According to Wikipedia, The term “Experience Economy” was first used in a 1998 article by B. Joseph Pine II and James H. Gilmore describing the experience economy as the next economy following the agrarian economy, the industrial economy, and the most recent service economy. Joseph Pine and James Gilmore offered this idea to readers as a new way to think about connecting with customers and securing their loyalty.
How do economies change?
Time is the currency of experiences. People value two forms of time: time well saved and time well spent. As less time (and money!) is spent on goods and services, less time in stores and with call centers, people simultaneously spend more time (and money!) on experiences that engage them in a personal and memorable way. Since 2010, Nigerian consumers spend more money per year — and much more time — at restaurants and bars than in grocery stores, social activities, more on food service and dining experiences than on commodity produce, meats, and packaged goods. Why do you think Nigeria has the fastest growing entertainment industry in the world?
An experience is not an amorphous construct; it is as real an offering as any service, good, or commodity. In today’s service economy, many companies simply wrap experiences around their traditional offerings to sell them better. To realize the full benefit of staging experiences, however, businesses must deliberately design engaging experiences that command a fee. This transition from selling services to selling experiences will be no easier for established companies to undertake and weather than the last great economic shift, from the industrial to the service economy. In a world where many suppliers offer similar products, what differentiates brands is an individual’s perception of their own experience. Unless companies want to be in a commoditized business, however, they will be compelled to upgrade their offerings to the next stage of economic value.
Africa’s consumer market brims with potential. Over the decade, it has grown at a compound annual rate of 3.9%, as reported by Brookings. In the wake of an efficient enactment of the Continental Free Trade Area (CFTA) which can facilitate intra-African trade, encourage mobility of businesses and persons, boost domestic economies and spur Africa’s economic growth, the consumer potential (and power) in Africa is set to soar even higher. This comes at a time when Africa’s working age population is growing at an annual rate of 2.7% and about 202 million households are expected to have discretionary income – derived through earnings above $5,000 -by 2025, according to a McKinsey Africa consumer sector report. Moreso, a vibrant age group – 16 to 34 – of income earners in Africa are expected to contribute to $400 billion in total consumption growth by 2025. This increase in purchasing power on the African continent, in line with the competitive business landscape in today’s globalized world, implies that consumers have more reason to demand for experiences – excellent ones – and nothing short of that, when they spend.
It is important to understand who customers are and know what they want to be able to deliver the solutions that suit them, prevent the problems that plague them and resolve any inconveniences that might dissuade them. Enterprise data collection can be done through surveys, image capture, registrations, mobile forms, which can be analyzed and visualized in order to identify, share and monitor insights about customers. Brands can also leverage on predictive marketing tools with more advanced features to work with historical data and trends.
People didn’t just want things anymore. They were spending more money on services than they were on stuff. And that’s when we saw the progression of economic value shift to its current phase, known as staged experiences. Brands had to try harder to give their customers a memorable experience. The reason for this shift was because individuals began to value experiences over material goods.
Pricing is the smallest component in a purchasing decision. Instead, what drives conversion is the perception of overall experience and perceived value, demonstrated and cemented indelibly from user experience (UX) to customer service.
As a brand, to build lasting relationships with your customer, you need to offer them more than goods and services. Live events and experiential marketing campaigns have been successful in raising brand awareness and increasing profits but you don’t need a huge budget to pull off a stunt this big.