In the experience economy, experience systems occupy a central place

In a now famous 1998 article in the Harvard Business Review, B. Joseph Pine II, and James H. Gilmore introduced the concept of experience economics to the business world. The theory went something like this: companies had gone through various economic stages (agricultural, industrial and services) in which the nature of what was sold continued to evolve. For example, the agrarian economy focused on the sale of ingredients (they used the example of the ingredients in a cake), while the industrial economy saw those ingredients prepackaged in a complete offering (cake mix). Finally, the service economy saw the rise of companies that built a series of services around those products (the bakery that makes your cake). At every step, the price to the consumer was constantly increasing.

At the turn of the millennium, the authors accurately predicted the new experience economy, where both product and service are an accessory to the main event – the party at Chuck E. Cheese! In an experience economy, the goal becomes a lasting memory (although some may prefer not to remember the entire Chuck E. Cheese experience).

Certainly, there are few arguments in which the authors have been correct. The experience economy quickly took hold and continues today. But there is a branch of experience economics that is developing rapidly. This new variation, which we call the “digital experience economy,” takes the concept even further by imagining products and services delivered not just as physical experiences, but also as digital experiences (and sometimes totally). In our analogy above, the birthday party at Chuck E. Cheese turns into an online event between your child and a group of friends from around the world.

Recent from Facebook change the brand to Meta, a company focused on creating virtual worlds, makes the prospect of the digital experience economy even more likely and immediate. But before we delve into a burrow akin to a “total retreat,” let’s focus on what the economics of hands-on digital experience looks like today and what it will look like in the near future.

Supporting the digital experience economy

Bringing the experience economy to the digital realm means data, and a lot of it. A key element of the experience economy, according to Pine and Gilmore, is personalization. However, in a digital world, the experience will likely need to go further to provide hyper-personalization. As such, artificial intelligence and real-time behavioral data are becoming increasingly important. In particular, companies must not only configure multichannel access for customers, but must also understand all of a customer’s interactions through those channels in real time.

The shift to a digital experience economy ultimately requires a massive understanding of each customer. With that knowledge, companies can deliver the kind of hyper-personalized and memorable experiences that generate greater value for their customers (both internal and external), which in turn enables companies to generate higher profits. Doing so requires systems that can support large-scale accumulation of knowledge.

Experience systems

So what does it take to support this new digital experience economy? RingCentral recorded “experience systems” to define technologies that can support the kind of hyper-personalization and knowledge accumulation that we discussed earlier. Broadly speaking, experience systems encompass not only the sophisticated large data warehouses to support the digital experience economy, but also the myriad technologies that support the ways customers (both internal and external) interact with your organization.

In 2018, Gartner discussed the emergence of multi-experience development platforms, recognizing that while most companies have focused on web-based communication (email) to create customer experiences and, more recently, on mobile devices, those platforms alone will simply not be enough today . Today’s experiences require video, chat, and very soon, the aforementioned augmented / virtual reality. Why? Because customers determine what communication modalities they want brands to use today, and when they don’t get what they want, they just walk away. A survey conducted by RingCentral found that customers stopped using a product or service an average of four times during a 12-month period due to bad customer service.

But experience systems are not just about multichannel or even omnichannel communication. True experience systems create a different experience for each channel based on the unique attributes each channel possesses. It is the antithesis of “one size fits all.” And it also goes one step further. While each experience is tailored to each specific channel, all experiences should feel consistent in some way. Why? Because customers want to change channels effortlessly. The truth is, inconsistent experiences across all channels hurt your brand.

Identity signs of experience systems

While technologies like artificial intelligence and big data certainly underpin experience systems, to customers those technologies mean very little. For them, the hallmarks of their experience will revolve around concepts such as:

  • An immersive experience that combines multiple sensory experiences
  • A sense of community, where customers feel part of a larger group of like-minded people
  • Simplicity that enables customers to enjoy effortless experiences

Ultimately, experience systems must achieve three main goals:

  1. Increase revenue from existing products for your business
  2. Improve customer experience
  3. Improve the employee experience

That last goal, improving the employee experience, is the one most often overlooked in building experience systems. This is because many companies often overlook the impact that employee experience has on the overall customer experience. Simply put, happy employees are happy customers. And that’s not just a catchy phrase. There are numbers to back it up. A Gallup poll found that organizations with a high committed employees outperformed its competitors by 147% in earnings per share.

Today, one of the ways that companies are addressing the link between employee engagement and customer engagement is by creating links between those two components of experience systems. It makes sense, especially since customer service teams, for example, are crying out for it. In the RingCentral survey, nearly 80% of agents said they have to put customers on hold every day while they search for information to solve problems. The problem, they say, is broken workflows. However, unifying customer service and employee engagement systems was a welcome solution: 92% said integrated communications and collaboration solutions—Platforms that tightly integrate messaging, video, phone, and customer experience — would help.

While the digital experience economy may seem like a natural consequence of the experience economy, the experience systems needed to support it require careful consideration. Cloud communications technology will become a hub for collecting, storing, distilling, and using interaction data to drive simple, powerful, and brand-consistent experiences. The ability to effortlessly connect those systems with other technologies, such as artificial intelligence, will also be critical.

This content was produced by RingCentral. It was not written by the editorial staff of MIT Technology Review.

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