This will enable them to completely reimagine their customer experiences, adding value in unique, differentiated ways. By going beyond convenient, accessible and standardised experiences to hyper-individualised, intelligence infused, pre-emptive and prescriptive customer interactions, businesses will increase the value they can add to the customer while also accelerating the speed with which they bring these intelligent experiences to market.
To successfully deliver on the promise of the Intelligent Experience Economy, businesses must ensure that value is united around a customer vision where experience is embedded in the value delivery of the brand. By embracing the value and capability offered by the Intelligent Enterprise, the entire business, from the back-office to the frontline can bring a differentiated customer experience to life. The consumer-driven growth revolution will require all businesses to not only change their thinking but also adopt a new approach – one that puts the customer and their experience, not sales, at the centre of the relationship.
This shift will require businesses to be bold in adopting new approaches, processes and technologies to satisfy the expectations of digitally native consumers. Organisations that want to survive and thrive in the new intelligent Experience Economy will need to enter uncharted waters to radically re-imagine the very concept of customer experience.