In a now-famous 1998 article in the Harvard Business Review, B. Joseph Pine II and James H. Gilmore introduced the business world to the concept of the experience economy. The theory went something like this: businesses had moved through various economic stages—agrarian, industrial, and service—in which the nature of what was sold continued to evolve. For example, the agrarian economy focused on selling ingredients (they used the example of the ingredients in a cake), while the industrial economy saw those ingredients pre-packaged into a complete offering (cake mix). Finally, the service economy saw the emergence of companies that built a host of services around those products (the bakery that makes the cake for you). At each step, the price for the consumer increased steadily.
At the turn of the millennium, the authors accurately foretold the new experience economy, where both the product and the 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 whole Chuck E. Cheese experience).
Certainly, there’s little argument that the authors were spot on. The experience economy took hold quickly and continues today. But there’s an offshoot to the experience economy that’s rapidly developing. This new variation, which we call the “digital experience economy,” takes the concept even further by envisioning products and services delivered not just as physical experiences, but as digital experiences as well (and sometimes entirely so). In our analogy above, the birthday party at Chuck E. Cheese becomes an online event between your child and a group of friends around the world.
Facebook’s recent rebrand 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 head down a “Total Recall”-like rabbit hole, let’s focus on what the practical digital experience economy looks like today and what it’ll look like in the near future.
Supporting the digital experience economy
Taking the experience economy into the digital realm means data—and lots of it. A key element of the experience economy, according to Pine and Gilmore, is personalization. In a digital world, however, the experience likely needs to go further to provide hyper-personalization. As such, artificial intelligence and real-time behavioral data become increasingly more important. In particular, companies need to not only set up multichannel access for customers, but they also need to understand all of a customer’s interactions across those channels in real time.
The shift to a digital experience economy ultimately requires a massive understanding of each customer. With that understanding, companies can deliver the kind of hyper-personalized—and memorable—experiences that drive greater value for their customers (both internal and external), which in turn allows companies to drive greater profit. Doing so requires systems that can support knowledge accumulation at scale.
Systems of experience
So what does it take to support this new digital experience economy? RingCentral trademarked “systems of experience” to define technologies that can support the kind of hyper-personalization and knowledge accumulation we discussed above. Broadly speaking, systems of experience comprise not only the sophisticated big data stores to support the digital experience economy, but also the myriad technologies that support ways that 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 focused on web-based communication (email) to create customer experiences, and more recently mobile, those platforms alone simply won’t cut it today. Today’s experiences require video, chat, and very soon, the aforementioned augmented/virtual reality. Why? Because customers determine which communications modalities they want brands to use today, and when they don’t get what they want, they simply leave. A survey by RingCentral found that customers stopped using a product or service an average of four times over a 12-month period because of poor customer service.
But systems of experience aren’t just about multichannel or even omnichannel communication. True systems of experience create a different experience for each channel based on the unique attributes each channel possesses. It’s the antithesis of “one size fits all.” And it also goes a step further. While each experience is tailored for each specific channel, the experiences must all somehow feel consistent. Why? Because customers want to switch between channels effortlessly. The truth is that inconsistent experiences across channels damage your brand.
Hallmarks of systems of experience
While technologies like artificial intelligence and big data certainly underpin systems of experience, for 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 individuals
- Simplicity that allows customers to enjoy effortless experiences
Ultimately, systems of experience should achieve three main objectives:
- Increase existing product revenue for your company
- Improve the experience for customers
- Improve the experience for employees
That last objective, improving the employee experience, is the most frequently overlooked in building systems of experience. That’s because many companies often overlook the impact employee experience has on overall customer experience. In a nutshell, happy employees make happy customers. And that’s not just a catchy phrase. There are numbers to back it up. A Gallup poll found that organizations with highly engaged employees outperformed their competitors by 147% in earnings per share.
One way companies today are tackling the link between employee engagement and customer engagement is building links between those two components of systems of experience. It makes sense, particularly because customer service teams, for example, are clamoring for it. In the RingCentral survey, nearly 80% of agents said they have to put customers on hold every day as they search for information to resolve issues. The problem, they say, is broken workflows. Unifying customer service and employee engagement systems, however, 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 feel like a natural outgrowth of the experience economy, the systems of experience necessary to support it require careful consideration. Cloud communications technology will become a hub for gathering, storing, distilling, and utilizing interaction data to fuel simple, powerful, and consistent experiences with your brand. The ability to connect those systems effortlessly with other technologies, like artificial intelligence, will become critical as well.
This content was produced by RingCentral. It was not written by MIT Technology Review’s editorial staff.
Source From technologyreview
Author: Deepti Illa