Last April, I had the opportunity to attend the Nielsen Norman Group UX conference in Washington, D.C. One speaker got my attention in their talk about something called the experience economy.
It got me thinking, both product and service companies might be seriously missing the mark on how they organize their teams. There’s a big potential opportunity for growth with something called experience-led teams.
I’m going to detail my thoughts later, but first, let me talk about the experience economy.
The experience economy
If you’ve been to Disneyland, Las Vegas or Vancouver’s Shameful Tiki Room then you’ve experienced the experience economy. Companies that offer these unique and memorable experiences can charge premium prices and stand out from competitors.
The experience economy is the next stage in the progression of economic value where customers demand more meaningful and memorable experiences. A defining characteristic of the experience economy is a shift away from cut-and-dry services.
The growth of experiences means organizations will need to shift their business strategy, team structure and compete in this new market space. Is it worth it?
Why you should care about the experience economy
As companies increasingly tap into the experience economy for a competitive advantage, you could either get ahead, catch up or get left behind. Are you only one feature away from your product becoming a commodity?
The opportunity is especially promising if your clients are millennials. A study by Eventbrite found that “more than 3 in 4 millennials (78%) would choose to spend money on a desirable experience or event over buying something desirable.”
McKinsey also found that people are willing to spend 6.3% more on average every year on experience related services. At that rate, millennials will spend 35% more on experiences after 5 years.
This figure from McKinsey shows that people are spending 6.3% more on average every year on experiences, a greater increase than for services or goods.
The experience economy will naturally affect both what your organization makes and how your team makes it. How should organizations navigate the experience economy?
How it will affect your product or service
While differentiating yourself from competitors and tapping into a new market are great promises of the experience economy, actually executing on this might not be so easy.
The term “Experience Economy” was coined by Joe Pine and James Gilmore in their seminal 1998 Harvard Business Review article. In it, they detailed principles that you need to follow to successfully navigate the experience economy.
To take advantage of the experience economy, they recommend that you harmonize all the touchpoints between your customers and your product or service. They should be tied together to an effective and comprehensive theme. You must also remove any touchpoints that are unnecessary or distract from your theme.
In addition, they recommend you make the experience multi-sensory and more immersive wherever possible. This will reinforce customers’ memory of the experience which can be capitalized on through memorabilia or higher user retention.
For example, to strengthen the experience of hospitality in a fast food place, they suggested turning a plain trash bin “into a talking, garbage-eating character that announces its gratitude when the lid swings open.”
It’s easy to imagine how retail stores, theme parks and other in-person experiences will adjust to an experience economy but what about tech companies?
The experience economy and tech
With the rise of AR and VR, it’s now possible to deliver incredibly immersive and compelling experiences directly to people’s homes with all the creative possibilities of the digital world. Gaming and other tech companies would do well to take advantage of this new tech to augment the experience of their users.
Some people have also been thinking about the implication of the experience economy for software. Alan Neveu, the CTO of Certify, coined the term Software as an Experience (SaaX) challenging the idea of Software as a Service (SaaS).
Not only does the experience economy require a review of your product or service, but you will also need to reevaluate your team structure.
How it will affect your team
In order to tap into the experience economy, some businesses might need to be redesigned from the bottom up. This means that the team structure and management philosophy will have to be adapted.
There are many different types of team structures out there, but let’s focus on design-led and engineering-led teams.
Engineering-led teams are good at addressing technical problems quickly but can miss the mark when it comes to product usability. Design-led teams, on the other hand, are great at addressing user problems and for that reason, lots of big-name companies (Google, Airbnb and Netflix) have made the switch from being engineering-led to design-led.
Either way, it’s possible for engineers or designers to develop an inflated sense of importance, causing internal friction and possibly affecting product quality.
As an alternative, let me introduce you to something called experience-led teams.
Experience-led teams
In the experience economy, user experience is the star of the show. This is because the value of the experience-driven business relies heavily on the users’ perceptions of your product. You will need to acknowledge and embrace the subjective, emotional nature of experiences to reap the rewards.
Since it’s hard to predict how an experience will land, especially when doing business across cultures, customer feedback has a core role. Experience-led teams are defined by having users at the centre.
You’ve got to start with the customer experience and work backwards to the technology.
Steve Jobs
How to put users at the centre of your team
To have users at the centre of your team, you must incorporate user feedback and testing into every stage of your development processes. All necessary teams should have equal involvement with user testing including engineering, design, product management, etc.
1. Get customer feedback. Have representatives of each team receive input from real users before, during and after development. Ask, how do they want to feel? What is memorable about your service?
2. Conduct usability tests. Take detailed notes on their emotions in real-time. Follow up with users after to gauge how memorable your service is. See how people actually use your product and observe any blockers distracting them from their ideal experience?
3. Test your innovative ideas. How people use something now isn’t necessarily how it will be in the future. So create your innovative feature, host customer interviews and evaluate the resulting experience.
When your service or product features are being matched by competitors and the only way to compete is price, team morale can slip. User testing allows for positive emotional feedback that can motivate your team. More broadly, the mission of creating experiences can make work more meaningful than just creating software.
When it comes to experience-led teams, there is a lot of potential and a lot to learn.
The experience economy is still emerging
As industrial revolutions happen more frequently and tech dives head-first into the future, it can be overwhelming to keep track of where we are and where we’re going. The emerging experience economy could make the difference between surviving and thriving in today’s faced past, competitive markets.
To take advantage of the experience economy you must reevaluate how your team is organized. Since experiences are subjective and difficult to predict, user testing and customer feedback must be incorporated at every stage of development. This means experience-led teams with users at the centre could be the future of your organization.
I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.
Maya Angelou
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