More than 20 years ago, B. Joseph Pine and James Gilmore described the transition from services to experiences as entering a new era of economic history: The Experience Economy. They stated, “Focusing on goods and services alone leads down the road of economic austerity. Experiences are a distinct form of economic output, and as such hold the key to promoting economic prosperity.” Their foundational idea has since become a reality for the majority of brands. With goods and services being perceived as more and more interchangeable, companies are now competing on providing experiences that make them stand out from the crowd.
Are we entering the Transformation Economy?
When revisiting their work a couple of years ago, Pine and Gilmore also addressed the question of what comes next. They observed the rising importance of experiences becoming transformational – going beyond the actual moment and aiming at transforming a person. There is certainly a lot of evidence to support this. More and more offerings help customers to change if not all, but certainly some, aspects of their lives. Sales of self-help books have risen hugely, there is an abundance of online learning courses, fitness courses, and suggestions on social media on what to do differently with your life. Even the popularity of Marie Kondo – whose website homepage claims “tidy your space, transform your life” – signals that customer needs go beyond experiences now.
COVID-19 might accelerate this transformational movement. Not only because the shift from physical to digital touchpoints means a different type of experience, but also because our daily routines are so profoundly disrupted. We are staying at home. With few activities available (outdoor, restaurants, meeting friends), we are likely to be more focused on ourselves. Indeed, over 30% of consumers globally state that they are focusing on personal development to better manage their mental health during the crisis (COVID-19 Barometer). We have more time to reflect. We are confronted with terrible tragedies all around the world and in some cases near to us, which is leading many of us to reassess what’s really important. Care for our neighbours and communities is taking on a new sense of importance, for example in the UK where 750,000 people signed up to be COVID-19 volunteers in the space of a couple of days.
Sufficient evidence to call out a new economic era?
It is likely that some of the changes we observe right now are here to stay. Brands that have built digital purchase journeys as a response to the crisis won’t withdraw that offering once the pandemic subsides. We are likely to have a stronger sense of the importance of health and safety. Working from home might permanently increase, and our travel and mobility habits might change. But does this mean that experiences are losing relevance, and customer needs are shifting to transformation?
At Kantar we reviewed recent data from real-time customer listening programmes, all feedback collected during the last couple of weeks. A couple of common themes emerged strongly in open text answers: How well retailers and service providers handle health and safety regulations, and how customers perceive the cleanliness of stores, workshops and other sites. But above all, customers showed an overwhelming sense of gratitude for employees on how well they handle the situation, how hard they work to keep shelves re-stocked, and how quickly brands have adapted to the required changes with creative and innovative ideas.
For many companies, we observed a surge of 5 to 10 points in KPIs within a week. The secret to this was simply to provide a great experience in difficult times: quickly adapt to new customer journeys, empower employees to react to the new situation, and demonstrate genuine care and customer empathy. Experiences still matter hugely, and employees are still key in delivering to a brand’s promise.
The new Experience Economy
While the end of the era of experience might not be here yet, it is likely that we are entering a different type of Experience Economy. Certain aspects of experiences are becoming more important than others, reinforced through the pandemic.
The first is Memorability. The heightened emotions during the current crisis make this a period where lasting memories are going to be made. People will recall brands that were authentic in their care and humanity, and found ways to adapt their experiences to customers’ changing needs.
Transformation is indeed another. This will go beyond the current focus on personalisation, to brands having a genuine link to people’s lives, aspirations and dreams – many of which will be different after COVID-19. People will expect brands to adapt, understand what is now important, and provide experiences that have a lasting and positive impact on their lives.
And last, but not least, Sustainability. The pandemic has reminded the whole world that there is more to life than material possessions, and has demonstrated what is possible when we act collectively. Anjali Puri has published an excellent piece on the ways that the COVID-19 response is going to redefine what it means for a brand to be a leader, particularly when it comes to sustainability. When the current crisis has passed, people will not be willing to revert to the status quo when it comes to global challenges.
Kantar has the global knowledge and tools to help companies find their place in this new world. Get in touch to discuss how we can help.
Reference: Pine, B.J. and J. Gilmore (2013), The experience economy: past, present and future. In: Sundbo, J. & F. Sorensen: Handbook on the experience economy.