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Why You Need to Create Experiences in the Experience Economy

Why You Need to Create Experiences in the Experience EconomyWe’ve written extensively about the sharing economy and how consumers increasingly prefer renting items instead of buying them outright.                  

Uber is a prime example. 

A close cousin of the sharing economy is the “experience economy” — a growing trend that also de-emphasizes “ownership.” 

Instead, the focus is on experiences. 

Just think about all the holiday gifts you’ve received over the years — from ugly sweaters to socks to hot new gadgets. Even the best “physical” presents in the world lose their luster over time.

Yet, that family vacation to Disney World or that romantic dinner with your partner will likely stick with you forever. 

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Business Lessons from the New Experience Economy

As a business owner, it’s not always possible to re-create consumer experiences that reach the level of family vacation nostalgia. This is especially true if you sell power tools or landscaping services. 

Even still, there are many compelling reasons why you should try to weave more experiential elements into your offerings: 

  • The positive experiences you provide your customers will likely outlast the goodwill and fondness generated from the best-selling consumer items in your inventory. 
  • Marketing experiences (instead of things) often delivers much higher returns. This is because buying is largely an emotional decision. Experiences do a much better job of tapping into feelings, pain points and frustrations than inanimate objects can. 
  • When you market experiences, it’s much harder for other businesses to muscle in on your territory. Anyone can copy your widgets or inventory, but it’s more difficult to duplicate another company’s customer experience entirely from scratch. 

The question is, how do you make customer experience central to your business? 

The Experience Economy Goes Beyond Service Delivery

It’s easy to automatically assume that service providers have a natural advantage in this emerging economy. After all, their core business is experiential. 

If you work in hospitality, event planning or tourism, the road really is much easier in many respects, but the benefits aren’t automatic. 

According to Brian Solis, author of “X: The Experience When Business Meets Design,” 

“It starts with understanding how, when and why customers are engaging with your brand, then finding ways to create new value with every interaction.” 

In other words, service is about delivery — while experience is about engagement. 

For example, all hotels provide lodging (i.e., a service). However, friendly smiles, speedy resolutions, prompt room service and being addressed by your name are all experiential. 

This isn’t limited to the service industry either: 

  • Apple sells electronic devices (i.e., physical goods). Yet, it also has well-designed stores with hands-on display items, Genius Bar support and uber-friendly sales staff. 
  • Starbucks sells coffee (which is both a good and a service). Still, people come for the music, sofas, free Wi-Fi and relatively clean bathrooms — all of which are experiential. 

Joining the Experience Economy (With Limited Resources)

All of the above examples are well and good, but as a small to medium business owner, you probably don’t have the resources to beat Apple or Starbucks at their own game. 

However, being a smaller player can work to your advantage. 

Here’s why. 

Smaller businesses can afford to take the time to interact with every customer. There’s less need (and fewer opportunities) to automate or scale up the cookie-cutter approaches that most multinational businesses use when interacting with their customers. 

Take credit unions, for example. 

When it comes to budgets, resources and reach, they can’t hold a torch to major banks. When it comes to adding that personal touch, though, credit union employees can (and do): 

  • Greet each customer with a smile 
  • Remember every customer’s name 
  • Follow up with birthday or get well cards 

You don’t have to be a credit union to piggyback off these examples. 

Instead, simply determine what feelings you want your customers to have when they walk through the door. 

Or, better yet, imagine a scenario in which 10 similar stores opened on your block — all with identical inventory to yours. These new competitors also charge slightly lower prices than you do. 

Against this backdrop, what would you do to keep folks coming back? 

You might be tempted to lower your prices, but this is a short-term strategy that will almost certainly fail. Your rivals will simply undercut you. 

Instead, you might consider: 

  • Making the decorations and lighting more appealing 
  • Training your team members to smile more often 
  • Having all employees wear name tags 
  • Offering workshops, tutorials and weekend classes 
  • Sponsoring community events and volunteer programs 

Whatever strategies you adopt, the goal is to make the experience more memorable than whatever items you sell. 

That’s how you thrive in the experience economy. 

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Topics: Financial Institutions, Small Business Tips

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