Experience Economy Trend in 2021: Challenges & Secret Weapons

In the 90s, when clouds were nothing more than condensed water in the sky and "Where do you see yourself in 5 years?" was still a legitimate interview question... nobody could have imagined the impact the digital revolution would have on business and commerce.

The digital revolution has not only changed the nature of communication and the way business is done. Over the years it has also raised the expectations of consumers, significantly. 

How exactly? Well, for one, the internet and the rise of messaging apps has enabled instant and direct contact with customers. 

What a chatbot would call its daily bread — immediacy, personalization, and convenience — is now considered a given and minimum by customers.

Businesses have been forced to cater to an audience which craves personalized experiences and instant answers. This shift has given rise to something called the experience economy. 

So, what is experience economy, and what does it mean for businesses and marketers today?

What is Experience Economy?

The term experience economy was first coined in 1998 by two economists, B. Joseph Pine II and James H. Gilmore in the Harvard Business Review article 'Welcome to the Experience Economy'.

The experience economy is essentially where businesses move from offering products and services to crafting distinctive experiences for their customers. Pine and Gilmore found that these experiences were becoming a dominant economic offering in the USA even back in 1998!

Pine and Gilmore identified four types of experiences businesses can offer their customers:

• Entertainment: passive participation and absorption. For instance, streaming a concert or watching a performance.
• Education: active participation and absorption. For instance, attending a coding bootcamp.
  
• Esthetic (Escapist): active participation and immersion. For instance, visiting a theme park.
• Esthetic (Aesthetic): passive participation and immersion. For instance, standing in the Grand Canyon.

We've moved well past the world of experience economy to what is now called the transformation economy. Businesses now want to help their customers achieve transformation and improvement of their lives. For example, personal fitness apps that help you lose weight and transform your body. 

But, the experience economy concepts still hold true as a baseline for understanding consumer behavior and what businesses need to do to survive in an increasingly competitive environment. 

What the Experience Economy Means for Businesses Today

Over the past couple of decades, the experience economy philosophy has permeated more and more industries, forcing businesses to put customer experience at the heart of their strategy.

Gone are the days when price or product quality was the driving differentiator. Today, customer experience has become THE key battleground. According to a Gartner report, 89% of businesses now expect to compete primarily on the basis of customer experience. 

A PwC study found that 73% of consumers say experience is an important factor in their purchasing decisions yet only 49% of US consumers say that companies currently provide a good experience. This means there's still a large gap between expectations and delivery.

Customers want, and expect, to be wowed by the experiences brands offer them. In order to meet their demands, businesses must take a more experience-focused approach to their offering.

Here are 4 big challenges that businesses and marketers face when it comes to delivering on experience economy demands: 

1. Keep up with Consumers' Digital Lives

The digital revolution means that customers are increasingly living their lives digitally. According to a GlobalWebIndex report, in 2020 internet users spent an average of 6 hours and 43 minutes online per day, including on social media.

Customers have also become more demanding. They expect brands to be available 24/7 and to have consistent, seamless experiences across channels. And they're not wrong to expect this, as companies like Amazon, Uber, and Netflix have shown what's possible with customer-centric technology.

Being present, available, and consistent has become an enormous challenge for businesses operating in the experience economy. Meeting the bar set by tech giants is not easy, especially for small and medium-sized businesses.

Fortunately, the availability of new customer service tools, including conversational automation tools like chatbots, can help bridge that gap. 

2. Move the Needle on Personalization

Customers in the experience economy want to feel like they're getting a personalized experience. They don't want to be treated like just another number. They want to feel like a unique individual.

A 2018 Accenture report found that 91% of consumers are more likely to shop with brands who recognize, remember, and provide relevant offers and recommendations. Yet, most companies still struggle to deliver it effectively.

Making personalization a reality at scale is a complex challenge. It requires a deep understanding of customer data and the ability to act on it in real time. The good news is that advances in AI and machine learning are making this increasingly possible.

Indeed, conversational chatbots present businesses with an incredible opportunity to deliver the kind of personalized, 1-on-1 interaction that customers crave — at scale.

3. Earn and Keep Customer Trust

Customer trust has never been more important, and it's never been more difficult to earn and keep. Brands are under enormous pressure to be transparent and authentic.

In the age of social media, a single negative customer experience can go viral and cause significant damage to a brand's reputation. Businesses need to be proactive in managing their customer relationships and in addressing customer concerns before they escalate.

Furthermore, while consumers are more willing than ever to share their data with businesses, they want it to be used responsibly and for clear benefit to themselves. According to a Salesforce report, 84% of customers say that being treated like a person, not a number, is very important to winning their business. Yet, 54% don't believe that companies have their best interests at heart.

Building a brand that customers trust is a long-term commitment that requires consistent behavior and communication.

4. Optimize the End-to-End Customer Journey

The experience economy has raised the bar for what customers expect at every touchpoint in their journey with a brand — from discovery and consideration to purchase and post-purchase. A bad experience at any point in the journey can lose a customer, not just for that particular purchase but permanently.

A PwC report found that one in three consumers would leave a brand they love after just one bad experience, while 92% would completely abandon a company after two or three negative interactions.

Delivering a great end-to-end experience is a complex challenge. The fact that the journey is increasingly non-linear and multi-channel makes it even harder.

And yet, it's something that businesses simply cannot afford to ignore.

How Conversational Chatbots Help Businesses Navigate the Experience Economy

While these challenges might feel like a lot to navigate, conversational chatbots have emerged as a powerful tool to help businesses deliver on all of them. 

Let's take a closer look at how chatbots can help: 

Always On, Always Available

Chatbots are available 24/7, meaning businesses can offer round-the-clock customer service and support without having to staff a team of humans at all hours. This is a huge win for companies, especially those operating in global markets with customers in different time zones.

The use of chatbots for customer service allows businesses to ensure that no customer query goes unanswered, no matter when it's submitted. This leads to improved customer experience and, ultimately, to increased customer satisfaction, loyalty, and lifetime value.

Personalization at Scale

One of the most compelling things about conversational chatbots is their ability to deliver personalized experiences at scale. Using customer data and machine learning, chatbots can tailor their interactions to each individual customer, providing them with the information and recommendations that are most relevant to them.

It's the kind of personalization that would be impossible for a human to deliver at scale — but chatbots can do it effortlessly. They can address customers by name, remember their preferences, and tailor their responses accordingly.

Frictionless Experiences 

Conversational chatbots make the customer journey simpler, faster, and more seamless. Whether customers are looking for information, making a purchase, or seeking help, a chatbot can be the bridge that connects them to the information or solution they need, quickly and effortlessly.

Businesses that use chatbots can reduce customer effort at key moments in the journey, removing the friction that often leads to drop-offs and lost customers.

Building Trust Through Consistency

Chatbots can help businesses build trust with their customers by providing consistent, reliable, and accurate information at every touchpoint. Unlike human agents, chatbots don't have bad days, and they don't make mistakes due to fatigue or oversight.

This consistency of experience — combined with the ability to always be available — can go a long way towards building the kind of trust that keeps customers coming back.

The experience economy is here to stay, and the pressure on businesses to deliver exceptional customer experiences will only intensify over time. Fortunately, conversational chatbots offer a powerful and scalable solution to many of the key challenges that businesses face in the experience economy.

As technology continues to evolve, the capabilities of chatbots will only grow, making them an increasingly valuable tool in the arsenal of businesses looking to thrive in the experience economy.

So, are you ready to level up your customer experience game with chatbots? Start for free with Landbot today.