Quality and the Experience Economy

Over the past two decades consumers have been gravitating towards purchases that are of both high quality and provide an experience. Quality of a product or service alone is no longer a differentiator, quality of experience is. Consumers are buying what will not only satisfy a need, but will illicit an emotion or establish a connection.

How will this new economic structure affect the quality industry?

Babette Ten Haken

The Experience Economy, by Joe Pine and Jim Gilmore (1999, 2011), created the blueprint for how B2C (business-to-consumer) industries created customer experiences to build customer engagement, loyalty and marketshare.

Today, the Age of Mass Production is gone. Customers expect a company’s products and services to do more than remain “as good as the day I bought them.” Instead, customers make purchase decisions, expecting products and services to continuously become better and better over the duration of their life cycles. As a result, customers expect their own emotional experiences, interacting with their purchases, to become better and better.

The Experience Economy principles offer competitive advantages to the B2B (business-to-business) space, especially industry and manufacturing. However, this scenario sets up legacy cultural and methodological plate tectonics. Operations and Quality processes and mindset crash into Business processes and mindset. After all, Operations and Quality traditionally focus on issues and risk. Business traditionally focuses on possibilities and opportunities.

Can the two cultures not only co-exist within The Experience Economy industrial IoT ecosystem? Can they collaborate, cross-functionally, to create extraordinary and enduring customer outcomes and experiences?

Yes! Quality tools like design thinking and qualitative Voice of the Customer (VoC) methodologies have a tremendous impact on delivering product- and service-based designs which deliver remarkable customer experiences and catalyze customer retention. These insights give breadth and depth to periodic, quantitative customer experience survey results, conducted on the business side of the table.

However, to successfully deploy these tools and methodologies, Quality professionals must walk Quality talk across the organization, from the plant floor to the C-Suite. How does the Voice of Operations-based end-users relate to the Voice of Business-based decision makers? That is the Quality Challenge. Because once the dots are connected, organizations create a powerful, customized, experience-based blueprint for growth, expansion and sustainability.

John Hunter

It is very difficult to create great customer experiences if the management system doesn’t provide those interacting with customers the authority, tools, training and support to make decisions and continually improve the systems in place to deliver great customer experiences.

The management system must not only give people the authority to react to specific customer desires individually but must integrate continual improvement of the processes and systems to continually enhance the ability of the organization to delight – even in the face of ever greater customer expectations.

There is not a magic bullet solution to creating the capabilities to delight customers with the overall customer experience. It requires creating a management system that encourages that focus and supports acting based on those principles every day.

Luciana Paulise

Instead of spending a big budget on advertising, some companies decide to bet on free marketing by investing in their customer’s experience instead. For companies Like Johnny Cupcakes, Zappos or Delivering Happiness, their driver for growth has been repeating customers and word of mouth to actually get free advertising . Most of the money they would have spent on paid advertising like regular companies do, they invested it into customer service and the customer experience instead, letting customers do the marketing for them through word of mouth and relationships. They will recommend your brand to their friends, talk about you on their social networks, generate repetitive sales and sometimes even give you ideas for potential new products. Basically, customers become what I call “lovers” of your brand.

So what is a great experience? it is not just regular customer service. It is to take care of every detail in every contact with your customer, face to face, online or even on the phone. Tony Hsieh, founder of Zappo’s says that “If you get a 10 minutes interaction right, the customer remembers the experience for a very long time and tell his or her friends about it. You need to make sure that we use that opportunity to create a lasting memory”. So, the key is to focus on building engagement and trust, seeing every interaction through an experience of a long-life relationship lens instead of an expense-minimization lens.

This shift from buzz marketing to experience marketing can only be possible through a cultural transformation within the company. All the old habits of just minimizing cost need to shift towards customer centered habits.

Edwards Deming, proposed a cultural transformation in his last work, the System of Profound knowledge. This method shifts organization from “Me” to “we”. a “We ” organization means that departments work together, and make decisions considering the interactions they have with each other. As Deming puts it, we need to mind not only about doing “good parts” but also about “the gaps” between the parts. That is, your report can be done correctly, but if it doesn’t fit the needs of your customer, it may not be as good for him. We need the customer or the preparer to raise the voice to make a change in the process.

“We” thinking is crucial in an experience-based marketing, as everybody needs to be involved in getting the right interaction to the customer, everybody needs to be open to see how the company can do better and be part of it.

The cultural change needs to be lead by the head of the organizations by example (top-down) and specific principles, and provide the appropriate training of those principles to the employees to offer bottom-up solutions.

Chris Moustakas

Remember the first time you used Google Maps? Compared to the experience of Mapquest, it looked and felt like magic, and what was state of the art just the day before became obsolete overnight.

A wealth of open resources, plus a step change in what “good” looks like, has reset people’s expectations. At its core, “Quality of Experience” is a holistic definition. It used to be that a company could be judged by specific criteria – a widget’s reliability measures, for example – but those days are over. Today it’s not only that widget’s reliability that matters, but how and from where you source the raw materials, how responsive your support hotline is, even what your employees are saying about you on Glassdoor.

This change makes perfect sense in a world dominated by instant information and social media. It has nothing to do with producing a warm-and-fuzzy feeling, and everything to do with smart business. Your supplier may provide cost-effective, high-quality products, but if those products were developed in repressive environments, you expose yourself to the risk of social backlash (especially if you’re a bigger company). You don’t have to think for long to remember recent examples of this.

How can quality professional contribute positively to this new reality?

  • Use tools like NPS to gauge how your customers feel about you.
  • Apply metrics to qualitative measures (such as your NPS scores), and use those metrics to communicate management expectations.
  • Open your organization to suggestions from employees, who often have the best ideas, and track those with the same attention you would a corrective action.

The techniques are the same. The only thing that’s different is the larger scope – and with that larger scope, the opportunity to effect more meaningful change than ever before.

Luigi Sille

Nowadays customers are much more educated, they know exactly what they want. They read and do research (using internet) about the products they want. In an experience economy an external customer is referred to as a “guest”, and not just a customer.  A guest does not just buy a product, but he or she pays for the experience.

How will this shift to experience economy affect the quality industry, and what quality practices can be applied or adapted to ensure success in this new economic structure? The answer is simple: SERVICE

Companies should invest in training and development of their employees to:

  • Deliver better services
  • Communicate better
  • Handle and help solve complaints/problems… “Service Recovery”
  • Expand their knowledge
  • Work on team-building

Managers should:

  • Be more flexible
  • Brainstorm (with the team) for new ideas and possibilities (Creativity & Innovation are very hot topics in the quality industry)
  • Help / guide / advise the team
  • Quality of work-life is also important
  • Deal with conflicts, and never neglect them

We have to remember that Managers have to guide, control, and motivate employees (team members) so everyone will feel that they are part of the organization. We also have to measure, one way or another, the quality of service we are delivering. But measurement of Service quality is not an easy task. Compared to measuring tangible products, it’s difficult.

Aspects of service quality that can be measured:

  • Reliability: Deliver promised service in a consistent way
  • Tangibles: physical appearance
  • Responsiveness: Willingness to offer a fast service
  • Credibility
  • Access: Easy to do business
  • Customer complaints

Maybe we (Quality professionals) have to do more on this measuring aspect. New and improved measuring methods will have a positive value for both organizations and your customers.

So the experience economy and the quality industry, go hand in hand. Improving the quality of your service will in turn deliver the experience your customers are looking for.

Dr. Suresh Gettala

Joseph Pine and James Gilmore, the two protagonists of the experience economy, argued that the transformation of the economic progress has gone through four-stages of evolution – from agrarian (commodity based) to industrial (goods based) to service (service based) and finally to experience based economy.

Source: B. Joseph Pine II and James H. Gilmore, “A leader’s guide to innovation in the experience economy”, Strategy & Leadership, Vol. 42, Issue: 1, pp.24-29, 2014.

Today, experiences are construed as a distinct construct and economic offering from services just like how services were seen distinctive from goods in the earlier decades. Experiences are perceived to be unique, memorable and sustainable over time that would involve customers’ involvement at multiple levels – physical, emotional, intellectual, behavioral, social and spiritual.

The primary question that arises is: “Can the quality of the experience be measured”? Earlier dimensions of quality, predominantly were explained from a goods/services perspective, quality of the experience transcends such limited thought process and details that experience quality encompasses the “total experience” ranging from the pursuit, procurement, consumption and post-sales phases of the experience.

It has been proven through research studies that customers do construe customer experience quality and therefore able to perceive the relative superiority or inferiority of their experiences. While we can be forgiven for thinking that managing customer experiences is apropos only to the consumer industry, it must be noted that business to business milieu also provides definitive stages for experiences.

Pine and Gilmore postulates five value creating quality approaches that drive progress in the dynamic experience economy that include, customized goods, enhanced services, charging for experiences, fusing digital technology with reality and transformative experiences.

To encapsulate, “Experience” is not an immeasurable, amorphous construct but a concrete economic offering which if carefully designed and staged would result in a lasting impression on the customers. Needless to mention, this would in turn help to carve a niche for the seller organization if they can stage an experience that is going to create some memorabilia in the minds of the players that results in a transformation within the customers.

As more and more focus is being given to the quality of the experience, by both the business and the academia, prudent practitioners have realized that they can command a fee for the experience per se. Consequently, companies enabling such transformational experiences can charge not just for the goods and services or the time spent with the customers but for the transformation resulting from such experiences.

Several research and practitioner oriented articles have dwelled on the dimensions of experience quality and how they positively influence other constructs such as customer satisfaction, loyalty, retention and repeat purchases. There has been substantial proof to illustrate that effective management of experience quality is extremely crucial for achieving sustained financial success.

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