How the Experience Economy is shaping customer relations

Sure, we all appreciate a great product. But what is it that truly excites us and makes us think ‘wow!’? Is it the product itself or the feeling we get when we first hold it? Is it ‘the thing’ or is it our personal experience of ‘the thing’?

Research is showing that, more and more, what matters to consumers is the experience. In fact, 86% of consumers questioned in one survey quoted in Forbes said they would be willing to pay more if they received a great customer experience (rising to 90% in another survey). Are you in that majority? It’s suggested by PWC that, on average, people would pay 16% more for a coffee that came with a great customer experience. Or 10% more for an airline ticket.

So the customer experience matters, sometimes even more than the price a customer pays. Welcome to the Experience Economy, where there is value in the feeling we get when we pay for something.

The notion has been around for decades, but was perhaps best articulated at the turn of this century in a book by B. Joseph Pine II and James H. Gilmore, who coined the term Experience Economy. Its power as a commercial argument is on the rise, especially in highly competitive markets.

So what is it and how can it benefit you? Let’s take a look.

We spend, as a global average reported by the BBC, nearly 5 hours per day gazing at our smartphones. That’s plenty of time for brands to bore or irritate us with generic ads peddling whatever goods or services they have to offer. But it’s also a wide window of opportunity for a brand to provide us with an experience, a moment that we will remember or even cherish.

That moment provides value to the customer, which in turn means value for the brand.

The more personalized the experience, the more memorable the moment can be. Think Starbucks writing customers’ names on their drinks back in the day, an early example of an elevated customer experience. A simple gesture, but it helped Starbucks become what it is now.

The experience has become an integral part of the buyer’s journey and businesses are becoming ever more mindful of the need to put the customer experience front and center of their marketing strategy. A positive experience will keep customers coming back for more but, increasingly, a negative experience is likely to see them shop elsewhere. And of course, word soon gets around…

• 70% of consumers surveyed in France said they’d walk away from a brand after just one bad experience. (Zendesk)
• 76% of consumers say they have shared bad customer experiences with their friends and family; 74% say they have shared good customer experiences. (Zendesk)
• 88% of consumers check public online reviews (social networks, forums, review sites…) before deciding on a purchase. (Forbes)

Providing a quality customer experience - whether it’s by personalizing it or simply answering customer questions quickly - can have a significant impact on customer retention and, by extension, a company’s bottom line.

• Acquiring a new customer is between 5% and 25% more expensive than retaining an existing customer (Harvard Business Review).
• Increasing customer retention rates by 5% increases profits by between 25% and 95% (Bain and Company).

We talk of customer experience when the price, product and service combine to generate a unique and positive emotion. It can be expensive and sophisticated. Or it can be refreshingly simple:

• Making a customer feel that their request has been answered.
• Providing a website that’s mobile-friendly and easy to navigate.
• Accompanying the customer through the buyer’s journey from beginning to end.

Some guidance in creating a great ‘CX’ applies to companies of all sizes, across most sectors.

Why do you carry out your business activity? What is your company’s raison d’être? 

The question ‘why?’ is key, as pointed out by author and speaker Simon Sinek in his TED Talk on inspirational leadership.

In other words, what did you hope to bring to the world when you started your business? The answer to this question is precisely the reason your customers will want to buy from you, beyond simply the product and service that you offer. If the answer is simply ‘to make money’, then that purpose will likely not be enough for your customers to buy into your project. What Sinek suggests will excite your customers is the same as what gives you a feeling of satisfaction every time you do business.

This ‘purpose’ should remain at the heart of everything, from the materials you work with to the words you use in your marketing and communications. 

Most of the time, we pay for goods or services to satisfy an emotional need. As entrepreneurial founder and investor Logan Chierotti argues, emotions drive all of our decisions, including our purchasing behavior.

This doesn’t mean businesses should manipulate their customers’ emotions. Instead, entrepreneurs should always identify how their product can fulfil the customers’ emotional needs. Then, they should focus their communications around this convergence between ‘need’ and ‘solution’.

As the old marketing saying goes: “you don’t sell the mattress; you sell a good night’s sleep.”

An experience is made of one or more key moments. We rarely remember every detail of a journey, so it’s important to create highlights that will stay in the customer’s memory. This doesn’t mean you need rainbows, unicorns and rivers of honey (although this may well do the trick); these moments can be simple to put in place:

• A quick quiz for visitors to a jewellery website, to engage them and help the owner learn about their tastes.
• A little effort, a micro-ceremony by a construction company, to mark the moment a customer is handed the keys to a building.
• A short hand-written note popped into an envelope to accompany the delivery of a package in the mail.

The above are experiences in their own little way. Nothing dramatic, nothing extravagant, just small gestures that make a customer think ‘well, isn’t that nice!’ Gestures that set you apart by making people actually feel something. Gestures that give your customers a great reason to come back.

• The Experience Economy, by B. Joseph Pine II and James H. Gilmore
• Winning in the Experience Economy, by Sanat Rao
• Experience is everything: Here’s how to get it right, PWC
• The Subconscious Mind of the Consumer (and how to reach it), with Gerald Zaltman
• Customer Service Statistics 2022, 123 Form Builder
• Top 35+ customer experience statistics to know in 2022, Emplifi