The End of the Experience Economy
Harald Pol
Lector | Professor Marketing & Entrepreneurship | Consultant Marketing, customer experience & digital transformation
Or: how in times of crisis the relationship between customer and organization suddenly becomes a lot more important than the experience of touchpoints
The newspapers are full of it. There is a compelling shortage of staff in many sectors: airports are having major problems finding security guards and baggage handlers, the hospitality industry is facing major staff shortages, forcing restaurants to close on certain days, shops having to close because they lack staff, waiting times at the contact centers are increasing because there are too few people to answer questions. As a result, the customer experience is under heavy pressure in a number of sectors. Customers are asked to have compassion with the longer waiting times. Sometimes customers do, but often they don't. Think of all those people who are waiting frustrated at the airport before they can check in, and who risk missing their flight because of this. In these times of crisis, is it still useful to work on optimizing customer experience, while you don't have enough people to get the primary processes in order?
Last August, I myself had the misfortune that when I returned from a holiday at our national airport Schiphol, after a transfer at Heathrow Airport in London, I was told what had happened to more than 8,000 other passengers at that time: our suitcases with all our summer equipment and valuable souvenirs had not arrived at Schiphol. A true shock after a wonderful holiday and a great return flight. What you experience as a customer from that moment on is a customer journey in which you are completely lost, where you are sent from one to the other. Employees who no longer feel responsible, as a result of all the misery and frustration of angry customers and poorly functioning procedures, processes and systems. The phone for lost luggage is no longer answered, because the airline can no longer handle the large number of questions and complaints. Whatsapp still works, but the answer to a question can take between 1 and 72 hours, and if there was a response, it is a chatbot that does not answer the question, but in the best case redirects you back to the site (where you already came from but who also had no answer to your question).
Organizations focusing on customer experience
Thinking about the relationships between organizations and customers has been dominated since the end of the last century by focusing on the customer experience. In the late 1990s, Pine and Gilmore laid the foundation for a global introduction of the concept of customer experience with their book 'The Experience Economy' (1999). In the decades since the publication of the book, most customer-oriented organizations have started working optimizing the customer experience. According to Pine and Gilmore, people today are looking for valuable, memorable and pleasurable experiences. Since the introduction of the experience economy, the experience that customers have with the products and services have received an enormous boost. Organizations have started to pay massive attention to optimizing the customer experience, often by mapping customer journeys and touch points and measuring and by improving the emotional experience. In scientific research too, more and more attention has been paid to customer experience and the question of how organizations can manage and improve this experience. In recent decades, much has been published in marketing literature about research into customer emotions and measuring emotions, but this has mainly been applied to the effect of advertisements and commercials. Little research has been done into the emotions customers experience during the service delivery process before and after purchasing a service. What we do know is that customer experiences are very personal: what appeals to one customer may not appeal to another customer at all. In addition, a customer experience can vary in strength: the one time the experience is very strong, the other time the experience is very superficial. And one time the customer experience is positive, the other time negative. Some experiences arise spontaneously without much reflection, others arise more deliberately and last longer. It is mainly the longer lasting experiences that are stored in the customer's memory and that influence customer behavior in terms of customer satisfaction, willingness to switch and loyalty.
The reasons why organizations are massively working on customer experience are clear: if people have a positive feeling about an organization, they are not only more satisfied but also more loyal. If customers have no or a negative feeling about an organization, then loyalty is lower and the willingness to switch to a competitor is higher. In addition to higher satisfaction and loyalty, a positive emotional experience leads to a greater willingness to share feedback with the organization and to recommend the organization to friends and acquaintances. A positive emotional experience also leads to fewer complaints: if customers have a good feeling about an organization, they are more likely to accept it if the quality of service is somewhat less. But perhaps the most important reason to work on customer experience: the economic value of a product or service increases. Customers are willing to pay more for a product if they feel good about it.
Customers have increasingly higher expectations
However, there is also a downside to striving for memorable customer experiences. Because customers are looking for a positive experience, they are also becoming increasingly critical of what they are offered. The experience a customer has with a product or service is largely determined by the extent to which the explicit and implicit expectations of this customer correspond with the actual performance. The expectations of the customer arise from the standards that the customer uses in the relationship with the organization, and from the values that indicate what the customer considers important. If the customer's expectations are higher than the performance delivered, the customer will become dissatisfied. If the expectations are exceeded by the performance delivered, then this satisfies the customer. In general, customer expectations are somewhat ahead of actual performance. That's because customer expectations are influenced by the best-performing organizations in the market: if one company is able to deliver a product ordered on the internet within 12 hours, why should another organization take two weeks? If one company can indicate exactly when the technician will visit, why should another company only be able to specify a day or part of a day. In the experience economy, the customer is constantly looking for memorable experiences. Man in his role as a customer of an organization wants it:
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Few organizations are able to consistently exceed customer expectations. This is partly due to the law of diminishing returns: as a customer consumes a product more often, the returns from the purchase in question decrease. For the same reason, a customer's expectations in the first phase of a product's life cycle will grow relatively quickly. As a certain saturation occurs, the growth of customer expectations slowly slows down.
Hedonic customer behavior in a sustainable society
Because organizations have done their best to optimize the customer experience in all areas, consumers and citizens have also become very focused on meeting their needs to the maximum and organizations are doing everything they can to meet those needs. And on searching and finding maximum convenience. Long waiting times are no longer accepted. That has long been the dominant model in economic issues. However, 'hedonism', or the doctrine within ethics that states that pleasure (in a general sense) is the highest good, seems to have had its day in thinking about organizations and customers. The question is to what extent hedonic behavior is still compatible with a sustainable society as we now experience it. Society is currently characterized by several major crisis: in the labor market, the housing market, the immigration problem, rising energy costs due to the war in Ukraine. Rising energy prices and sharply increasing inflation mean that customers will have to settle for a somewhat less luxurious life. A sustainable society requires sacrifices: organizations will have to settle for lower profits, customers will have to settle for a 'less' optimal service. Customers will have to accept that the major shortages on the labor market will sometimes lead to longer waiting times. Not a nice message, but the harsh reality.
From customer experience to sustainable and meaningful customer relationship
In a time where organizations can no longer provide optimal service and prices are rising as a result of inflation, the relationship that underlies the interactions between customers and organizations suddenly becomes much more important. A lasting and meaningful relationship can be defined as a relationship in which parties can provide for each other's values, for the things that are important to the other. Organizations and customers care for each other and together they ensure a sustainable society. It is a relationship that is driven by social values and not by commercial values such as wanting to close the very best deal (highest quality, lowest price, greatest convenience). Scientific research shows that if people have a positive feeling about their relationship with an organization, they are not only more satisfied but also more loyal. If customers have no or a negative feeling about an organization, then loyalty is lower and the willingness to switch to a competitor is higher. Finally: if customers have a good feeling about an organization, they are more likely to accept it if the quality of service is somewhat less. In addition to customer experience, customer commitment and customer engagement are becoming increasingly important. Commitment arises when customers are willing to enter into a relationship for a longer period of time, commitment stands for real involvement that is expressed in, for example, helping the organization where possible, but also for contributing to a sustainable society .
Harald Pol PhD is an independent consultant in the field of customer experience and customer relations. In 2017 he completed his PhD research 'Mastering meaningful customer connections'. Since then he has been part-time affiliated with the reserach group Marketing and Customer Experience of the University of Applied Sciences in Utrecht. Harald is founder of the Institute for Service Leadership and author of several books, most recently "The Journey through the Kingdom of King Customer".