Commerce has successfully transitioned from being based around commodities, then products and finally services. But that is not the end of the evolution as Mark Brewer, Global Industry Director, Service Management, IFS introduces the concept of the experience economy…
Commerce began with commodities.
Hundreds of years ago, we simply exchanged items for money in a single transaction. Take coffee, for example. You could buy a sack of beans, but you’d still have to put in a lot of work in to make a drink.
So, these transactions gradually became more constructive and based around specific buyer needs. Commodities became products. Coffee beans became coffee jars – ready-ground. All you had to do was add water. It was a better, faster and a more cost-effective solution.
As competition intensified, our service economy was born. Rather than getting your coffee from a jar, you went to a coffee shop where someone would not only make it for you but also ensure it tasted just right. Success was now about ensuring customer satisfaction.
But what’s next?
Welcome to the ‘Experience Economy’
Technology has transformed the way people interact. In the digital age, we expect to track orders, resolve issues and update information immediately. It’s a world of ‘connected customers’, and businesses must respond with exceptional, personalised service experiences. Customer engagement is king and servitization enables it.
Staying with the coffee analogy, consider Starbucks. Now, you’re not just buying a product or service, but an entire lifestyle. However brief your visit, you’re immersed in the Starbucks brand – from communications and messaging to products and services, and so on. It’s a rich, multi-sensorial, emotive world… and whether good or bad, you leave with a feeling. It is memorable.
Mass customize a service and it becomes an experience – making you feel like “one in a million”
Mass customize a service and it becomes an experience – making you feel like “one in a million” (Starbucks puts your name on the cup!). It’s the next evolution for businesses, although some are already well on their way – like the medical devices industry.
MRI scanner manufacturers are under pressure to deliver high-quality, accurate scans every day.
With the stakes so high, these companies don’t just sell the machines, they also guarantee their ongoing service performance and overall user experience. It’s about the entire patient and hospital interaction, from start to finish.
It’s like staying in a hotel. These days, you probably wouldn’t only judge your stay based on your room, or how comfortable your bed is. More likely, you’d consider your entire accommodation experience – from the moment you make your reservation online to your final steps out of the door after checkout. Each influence and interaction along the way contributes either positively or negatively to your overall opinion.
Every touchpoint counts
This analogy may seem obvious – but it’s essential to doing business today. Most organisations have traditionally measured customer satisfaction to predict loyalty and future behaviour. However, consumers consider every individual touchpoint, rather than simply linear values like ‘Did I like the product?’ or ‘Did I get value for money?’ So, this metric may be less valid these days.
Sure, the product may be excellent and do exactly what they always wanted, but that is table stakes today.
What if the delivery lead time was too long, the support helpline is not promptly answered, or the returns process inefficient, then they may shop elsewhere next time.
Elevator manufacturers demonstrate this opportunity in action. Most products are similar in functionality and have become commoditised.
Many companies don’t yet have the right processes or infrastructure in place. Systems are not optimised and often disjointed which means ERP is either over-stretched or misused.
If we look at this from the perspective of the IT industry, for service providers the mindset shift is from selling contracts to selling outcomes, such as user experiences and comprehensive service level agreements. In such a competitive environment with so many similar products and services on offer, this gives vendors a real opportunity to create difference and build success within their customer base.
So, how do you get to this position?
Many companies don’t yet have the right processes or infrastructure in place. Systems are not optimised and often disjointed which means ERP is either over-stretched or misused. IFS can help. Our end to end service lifecycle management solution is purpose-built and holistic, delivering customer engagement seamlessly, throughout the journey.
The experience economy is here to stay – and customer engagement aimed at delivering outcomes is its currency. To find out more about how to make the experience economy work for your business, visit IFSworld.com.
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