If you watched #BeLikeRuby, you’ll know that we’re passionate about the heart it takes to win in the experience economy. But how do you quantify “heart”? We all intuitively know why Starbucks makes more from their assortments of flavored water than Dunkin’ Donuts, but how do the differences come to life through data? More importantly, how can the process of getting there be replicated?
It probably wouldn’t take you much effort to find out your sales figures, cost of goods sold, or the average number of vacation days employees took last month. Operational Data (O-Data) has become the lifeblood of businesses. It’s hard to imagine running a business without it.
But as Qualtrics notes, O-Data isn’t enough. Just look at the 52% of the Fortune 500 that was wiped out in under two decades. They had O-Data, but they were still missing critical insights that could have saved them.
“Experience is now the organizing principle of the global economy. Every CEO I meet is trying to solve the experience gap,” says Bill McDermott, CEO of SAP SE. “What is it? It’s the difference between what people expect versus what they actually received. This is a $1.6 trillion problem.”
Gartner goes so far as to predict that 2019 is the year when 81% of marketers will be relying nearly completely on Customer Experience (CX) to win, with analyst Jenny Sussin noting that “a superior CX is one of the few remaining means of sustainable competitive differentiation.”
The economy is in transformation as customer expectations continue to increase and competition moves into the realm of delivering better experiences across the board. Whether those better experiences take the form of intuitive conversational digital buying interfaces, more authentically motivated customer representatives, or even the better experience of having IoT data for industrial machinery. Better experiences create better outcomes, and they’re becoming the primary grounds for winning – and keeping – the business of customers. We’re in the experience economy.
The experience economy concept was introduced by Joseph Pine and James Gilmour in the 90’s when many companies were just exploring the notion of a website and GeoCities was a hot commodity.
One of the foundational elements of the concept is how the economy evolves as incremental value is added by the seller.
At the bottom of the value pyramid are Commodities, things like generic coffee beans that have (relatively) no differentiation. Value is added when it becomes distinctive and tangible, in this case the coffee bean becomes a Good when it’s been roasted and packaged in some exotic locale, like a Brooklyn basement filled with heavily bearded hipsters. It’s become branded. Further up the pyramid, the Service business turns it into a cup of coffee for you, saving you the time of grinding and brewing it yourself.
Harvard Business Review, 1998
And here’s where we meet the interesting value-added example of Starbucks, because they’re a business that goes beyond Service and enters the Experience space. Describing themselves as “the third space” outside of home and work, the company isn’t selling a cup of coffee, they’re selling the experience of Starbucks. It happens to be largely monetized by coffee. Customers are paying a premium for the value they ascribe to the Starbucks experience.
This is where Experience Data (X-Data) comes into play. Championed by Qualtrics, which was just acquired by SAP, X-Data measures the qualitative experience of the brand, rather than the operational aspects. X-Data would reveal the qualitative differences between Starbucks and Dunkin’ Donuts in ways that O-Data can’t, for example.
It’s not about how much was your coffee, it’s about how was your coffee? How was the service? Did you like the décor? How did it make you feel? Would you try a new flavor? As an employee, do you feel the company’s values are clear and easy to represent to customers?
These qualitative answers can all be quantified as X-Data, and when that data is gathered at scale and made interoperable, magic can happen.
X-Data doesn’t just apply to the customer experience, it can also capture the employee experience, or capture feedback on new products before they go to market, providing levels of insights that go far beyond customer satisfaction and provide a holistic view of the brand experience, inside and out.
While this data is, in itself, nothing new, what is new is the development of systematic approaches to Experience Management that can be applied universally across organizations so that there is a single system of insights, rather than scattered pockets of feedback. With insight standardized and centralized, employees across the organization can mine and manipulate it in new ways to better drive the overall brand experience.
This data, and the experience management movement as a whole, helps make buying and selling more awesome. That’s been our mission over 20 years as we’ve helped hundreds of clients deliver better outcomes through enhanced customer experiences. If you’d like to learn how we can help you navigate the experience economy, let’s talk.