Leveraging technology in travel to capitalize on the Experience Economy
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.