Intelligent Enterprises make the Experience Economy Click with Consumers
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.
2ND QUARTER 2019
By Rudeon Snell, Director: Intelligent Solutions at SAP Southern EMEA
SYNAPSE
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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
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Organisations that want to survive and thrive in the new intelligent Experience Economy will need to enter uncharted waters to radically reimagine the very concept of customer experience.
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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
