Consumer Insights Driving Success in the “Customer Experience Economy”
by Bonnie Janzen
In the distant past, we had an agrarian economy, which was followed by the industrial economy and then the service economy. Depending on your specific definition, by the 1990s, we had evolved to the “Experience Economy.”In 1992, German sociologist Gerhard Schulze researched inhabitants of the city of Nürnberg and observed a new way of living. Basic needs were met and people desired a nice living and were looking to experience life. Based on that research, he wrote a book in 1995 entitled The Experience Society.
There was a transformation where the need for goods that are generally useful or functional evolved into a need for goods that deliver an individual experience. As the Harvard Business Review defined it, "…a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event. For example, Apple’s Stores strategy of becoming “Town Squares,” so Apple consumers can become a community that not only purchases Apple products, but also learns more about them and shares their experiences. Or the Crayola Experience, kids and their families can spend several hours going through Crayola themed activities, such as the ‘Crayon Factory’ and ‘Melt & Mold.’ Afterward, the exit goes directly through the Crayola store. Not all the experiences are that elaborate, but the space where companies’ offers of experiences meet consumer demand for them is the "Experience Market.”
One place we see this is in the retail sector, where there is a trend of building more “lifestyle shopping centers.” Lifestyle centers are defined by the International Council of Shopping Centers (ICSC) as “specialized centers” that have “upscale national-chain specialty stores with dining and entertainment in an outdoor setting.” The ICSC further describes a lifestyle center as a “multi-purpose leisure-time destination, including restaurants, entertainment, and design ambiance and amenities such as fountains and street furniture that are conducive to casual browsing.” The lifestyle shopping center is designed to improve the shopping experience, and we’ve probably all seen friends and families enjoying the outdoor spaces in these types of centers.
Technology solutions offered by retailers and shopping centers are integral to this experiential improvement. Websites and apps let consumers select options that are convenient for them. They can order and pay online and choose to have products shipped to their local store or directly to their home. Some companies let customers schedule delivery and, if needed, even professional assembly of the products the purchase.
So how can a brand or business determine how it should evolve in the Experience Economy?
It is always important to make business decisions steeped in a deep understanding of how the consumer feels and thinks about your brand or company. That is even more important today when consumers have more choices than ever.
We recommend Customer Experience Optimization research, which allows you to maximize long-term profitability through managing the “lifetime value” of your customers. The goal should not simply be to maximize customer satisfaction or loyalty, but to optimize it. As the old 80/20 rule or Pareto Principle points out, typically 20% of your customers generate 80% of your profits. So, obviously not all customers are created equal. It is critical to find a way to understand this highly profitable 20% of your customers. What is most important to them, and how does your brand deliver that in products/services, feelings, aspirations, during the shopping experience, etc.?
As with many marketing questions, beginning with some type of qualitative research is ideal. You might want to do some depth interviews (which can be done in person, by phone, or online) or focus groups (which can be done in person or by webcam) among employees and among consumers. The discussions should be centered on the typical path the consumer takes to purchase the product or service as well as the barriers to trial and more frequent usage of that product or service. Start by asking questions in the store or online, wherever you are selling your products. Do you have employees or technicians involved in recommending, selling, servicing, and/or delivering your product or service? They spend their days working with your customers, and if they are given an open and nonthreatening atmosphere, they could help you identify customers’ wants and needs quickly. It can often be helpful to include some exploration outside of your brand or category. How do consumers experience other categories? What do they do or encounter that really delights them? The answers to these questions can provide clues for us along the development pathway.
Based on qualitative research, you will find the optimal way to contact customers and can design a study to monitor their experiences and attitudes over time. That might be by utilizing the voice of the customer via brand tracking research, customer loyalty simulator, customer lifetime value analyses, etc. It is important to monitor every aspect of your brand and every touchpoint with customers.
Flourish in the Experience Economy through Customer Experience Optimization Research. Understand your customers and your employees.
About the Author
Bonnie Janzen (email@example.com) is Executive Vice President at Decision Analyst. She may be reached at 1-800-262-5974 or 1-817-640-6166.
Copyright © 2018 by Decision Analyst, Inc.
This posting may not be copied, published, or used in any way without written permission of Decision Analyst.