Why Experiences are Becoming Important to Businesses

Mankind since ages has always done things to receive something they value or increase the value of things they already possess. People exchanged goods for other goods in the barter system, then they used a medium of exchange to buy those goods in the market and then people started buying services as well. The world economy has been dividing its pie chart into more and more parts and the share of each portion changes everyday. Companies try to capitalize on the largest, tastiest piece of the pie and battle it out to gain the attention of their customers on a regular basis. But, we always have room for innovation, the human mind is built to crave newness. The whole market that caters to the masses keeps on looking for the answer to one question, what does a consumer value the most? B. Joseph Pine II and James H. Gilmore in an article in the Harvard Business Review issue of 1998 suggested that ‘experiences’ are one of those things. The experience economy is not to be perceived as a trend but as a shift, as a step up in the economic progression of value that earlier consisted of the agrarian economy, the industrial economy, and the service economy.


Experiences and services are two distinct concepts and very different areas for companies to tap. An experience can be a transformed service but a mere service cannot be an experience. Building experiences is not as easy as it sounds. Restaurants are one of the most flourishing businesses in the service sector. When they serve lightly toasted portugese bread with mix-vegetable garnished with coriander, chopped onion, and a dash of lemon or what we call ‘pav bhaji’ with a hot lemon bath to wash your hands and a palate cleanser in the beginning and fennel and sugar at the end of the meal, we pay more for it than the pav bhaji we eat from juhu beach every Sunday. There are candles and flowers on the table and a band playing tunes at one corner, it’s not just a restaurant anymore, eating food there is an experience now. The experience economy thrives on ‘what is next?’ and the assessment of what consumers expect. The focus has shifted from buying a service to investing in an experience. Pine and Gilmore stated how with changing generation and lifestyles our approaches also change, where on one hand we have come from baking a cake to using a cake mix to buying cakes from a bakery, we now want personalised, photo printed cakes that are special to us.




But the experience economy has found application in more than just the service industry sectors like food and entertainment. Artificial intelligence, experiential games, even entering into an apple experience store or a decathlon store with all equipment open for use, is an experience. The concentration is no more on just making a product and selling it but also making it user friendly to the extent that no two people have the same experience using it, a memory based concept. This model extends not only to B2C businesses but also B2B ones, with elaborate store settings companies like Silicon Graphics, that opened a Visionar-ium Reality Center as early as 1996 at California, USA to bring customers and engineers together in an open environment with an added experience of 3-D product visualizations. Customers can satisfy all senses by viewing, hearing and feeling the products pre-manufacturing.


Certain pillars that uphold innovation in this space are, exceeding expectations, using technology to advantage your customer more than yourself and the presentation of the experience you stage i.e. marketing.The smartphone has emerged both as the biggest space for expansion and outreach and simultaneously the most competitive one for businesses. The average attention span of a millennial today is merely 12 seconds and ultimately it is all about being attractive enough for your audience. Every airways wants people to believe that they are not providing a transportation service but an experience, which is evident from Etihad Airways’ motto “The World Is Our Home, You Are Our Guest”. Here, the airplane is their stage and all the service providers, human or machine are the artists that enhance customer experience. Similarly companies come up with limited edition experiential programmes and campaigns to add an attractive aspect to their marketing and sales strategy. No one could have thought that a hotel chain like Westin and a sports company like New Balance would collaborate to provide trial workout kits with New Balance shoes free of cost to guests to gain a workout experience at the hotel as well as test drive the sports gear serving dual purpose.


Gilmore and Pine mentioned 4Es in their initial article that could add experiential value to a business. You can add Educational, Entertainment, Esthetic and Escapist experiences in your business based on the active or passive, immersion or absorption of the experience by the consumer. The customer can actively participate in a mystery restaurant experience or passively watch a concert. By absorption they meant occupying consumer attention retaining it by using the first two Es, Education and and Entertainment and immersion meant letting them be a part of the experience as is in the case of Esthetic experiences like enjoying at a monument or park at a bench in front of fountains or Escapist ones like mountain climbing. The experience economy will thrive for a long time with the evolving mindsets of people and their urge to make memories constantly, squeezing these experiences in the short span when life is not so busy. It is not an easy shift just like the one from industrial to service economy, but perception of life and value associated with products are constantly changing so such shifts don’t have time to slow down. Carnivals, concerts and trade shows are already experiences, will malls be too? Will we have to soon pay to just stroll around a three story glass building even if we wanted to pick up a starbucks, because suddenly the experience of window shopping from your eyes also holds value. What is definitely an opportunity for businesses is also a threat for many others, but for consumers it is just another way to spend their money to increase value in their lives. With the flip of a coin technologies change and so do our feelings and memories, are we ready to bet our life memories on paid experiences or will this complication take us back to simpler times when a picnic basket, garden and some friends were enough?


References:

https://hbr.org/1998/07/welcome-to-the-experience-economy


https://www.pcma.org/experience-economy-change-event-design/


https://www.localist.com/blog/experience-economy/


Further Readings:

https://www.forbes.com/sites/danielnewman/2015/11/24/what-is-the-experience-economy-should-your-business-care/#18e104281d0c


http://srdc.msstate.edu/ecommerce/curricula/exp_economy/module1_4.htm


https://www.the-future-of-commerce.com/2019/11/19/e-commerce-platforms-b2b-experience-economy/


By Shruti Bhardwaj (shruti.bhardwaj50@gmail.com)