The importance of innovating for the experience economy

30-second abstract:

  • In 1998, the time period “experience economy” entered the enterprise lexicon as a option to outline the commoditization of experiences, differentiating them from items and providers as essential consumer-driven choices.
  • Innovating for experiences is important for companies who’re navigating a modified experience panorama post-COVID. Companies should learn to determine services which can be ripe for innovation and might meet the altering wants and preferences of their prospects.
  • Capgemini’s Adam Rubin supplies some perception on how companies can leverage know-how and knowledge to maintain prospects engaged.
  • Rubin notes that know-how will play a pivotal position in shaping the future of the experience economy, significantly in a post-pandemic world.

The time period experience economy is a phrase that describes a shift in the approach shoppers work together with companies, and encapsulates how this shift is forcing (or inspiring) corporations to innovate their product and repair choices to accommodate a unique set of shopper expectations.

The transformation of a goods-based economy to a service-based economy to an experience-based economy has been occurring for over twenty years.

A 1998 article in Harvard Business Review by authors B. Joseph Pine II and James H. Gilmore notes that the commoditization of experiences is a end result of the development of perceived financial worth (e.g., as an alternative of baking a birthday cake from scratch, dad and mom look for a spot to host a birthday celebration that features the leisure, the celebration favors, and the cake).

The development of financial worth—Source: Harvard Business Review

Pine and Gilmore write, “An experience is not an amorphous construct; it is as real an offering as any service, good, or commodity. In today’s service economy, many companies simply wrap experiences around their traditional offerings to sell them better.”

Now, twenty-two years later, the experience economy has totally taken maintain due to a mixture of know-how, knowledge, shopper demand and, most just lately, the quickly altering wants of shoppers as a result of the coronavirus.

Leveraging know-how and knowledge

We requested Adam Rubin, the Head of Innovation and Enablement at Capgemini Invent, to weigh in on how companies can leverage know-how and knowledge to maintain prospects engaged.

Headquartered in France, Capgemini is a worldwide know-how consulting agency that works with corporations to assist innovate, automate, and embrace digital transformation. Capgemini Invent is a enterprise line inside Capgemini that mixes technique, know-how, knowledge science and artistic design to resolve the most advanced enterprise and know-how challenges.

“The experience economy is about B2C and B2B interactions which can be elevated and custom-made to people and organizations, going past services into deeper, longer, extra personalised engagements,” writes Rubin.

“You’re not drinking coffee; you’re going to Starbucks. You’re not waiting at the airport gate, you’re in the SkyClub Lounge. You’re not buying a phone; you’re happily hanging out in the Apple Store for the afternoon. Experiences are memorable and emotional, and customers seek them out because they deliver disproportionate value over the commoditized alternatives.”

This yr has posed a problem to the experience economy, with companies that thrive on the promise of good experiences (amusement parks, eating places, occasions, and inns/locations) all however shut down as a result of of the virus.

A July report from PwC discovered that the lodging and meals sectors have been the hardest hit in the UK as a result of the pandemic, with arts, leisure, and recreation following intently behind.

These industries depend on conventional experiences to thrive—that’s, individuals congregating in a shared setting creates the experience.

COVID-19 has pressured companies in all industries, however significantly these sectors, to be modern. For instance, many eating places and retailers have created curbside pickup fashions utilizing apps, web sites, and different know-how to facilitate the course of.

Businesses who wish to survive (and thrive) throughout the pandemic—and past—completely should learn to create and determine services that prioritize experiences.

Identifying services that create nice experiences

Identifying services which can be ripe for innovation and might meet the altering wants and preferences of shoppers is an unbelievable alternative for companies. To achieve success at this, companies have to put experience first, designing their choices in order that the experience is inherently half of the providing.

“Experience-design is an avenue to escape the undifferentiated abyss of commoditization,” explains Rubin. “So, to the extent that there’s a product or service area that companies want to preserve or grow, innovation through experience-design is a good tactic.”

To embrace this strategy, Rubin recommends figuring out the services that occupy individuals and companies’ time with out delivering worth. Ask the query: What drains individuals’s time?

“Waiting rooms in doctors’ offices. Commuting for suburbanites. These are places and spaces that people are constantly trying to ‘pass the time.’ These are opportunities for companies to engage people, stimulate their senses, enrich their lives, overdeliver, and exceed expectations,” writes Rubin.

Rubin additionally recommends areas of life the place individuals assemble their very own options from disparate services, weaving them into options that work higher for them.

What are some frequent hacks? When and the place are individuals discovering methods to compensate for a partial-solutions supplied by corporations? These are locations to seek out alternatives to raise items and providers to significant experiences.

When innovating for trendy experiences, it’s necessary to grasp what shoppers worth.

In a current article in The Conversation, author and advertising and marketing professor Brendan Canavan notes a brand new tourism development that revolves round individuals’s want for consideration. The means to share and achieve consideration out of your travels equals experience.

Canavan writes, “It may be time to add a new layer to Pine and Gilmore’s progression of economic development, in which value is added by facilitating performances. People are now willing to pay for goods, services and experiences that support their gaining of attention.”

The future of the experience economy

The future of the experience economy will unquestionably contain knowledge and know-how. It can even possible help the gaining of consideration. These days, sharing experiences has by no means been simpler due to social media, cellular connectivity, and the incontrovertible fact that just about everybody carries a digital camera of their pocket.

Rubin agrees that know-how will play a pivotal position in shaping the future of the experience economy, significantly in a post-pandemic world.

“I’m the millionth person to remark that the virus has accelerated the adoption of digital technologies and in mere months, it has driven more transformation within business and for customers than what was expected over multiple years,” writes Rubin.

With property and sources being reworked and redeployed by means of digital channels, it’s not simply good to have services present optimum digital experiences, it’s important.

“As an instance, previous to the pandemic, video collaboration instruments had a set of commonplace, ubiquitous options. It didn’t matter what you used, you simply used what your organization gave you. But now that we’re all actually depending on these providers, we’re noticing the variations and its fairly simple to think about the methods wherein they are often finely-tuned to ship wealthy experiences, not simply delivering a video convention service,” writes Rubin.

“Imagine how good a virtual doctor’s visit could be if the user experience was tailored for the physician-patient interaction. Or the teacher-student interaction. Or the coach-athlete interaction. The experience economy will leverage digital technologies to further customize to niche needs, where the marginal cost of delivering customizations is zero, and where the impact on people’s lives will be greatly felt.”

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