Experience economy is defined as “an economy in which many goods or services are sold by emphasizing the effect they can have on people’s lives.” Experiences have their category, just like “goods” and “services” do!

From a simple, general perspective, when working on making an experience possible you need a combination of goods or services. For example, if you pay to go on a skiing trip you could break down your bill as:

1. The driver to transport you to a specific ski resort
2. The instructor’s lesson
3. All required gear and equipement
4. Transportation to and from skiing zone
5. Insurance for the event

However, it is the combination of all of those goods and services that results in an experience that is much more valuable than the simple sum of its parts. Blame it on the internet showing more people what’s possible and how to do it, or the fact that so many of our most valuable “things” are now freely available – music, movies, art, communication, education and more. You could also attribute it to the longer hours most industries are adopting, now that everyone is accessible via their phones 24/7. But researchers have noted a trend: material goods are simply not as valued.

THE 4 Es

We can sort experiences into four broad categories according to where they fall along the spectra of the two dimensions.

• One way to think about experiences across the two dimensions. The first corresponds to customer participation. At one end of the spectrum lies passive participation, in which customers don’t affect the performance at all. Such participants include symphony-goers, for example, who experience the event as observers or listeners. At the other end of the spectrum lies active participation, in which customers play key roles in creating the performance or event that yields the experience. These participants include skiers. But even people who turn out to watch a ski race are not completely passive participants; simply by being there, they contribute to the visual and aural event that others experience.

• The second dimension of experience describes the connection, or environmental relationship, that unites customers with the event or performance. At one end of the connection spectrum lies absorption, at the other end, immersion. People viewing the Kentucky Derby from the grandstand can absorb the event taking place beneath and in front of them; meanwhile, people standing in the infield are immersed in the sights, sounds, and smells that surround them. Furiously scribbling notes while listening to a physics lecture is more absorbing than reading a textbook; seeing a film at the theater with an audience, large screen, and stereophonic sound is more immersing than watching the same film on video at home.

The kinds of experiences most people think of as :

Entertainment—watching television, attending a concert—tend to be those in which customers participate more passively than actively; their connection with the event is more likely one of absorption than of immersion.

Educational events—attending a class, taking a ski lesson—tend to involve more active participation, but students (customers, if you will) are still more outside the event than immersed in the action.

Escapist experiences can teach just as well as educational events can, or amuse just as well as entertainment, but they involve greater customer immersion.  Acting in a play, playing in an orchestra, or descending the Grand Canyon involve both active participation and immersion in the experience. If you minimize the customers’ active participation,

However, an escapist event becomes an experience of the fourth kind—the Aesthetic. Here customers or participants are immersed in an activity or environment, but they themselves have little or no effect on it—like a tourist who merely views the Grand Canyon from its rim or like a visitor to an art gallery.

Future = Experience

The deeper I read into the experience economy, the more I understand how companies would do everything to try monetize customer experience beyond the customized offers that are common today. Our goal, as a company, should be to make the deriving of experience value part of the organization’s DNA.   This requires sponsorship from the top, Take Apple as an example, whose charismatic leader emphasized on customer-centricity and engagement right from the start. When there is vision and belief at the top, it percolates down the ranks more easily.

For now, it is safe to assume that many industries, like the banking industry, will persist with a hybrid model where transactions will predominantly go through digital channels, even as the physical branches remain. What will increasingly happen is that bank branches that were traditionally built to facilitate transactions will be redesigned as channels of interaction and engagement.

In the experience economy, time is the currency of value. Consumers see value either in time well spent or in time well saved. In the hybrid model of banking, digital channels will focus on improving efficiency, fast transactions, few clicks, easy navigation, 24×7. So time is well saved. Physical channels, meanwhile, will focus on relationships and engagement so customers come away feeling that they spent their time well. This implies that in the race to digitization, banks must not neglect the transformation of their physical outlets. Actually those that challenge the opinion that customers will not return to the branch, by elevating their physical experiences, will stand out in the experience economy.

References:

https://www.linkedin.com/pulse/4-es-experience-economy-wineenclub-dh7ge?_l=en_US

https://globalriskcommunity.com/profiles/blogs/exploring-the-quadrants-the-four-realms-of-the-experience-economy

https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2021/04/07/winning-in-the-experience-economy/?sh=74f8af4c224f