Welcome to the Experience Economy ladies and gentlemen!
For years, the technology industry was in the business of selling products, services and dreams – dreams for a better tomorrow by making things faster, cheaper and more efficient than before. But in every step of its evolution, improving on faster and cheaper wasn’t enough – technology needed to look and feel better. Simplicity of use and intuitive design were important metrics in defining the next phase of technology growth.
Steve Jobs once said – “Design is not just how it looks. Design is how it works”. Now, Mr.Jobs was a revolutionary thinker who used this laser-focused design approach to create products that not only worked well, but also looked beautiful. But there was one more element on which Apple reigned supreme – the user experience. And this is deeper, more intangible characteristic that has now come to define the new generation of technology evolution.
Today the experience is not just how it works, an experience is how it makes you feel. Welcome to the experience economy.
What is the experience economy?
Joseph Pine, in his best-selling book ‘The Experience Economy,’ uses coffee as the simplest example of how a simple commodity has evolved into an experience. Coffee evolved from traders bartering beans, to ground coffee in a grocery store to brewed coffee in your neighborhood mom & pop café. Coffee transitioned from a commodity to being a product/good and subsequently a service. Today the coffee experience includes free wifi, cosy urban settings, mood music and an ambiance. You don’t just pay for the coffee, you pay for the right to enjoy all the associated frills and benefits that come with the coffee-shop experience.
Other companies have had similar successes. Apple revolutionized retail through their perfectly designed Apple Stores and Virgin Airlines magically transformed flights into entertainment vehicles. Today, Emirates chauffeurs business class passengers in limousines and boasts exclusive lounges that have changed the way people envision a trip to the airport. Uber has changed the way you drive, Tesla changes what you drive and Airbnb has changed how people travel. All these companies are unicorns, winning big in the billion-dollar club. Coincidence, much ?
Why should companies focus on creating experiences?
Network Effects: Experiences drive unparalleled adoptability and growth. Often, the strong network effects that experience-based services/products tend to inherently promote, fuel this growth. ‘Rent the Runway’’s (a starup that facilitates high-end designer dress rentals) success was primarily driven by referred users, those recommended by friends and converted at 2-3 times that of a lone visitor. In a world of rising acquisition costs, your customers and their networks automatically become your best converting channels.
Status / accessibility / ownership: The self-promotional nature of social media has created an audience where status drivers (where, what, who, when) are increasingly responsible for driving user action and engagement. Add to that elements of exclusivity and accessibility, and experiential products are often perfect for social-media savvy consumers who are looking to add status points to their online persona by virtue of sharing products they use with their social networks. Twitter and Instagram both redefined the interaction experience between brands and audiences by using ‘status’ to drive influence.
Intangibles and perceived value: Experiential products and services incorporate a high amount of intangibles that increase the perceived value a user gets with each transaction. It’s hard to match the comfort and luxury of being driven around in a fancy car with Uber or the unmatched customer service guaranteed by Zappos. The ease and flexibility that Square brings to the checkout process differentiates it from old-school PoS systems or Paypal, even.
Values of the experience economy:
Inspire OVER Sell
Emotion OVER Transaction
Do OVER Show
Value OVER Price
Aspirations OVER Needs
Participate OVER Observe
What’s next in the experience economy?
In a world where technology is ubiquitous and customer attention finite, does your product win by providing a cheaper service? Or do you win your customers by appealing to them on an emotional and inspirational level. Do you clearly differentiate from your competition by co-creating an experience with your customer which is difficult to replicate, and harder to match? Because somewhere there lies the key to building an engaged, loyal customer for life.
This is, after all, the business of selling aspirations, memories and dreams.
About the author :
Vikram Ahuja is an entreprneur and partner at Kyron Global Accelerator. Having worked across 3 different continents and 6 different global hotspots, he currently focuses on understanding what makes startups work across different cultures and markets. At Kyron he is using some of this research to power a new generation of Indian & Middle-East startups to win on a global scale. When not thinking about technology, Vikram is a director and actor with several award-winning short films and theatre performances to his name. Follow him on twitter @VikramAhuja27