Why the Experience Economy is Here To Stay

Why the Experience Economy is Here To Stay
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Several years ago I read an incredibly memorable article by the Harvard Business Review, titled “Welcome to the Experience Economy “.

While the piece is 20 years old, it is still highly relevant in describing how companies are creating billion dollar valuations and start ups are securing new customers.

In the article HBR suggests “experiences have emerged as the next step in what we call the progression of economic value” and that “an experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.”

Now it would be tempting to think that experiences only relate to activities like theme parks or concerts…but an experience can be wrapped around any product.

During a recent interview by Jim Courier of Roger Federer at this year’s Australia Open, Federer was asked what role he plays in designing his Nike outfits. The 6 time Australian Open winner went on to say how Nike fashion emulates the story of his successes, as marked by the use of a Flinders Street station symbol on his shoes. He said these are not just products, these are stories.  In that single comment he connected the product to a larger experience, as expressed by his personal story.

Consider Nike’s wider efforts to connect its products with Apple devices, such as with the Apple Watch® Nike+.  Here is a company that is deeply involved in experiences at every level, from Roger Federer’s sponsorship through to the Nike+ app.

Today everywhere we can see examples of the experience economy. Some companies concentrate purely on the experience, whereas others wrap an experience around a physical product.

Here are 5 other examples of how companies are integrating their offerings into experiences:

  • Uber: It’s not just about finding a ride, it’s about having a pleasant journey, having simple payment and then ongoing confidence….now it’ also about knowing your ‘rider rating’.
  • Netflix: It’s not about finding great content, it’s about knowing whether that content is suited to you, and what other shows you’ll like.  Digital experiences are at the heart of how Netflix delivers for its customers.
  • Rent The Runway: it’s not about just getting that special something to wear out, it’s about having an incredible selection of choice, the convenience of that choice coming to you, and super easy returns.
  • Dyson: it’s not just about a vacuum, it’s about having the transformer of vacuums (that can change to any nook and cranny), going cordless and having the assurance the product is good for thousands of hours before it breaks.
  • Expedia: it’s not about finding a great hotel, it’s finding THE HOTEL that is perfect for you, which others have loved, getting it at a great rate and having trust that it will be an amazing experience.

Can you think of others?  If so, consider sharing your thoughts below.

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I'm a digital strategist and channel manager with 15 years experience in digital, across marketing, e-commerce, online sales, digital and mobile app strategy. Companies I've worked for include Coles, ANZ and GlaxoSmithKline. I'm also a graduate and previous sessional lecturer of Strategic Foresight at Swinburne University.