Lever­ag­ing tech­nol­ogy in travel to cap­i­tal­ize on the Ex­pe­ri­ence Econ­omy

The Insider - - CONTENTS -

Travel and tourism book­ings reached al­most US$1.6B in 2017, ac­count­ing for more than 10% of the global GDP and mak­ing it one of the fastest-grow­ing sec­tors in the world. Mean­while, spend­ing con­tin­ues to shift from ma­te­rial goods to travel, par­tic­u­larly with mil­len­ni­als — a trend that isn’t ex­pected to change any­time soon. Isn’t it a great time to be in the travel busi­ness? Ab­so­lutely.

But like all good things in life and busi­ness, there is al­ways a catch. Ev­ery­one wants a piece of the ac­tion. There’s a lot of com­pe­ti­tion in the space now, not only be­tween tra­di­tional brands, but with dig­i­tal dis­rup­tors such as On­line Travel As­so­ci­a­tions (OTA) and al­ter­na­tive ac­com­mo­da­tion providers (the Airbnbs of the world). And in the mid­dle of all this frenzy is a new breed of trav­eler — a more con­trol­ling, more de­mand­ing, more in­formed, and more im­pa­tient con­sumer that holds all the cards.

The days of trav­el­ers re­turn­ing again and again to their fa­vorite brands through the pull of loy­alty points are fad­ing fast as more and more con­sumers flip the loy­alty equa­tion up­side down. "Suc­cess­ful com­pa­nies to­day re­al­ize that cus­tomer ex­pec­ta­tions are shaped by the most rel­e­vant, real-time, dy­namic ex­pe­ri­ences they en­counter across any and all in­dus­tries. Th­ese com­pa­nies have re­al­ized that to be rel­e­vant, they must build vi­tal­ity into all they do. They know it’s not about cus­tomer loy­alty any longer, it’s about com­pany loy­alty to cus­tomers."

Omar Ab­bosh, Chief Strat­egy Of­fi­cer, Ac­cen­ture

Ev­ery busi­ness is a stage

Back in 1999, B. Joseph Pine II and James H. Gil­more co-au­thored, “The Ex­pe­ri­ence Econ­omy: Work Is Theatre & Ev­ery Busi­ness a Stage.” It wasn’t the be­gin­ning of the Ex­pe­ri­ence Econ­omy; Dis­ney and oth­ers epit­o­mized it decades be­fore. But it did bring the phe­nom­e­non un­der a spot­light that has yet to fade (Will it ever?).

The thing about be­ing in the spot­light is that, while there are some ac­tors (i.e. busi­nesses) that de­serve a Tony award for their mas­tery of mar­ket­ing in the Ex­pe­ri­ence Econ­omy, oth­ers find them­selves be­ing booed off the stage.

In the Ex­pe­ri­ence Econ­omy — where time is lim­ited, at­ten­tion spans scarce (and di­min­ish­ing), and money dis­pos­able — busi­ness suc­cess is pred­i­cated on cap­tur­ing peo­ple’s time and at­ten­tion. This is where some busi­ness ex­ec­u­tives get con­fused. They think good cus­tomer ser­vice is all it takes. Not true.

The dif­fer­ences be­tween ser­vice and ex­pe­ri­ence may look small, but in the eyes of to­day’s con­sumer, they are huge.

We live in a world of ME gen­er­a­tions where no two peo­ple share the same ex­pe­ri­ence even when placed in the ex­act same sit­u­a­tion. Ev­ery­one ex­pe­ri­ences things and events in a very per­sonal way.

There have been nu­mer­ous stud­ies over the past decade that have shown peo­ple’s pref­er­ences to spend money on ex­pe­ri­ences rather than ma­te­rial goods. To­day, re­search con­tin­ues to con­firm th­ese find­ings, but also note that con­sumers also want ex­pe­ri­ences to be per­sonal — spe­cially cu­rated for them.

A new global For­rester study found that Ex­pe­ri­ence-Led Busi­nesses (ELB) out­per­form their con­tem­po­raries in terms of cus­tomer jour­ney and topline met­rics. ELBs have:

• 140% higher rev­enue growth

• 170% higher re­ten­tion rates

• 160% higher cus­tomer life time value

Cus­tomer ex­pe­ri­ence is no longer just a com­pet­i­tive dif­fer­en­tia­tor, it’s a busi­ness im­per­a­tive.

But hasn’t the travel in­dus­try al­ways been about ex­pe­ri­ence? In lux­ury travel, per­haps, but there’s a rea­son peo­ple call an air­line’s econ­omy class, “the cat­tle car” and re­fer to tol­er­a­ble econ­omy ho­tels as hav­ing “no sur­prises.” So how do travel ex­ec­u­tives trans­form their busi­nesses from sleep sta­tions to play sta­tions, and from peo­ple movers to peo­ple pleasers? Here is some food for thought, and hope­fully in­spi­ra­tion, from com­pa­nies who have raised the ex­pe­ri­ence bar to a whole new level.

Not just an­other econ­omy

Now, I know what many of you’re think­ing, “Enough with mar­ket­ing-speak about an­other econ­omy out to dis­rupt our busi­nesses!” And I can’t blame you. We have the dig­i­tal econ­omy, the knowl­edge econ­omy, the ser­vice econ­omy, the shar­ing econ­omy, the at­ten­tion econ­omy, the trust econ­omy, the po­lit­i­cal econ­omy, the mixed econ­omy, the com­mand econ­omy, and more re­cently with blockchain, the to­ken econ­omy. This is just the tip of the ice­berg and it’s al­ready over­whelm­ing.

But for a mo­ment, put aside your frus­tra­tion with all of this and make a list of your fa­vorite brands. Now ask your­self, what’s com­mon about them all? Why do you love them more than oth­ers?

Now take a look at what the rest of the world chose this year as their fa­vorites.

What do they all have in com­mon? En­vi­able rev­enues ob­vi­ously, but what else?

They are all masters in the Ex­pe­ri­ence Econ­omy. All but one (Dis­ney) are, for the most part, ti­tans of tech­nol­ogy. But, as much as Dis­ney is fa­mous for its theme parks and re­sorts, the me­dia and entertainment con­glom­er­ate was at the fore­front of tech­no­log­i­cal in­no­va­tion long be­fore the in­ter­net was even in­vented.

Given the NetBase list was based on so­cial an­a­lyt­ics, I de­cided to take a look at other more tra­di­tional sources for com­par­i­son. For­tune’s 2018 list of the 15 most ad­mired brands in the world has its share of com­mon­al­ity with NetBase’s, but there’re also brick-and-mor­tar brands on the list — two of which are fa­vorites of mine — Star­bucks and Costco.

Most ad­mired com­pa­nies in the world 2018 From the out­side, Costco looks like a bulk ware­house store of­fer­ing dis­counts across a wide va­ri­ety of goods and ser­vices — sav­ings that more than cover the cost of mem­ber­ship for many mem­bers. And Costco is all those things.

But walk in­side and you’ll im­me­di­ately see why 90 mil­lion peo­ple world­wide flock there week af­ter week. A trip to Costco is like a trea­sure hunt; ev­ery day there’s some­thing new to dis­cover — some­thing we may not even need, but can’t re­sist. Tast­ing stalls are strate­gi­cally sit­u­ated through­out the store, sur­rounded by cu­ri­ous con­sumers look­ing to sat­isfy a thirst, sweet tooth, or crav­ing.

Mean­while, Star­bucks ap­pears to be the po­lar op­po­site of the ware­house giant with its premium-priced cof­fee and food. But, in fact, both com­pa­nies are suc­cess­ful for the same rea­son — they are ge­niuses in ex­pe­ri­ence eco­nom­ics and their Net Pro­moter Scores (NPS) prove it.

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