Experience Economy: Primer

Originally posted on the ABA Bank Marketing site on May 15, 2017

Some may not know what the experience economy is about—or how it emerged. This article provides a primer on the concept of the experience economy.

In the early years of our country, agriculture and livestock were the mainstream of commerce. This period was known as the agrarian or commodities economy. People lived off the land, raised livestock, and mined the earth for resources like gold, silver, and coal.

After the agrarian era came industrial manufacturing, driven by the ability to mass-produce goods from those same commodities. Goods that had once been crafted individually could now be assembled and produced in mass quantities—increasing affordability and consistency. Banks adapted to this new goods economy by facilitating the use of currency and coin for the exchange of commodities and the regulation of cost.

As technology advanced and people began living in larger cities, a third economic model emerged—the services economy. And over time, banking shifted its focus again, no longer providing currency in exchange for silver ore or gold dust. Instead, banks became financial service providers, delivering services that members of the public cannot provide for themselves. As such, banks provide funding for homes, cars, and equipment. In addition, they offer a system of secure and regulated financial exchange in the form of checking or debit cards. They also provide safe and secure storage of documents and personal items of value. Through this model of serving consumer needs, banking increased its value to its customers—at least for a time.

And so, the pattern continues. Just as the commodities and goods economies ran their course, the service economy has also been surpassed. Over the past 20 years, there has been a growing trend by consumers to move away from spending on things or paying others to do things for them. The focus has now turned to paying for activities.

The experience economy had taken root—and it offers a greater value than all previous economies combined. A business focusing on experiences can increase the value of its offering by staging activities around the goods and services it provides.

People want to do things and are willing to pay up for that opportunity. Companies like Viking Cruises offer personalized river excursions. Car companies are creating unique driver experience centers where customers can drive high-end and exotic cars—both physically and virtually. Nike offers customers the ability to completely customize and personalize pairs of shoes for a fee. Even toy companies, like Lego, stage huge Lego conventions for the public so they can share their designs and learn about other’s creations—all designed to add value of the goods and services they offer.

What this means for banking.

So how can banks leverage this economic development? First step is to increase their value by staging activities that are not only customized, but personalized to each customer. Digital technology offers the greatest opportunity to achieve this. As described in the first article of this series on the ABA Bank Marketing site, if it’s digital, it can be customized. If something can be customized for the individual, then it has greater value for the customer and in turn, for the bank.

In addition to leveraging the digital world, banks can leverage their physical space by adapting branches to focus more on the purpose of customers’ visits. It’s no longer necessary for branches to revolve around performing basic transactions.

Think about staging activities around what your customers seek and need—and what goods and services you excel at providing. Use that knowledge to change the bank’s physical space to better stage personal experiences and unique engagements that support the brand. This will differentiate you from other banks. Make the shift from doing for the customer to doing with the customer. In the experience economy, it is all about staging engaging interactions that increase value for customers.

Signature Moments

Have you ever wondered if there was something more you could do to extend your brand or message? Well, there is.

One opportunity that is usually overlooked is at the point of when your customers are exiting your business. Add a signature moment that adds that little punch to the engagement. As a Visual Translator, I find that taking photos of attendees at the wall acting as if they are doing the work, is a great piece of memorabilia and a signature moment for them. It also gives me another chance to communicate my brand and my work through various channels the attendee wishes to use. It’s both branding and a signature moment.

Take a look at your business. When is there an opportunity to add that moment outside of the normal business transaction? Now fill it with something that is uniquely you.

Banking on the Experience Economy

Banking on the Experience Economy

Elevating the Value

Let’s face reality; banking is a service business. Banks provide customers with financial services and charge for doing what their customers cannot do for themselves. In today’s market, banking is faced with a wide and expanding range of competition that is forcing price to become the primary defining factor at best. Unfortunately, fighting on price creates no greater value for the business, only volume with decreased margins. If there is no real difference in the eyes of the customer, there is no loyalty. Moreover, the idea of great customer service is not a differentiator, it is what is expected.

In the Experience Economy, it is much more than efficiency or performance ratings of service delivery, it is about a personal customized offering to the individual and staging memorable engagements. It is a shift from doing for a customer to doing with a customer. This is a deliberate strategic change from ‘time well saved’ in the service economy to ‘time well spent’ in the experience economy. Moreover, that time well spent being engaged, should come at a premium price.

The question before us is this; can a service economy industry like banking be elevated to that of an experience stager? We believe the answer is a definitive yes given the desire for change exists.

 

 

Staging Experiences with Bank Customers

In the book “The Experience Economy” by B. Joseph Pine II and James H. Gilmore, the phrase “Work is theatre and every business a stage” is used to frame up the key idea that staff have roles to perform and that the environment becomes a stage for the performance. To achieve this idea, banks need to refocus away from merely delivering efficient service to staging engaging experiences with their customers. The environment must be aligned with the brand promise and support the bank’s culture. Banks need to avoid rehashing older delivery models or duplicating another bank’s design to create activity. The physical and digital place must be a manifestation of the bank’s brand and purpose.

 

Transforming the Culture

The hurdle for banking in the Experience Economy is that it requires an honest assessment of the culture across the whole of the organization. The evolution to an experience begins always with the strength of the people. No brand statement or great environment design can create a memorable engagement without the efforts and intention of the staff. This must happen at all levels and all channels of customer interaction. The more staff is engaged with the customer, the more memorable the experience.

 

3S Model: Satisfaction, Sacrifice and Surprise

One method to begin the journey to becoming an experience is applying the practice of the 3S model: Satisfaction, Sacrifice and Surprise.

  • Satisfaction: First, begin by finding ways to improve satisfaction for the customer. Find out what they like about the current interaction with the bank and expand those ideas. Improve on what is already being done and eliminate the customer’s dislike.
  • Sacrifice: Next, identify customer sacrifices and barriers between what the customer wants and what they must accept because of limitations, efficiencies or selection. Begin removing these sacrifices to enhance the interactions with the customer. Remember, it’s about what the customer really wants and not about being limited to selecting from a menu of what is only offered. One major method to removing sacrifice is by leveraging digital channels. As more and more functions and processes of banking become digital, the more customizable they become. The more customizable an experience/event can be, the more personalized it becomes and eventually, the more customer sacrifice is removed. Being digital means being customizable.
  • Surprise: Finally, add in a surprise during the interaction. Surprises can be random or planned. Take the idea of opening an account. Imagine allowing the customer to create their own unique banking package that fits their needs. Then, because options can be digital, this particular blend of service and features gets named after them and becomes a pre-designed package offering that others can choose. It also creates conversation for the customer with their connections and an experience they are willing to share.

For banking to evolve from the service economy to the experience economy, it will take deliberate action. It is a shift in thinking that is interactive and intentional. The experience economy is a very purposeful level of interaction and takes practice, performance and focus. Just imagine if Starbucks stopped being an experience and commoditized the experience by just serving preset coffee drinks. No more getting your order the way you want with the extra shot or soy versus milk. No more customization of ingredients so that it’s your personal latte and no one else’s. How fast would the value of Starbucks fall?

The key to being an experience stager is knowing that experience is unique to each customer, and the customer becomes the product in which the engagement is designed around. To become an experience, an organization must create a unique difference through the engagement, the purpose and deliberate staging of the engagement in order to create a memorable and valuable event in the mind of the customer. Creating memories through experiences creates increased value and revenue.

We are in the era of the experience economy, companies who do not adapt or evolve from goods or services will be replaced by companies who can stage experiences in order to add greater value to their offering.

 

 

Attracting Customers Is Not Enough

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In the Experience Economy, the authors use a flow process. Over the years of working with them, assisting clients with customer and employee journey maps, I realized that the first stage of most journeys begin with “Attracting”.

Attracting is good, yet the idea of attracting merely means you want them to notice you and nothing more. This term creates no call to action. Because of that and that I tend to never let an idea go, I rethought the whole initial process and change the beginning from Attracting to Enticing.

Look at an experience or business you have. Are you merely trying to attract attention or is it that you want people to enter your business? Me, I want to entice people inside. I want them to engage not merely notice. Enticing truly means you are actively generating interest that is sparking curiosity in the mind of your prospect in hopes to make them your customer.

If you would like to learn more or remap your customer journey, let’s chat.

Learning From Alice

In the Experience Economy, understanding the flow is critical in the success of any staged experience. A good example of how this works is through the story of Alice in Wonderland.

Flow of Exp

In order to develop a complete experience for your customer you must address every phase of the experience from the enticement to enter through the extending of the memory.