What do we mean by experience-based business development and experience economy?
The theory behind the idea that experiences can add increased value to businesses, products and outputs is called experience economy. The originators of the theory are the American theorists Joseph Pine and James Gilmore and the idea is that today we are consuming and shopping in a new way and in different patterns than before.
Today a product or a service will not only have to fulfil a function for the consumer. The decisive competitive parameter is very often the symbolic value of the product, namely the experience.
Therefore, to maintain competitiveness at the market businesses basically have two possibilities today. They can choose a strategy where the idea is to make the production of goods very effective and with that maintain a low and competitive price. Or they can choose a strategy that focuses on creating a symbolic added value in relation to the business or the product and in that way increase the consumers’ willingness to pay more.
Why are experiences so important?
According to Pine and Gilmore, the explanation of the growing importance of experiences is that nowadays people of the Western World get all their material needs fulfilled – and even more so. For that reason we are looking for something more than just something to eat, a place to sleep and general safety; and this something more has become a search for experiences. This means that when the modern consumer wants to cover his material and physical needs he is most likely to choose a product that offers some kind of experience in addition to its basic content.
Experience-based business development put into practice
Experiences can be integrated in almost all parts of a company’s value chain. Only imagination is the limit to how experiences can optimize the competitive position of the company and contribute to increasing earnings. In the following, each separate part of the value chain will be related to experience-based business development.
Development and production
The first part of the value chain consists of the development and production of a product. For a company to grow in the future it is crucial to aim widely, think differently and add unique values to the product. By creating an experience in connection with the purchase and the use of the product it is possible to substantiate the story the company wants to tell about itself and its products.
Product, service and experiences
Experiences can be integrated in the functional elements of products and services. Experiences very often come into existence by means of an interaction between designers, products and consumers. For a company the idea and crucial point is to get the consumer to feel ownership and commitment of the finished product and this is where the experience comes into the picture. Today’s consumers wish to contribute to creating their own experiences and take active part in the story that can be passed on afterwards. The experience can consist in co-creation, participation or surprise in the sales or service process.
Sales and marketing
Next part of the value chain includes sales and marketing. There is a big potential for businesses to use experiences as a deliberate strategy in their communication, sales and marketing. The secret is to include the values and opinions of the business in the brand and thereby creating the experienced added value that causes the customers to choose one product over another.
Service and add-ons
An add-on is some kind of supplement to the company’s core product? For instance, the positive values attached to a company’s name can be an add-on if the company uses the same and already known name in a new business area. Alternatively, an add-on can also be some kind of supplement creating new values and impressions of a company’s product or service. By creating an add-on a new experience is connected to the company.
HR, organization and management
Experiences can also be used internally in the company in relation to HR, organization and management. To include experiences can be a way of maintaining or recruiting the most competent employees. When a company works strategically with the feelings the employees have in relation to their place of work it is possible to reduce for instance absence due to illness and replacement of employees.