Experience-led transformation in today's experience economy: Part 1

The worldwide response to COVID-19 has impacted many sectors of the global economy. And it is those enterprises that are firmly in the experience economy – such as bars and restaurants, theaters, sports centers, museums, high street stores, and tourism companies – that have suffered most.

But this does not mean the end of the experience economy. Far from it. People are social beings and will always crave social experiences. Buying experiences, as research shows, still makes us happier than buying things. This is why consumers want commodified goods and services – those bought at the cheapest possible price and greatest possible convenience – so that they can spend their hard-earned money and their hard-earned time on the experiences that they value.

In fact, digital experience stagers – such as entertainment streaming, gaming platforms, and video sharing for consumers, employees, and business customers alike – are among those that are benefiting from global quarantining. People are not in any way giving up their experiences; they're just shifting them from public to familial, from out there to in here, from physical to digital. And experience stagers are responding with all manner of quarantine-driven digital events, including informal concerts, virtual cocktail parties, play broadcasts, coaching, webinars, and behind-the-scenes content.

Foreseeing the recovery

So what will it take for not just the experience economy, but all sectors of the global economy to come back? From my understanding, recovery first requires a diminishing of infections to slow down the spread of Coronavirus. Second, we need workable treatments so that more and more of the infected can recover. And third, we need herd immunity to prevent a further outbreak, most likely in tandem with a vaccine.

Because all enterprises depend on a physical presence, they need to understand that many effects of the current crisis will not just linger, but fundamentally change customer behavior.

There are many consumers who never ordered anything online – for takeaway or for collection – who now do so regularly. Many who once thought that zoom was only a technical word for a camera function, now use Zoom for coffee catchups. Businesses discovered that, yes, they can accomplish much without physically travel to a far-flung location. And many workers realized that working from home can work quite well.

Many industries will undergo important makeovers. A significant percentage of the shift to online ordering, and in particular takeout meals and contactless delivery, will remain. Telephone diagnoses will become a normal way to interact with nurses and doctors. Remote schooling will become far more acceptable, and accessible, particularly in higher education. Queue-less waiting will become prevalent at theme parks and other such experiences that often involve waiting in lines.

What's happening is that the future is sliding into the present. Think about physical retail. I wrote an article for the Harvard Business Review a few years ago wherein I looked at the shift from physical to digital shopping. To make the case that retailers should be not just merchandisers but experience stagers, I noted: “While the US Census Bureau puts e-commerce's share of the US retail market at less than 10% as of the first quarter of 2017, online sales are growing at almost 10% per year. Should that trend continue – and it appears to be accelerating slightly – online retailing will account for nearly 20% of the total in 2025, over 30% in 2030, and about 50% in 2035."

Well, guess what – that trend just accelerated immensely! Amazon is reportedly operating at Christmas levels. But although much of in-store retailing will bounce back, some of it never will. That 2035 date for a 50/50 split just slid much closer to the present as online buying becomes more evenly distributed throughout the population.

Envisioning the response

So what should you as an enterprise – particularly one that has been hit hard – do in response? First, be human. This is inspired by Katrine Thamdrup and Mathias Birkvad, strategic planners at Danish ad agency &Co., who wrote that in this first phase, companies should "demonstrate citizenship." Being human simply means to act in the most human way possible – with empathy, for the greater good, in helpful ways – with customers, employees, communities, nations, and the world. That's what so many experience stagers are doing via the quarantine-driven digital events mentioned above. They aren't necessarily trying to monetize all that activity right now when people just need to be socially present while physically distant. If any of these new formats is of lasting value, then economic value will come soon enough.

In many ways, COVID-19 has accelerated the pace of change from physical to digital. All enterprises, especially those that depend on a physical presence, need to understand that many effects of COVID-19 will not just linger, but also fundamentally change customer behavior. To learn more about why experiences will continue to be the most important criteria for enterprise-level success, download this Rightpoint, a Genpact company, point of view.

Read the second part of this blog series here.

This article is authored by B. Joseph Pine II, the leading authority on the experience economy, and was first published on Rightpoint.com.