The experience economy is a new buzzword in the SaaS industry. In this blog, we look at the definition of experience economy from the perspective of business leaders and what it means for the future.
The world saw the first mention of the term E8. This was in the Harvard Business Review. The term was relevant but did not get much popularity until very recently. Marketers took time to completely accept the term and find ways to help their businesses grow in the experience economy. The term has now become the buzzword in the SaaS industry, and we will tell you why.
In this write-up, we will explain the concept of the experience economy. We will also guide business leaders to make their businesses thrive in the growing experience economy. So, without further delays let us jump to the important topic.
Although the term economy got defined very late, human beings have built their economy ever since they started living a settled life. The earliest form of economy was based on commodities. It started with a barter system where people would get a commodity of their choice by giving away some other commodity. Thus, the earliest bunch of marketers based their business policy on commodities.
With changing circumstances, people’s preferences changed, and the commodity economy gradually shifted to become a service economy. People were giving more preference to services at this stage, so the marketers designed their approach around providing services to customers.
The current market condition has reached a level where customers are saturated with the availability of goods and services and are now willing to pay more for experiences. Even psychologists support experience economy with their theory that happiness is derived more from experiences than what people possess (commodities) or get (services).
This is best implemented by B2B SaaS companies today. Slack could be the best example of companies that banks on the experience economy. Slack, the messaging platform for the workplace, has focused on its products and also on the entire customer journey. The company takes care of the customer experience at each touchpoint. First, the company addressed their customers’ pain points – i.e., the gap in internal communications and the length of the meetings. By addressing these two through its product, the company focused on improving the entire customer experience journey.
On the same lines, Dropbox also came up with an excellent product and also ensured that it eased the customer journey by leveraging technology. Similarly, several companies have been using technologies such as AI-powered so the customers would not have to wait for their queries to be resolved. This is a fantastic way to enhance the customer experience. This way, they have changed how their customers view their services.
Several research studies have shown that the newer generation prefers spending more on experiences such as traveling, recreation, and eating out as compared to traditional commodities like cars, household commodities, and even a house. The preference for experience is increasing for various reasons. The following are the common driving forces behind the experience economy.
The biggest mistake any business can make while designing their strategy for growth in the experience economy is not knowing where to focus. If you remember the discussion about the origin of the experience economy, you already know that the earlier phase was focused on service. In that phase, most businesses focused entirely on customers. Customers are undoubtedly the king and will always be. But focusing solely on consumer experience is a sure shot road to failure.
When we talk about the importance of experience, we intend to say that it is important to all, including your employees. So, any business leader aiming to grow their business in the experience economy needs to focus on the experiences of people inside their organization too while focusing on customers’ experiences.
To thrive in an experience economy, it is important to blend your data insights with creativity and human empathy. Without empathy, you cannot touch human feelings and give someone a memorable experience. And at the same time, you will not be able to think out of the box and differentiate yourself from competitors without a pinch of creativity.
Here we are giving the ultimate guiding principles to help you create your strategy for the experience economy.
Any experienced business leader would know that the first step in any marketing strategy is to know your customers well. The experience economy is no exception. But, only knowing your customer will not suffice; you need to understand them and create their persona. This will help you know the needs, expectations, and preferences of your audience across all touchpoints, mediums, and channels. Unless you connect empathetically with your customers, you will not be able to provide them with the fulfilling experience they seek.
Without a doubt, technology can help you create an amazing user experience. But do not adopt technological advancements just for the sake of it. Many businesses invest a hefty amount in technology only to realize its failure at a later stage. For example, Chatbots are extremely helpful for many businesses, but if your target audience prefers human contact, deploying chatbots with auto-responses may backfire. So, whenever you plan to adopt innovative technology, keep the end goal and your user persona in mind. Remember, your goal is to provide a fulfilling experience and not pay for all innovative technologies that come into the market.
Creating a fulfilling experience should not be limited to the front end. Your strategy to provide experience should go well beyond that point and touch every aspect of your operation. The processes of your business, technologies employed, people, and operation model should aim to create a pleasant experience. As a business leader, you need to scrutinize your entire business process and search for any part that lacks good experience, be it for customers, employees, or other business stakeholders. You need to develop a holistic experience strategy.
The finest experience strategy will fail if your employees are not on the same page. Experience building is a process that needs an inside-out approach. You need to put your employees first and communicate to them the importance of experience so that they can create it for your customers. Creating a fulfilling experience for your customers ultimately lie in the hands of your employees, so they need to be kept in the loop always. So, never make the mistake of designing and developing a customer experience strategy without bringing your employees on the same page and in confidence.
Let it be said loud and clear that market positions are transforming rapidly, and you can benefit only by being swift in your approaches to planning, executing and optimizing. You need to jump on the bandwagon now to gain early bird’s benefits before your competitors do. You cannot wait and plan like forever. Once you understand the importance of experience economy, you need to design your strategy and execute it swiftly. However, the focus of execution and optimization should be on fulfilling experience rather than rigid adherence to the plans.
If you want to provide an exceptional experience for your customers, you need to think out of the box and come up with creative ideas. Unless you have a monopoly in your area of service, you need to compete rigorously because customers today are spoilt for choices. A lot of businesses are providing customers with the same services. Experience is the only thing that can give you a unique space in the market. And that can be built only by staying creative.
The experience economy has not become a buzzword in the market for no reason. Companies like Apple Inc. and Airbnb have already decoded the formula to thrive in the changing circumstances of the experience economy. Like any other transformation phase, this is a good time to create a strategy to provide an exceptional experience to your employees and customers and let your business flourish. The above-listed pointers can guide business leaders to develop plans for thriving in the experience economy and getting an edge over their competitors.23
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