The Experience Economy

In this Vlog, Grant explains that companies can no longer differentiate themselves by service because it has now become a commodity. We have now entered the ‘experience economy’…

Would you call this computer server a service?

IBM did.

As products became commoditized companies decided to create services around those products in order to be able to differentiate themselves. One of the most famous examples was in the late ’70s when IBM declared themselves no longer to be a product manufacturer but a service provider.

Now, we’ve undergone another major change. Companies can no longer differentiate themselves by service, which today has become the commodity.

We’ve now entered the experience economy.

There are two differences between a service and an experience. A service is done to you, and an experience is done with you. A service worries about key performance indicators like answering the phone in three rings or delivering the pizza in 30 minutes or your money back.

An experience goes further and actually worries about how the customer feels.

For example, a football match has always been an experience. You can have two great teams such as Real Madrid and Barcelona, with the two famous managers and 22 star players running out onto the pitch, but what would happen if the fans didn’t show up and there was an empty stadium?

There’d be no sense of occasion, because the sense of occasion is not simply delivered by all the stars, it’s also important that 70,000 fans show up as well. Therefore, it’s not done to them, it’s done with them.

The second part of the equation is the emotion.

On my travels I stay in a variety of budget hotels. While they’re perfectly functional, I never leave them wanting more. Whereas, a proper holiday destination is not just the services you get, but how you feel that makes the holiday fantastic.

Trying to differentiate yourself by service alone is extremely limiting. Rather, think of yourself as an experience – how can you involve the customer and how do you want them to feel?

By thinking in these terms and three-dimensionally you can create something truly remarkable for your prospects.

There may be small changes to the spoken word in this transcript in order to facilitate the readability of the written English