By Sarah Nicastro, Founder and Editor in Chief, Future of Field Service

The Experience Economy was first published by B. Joseph Pine II and James H. Gilmore in 1999, describing the emergence of experiences as distinct economic offerings and the next step (beyond services) in the progression of economic value. Pine, who was a guest on the podcast in 2019, has said that great experiences begin with, but don’t end at, great service.

While there are countless examples of consumer brands that have mastered, or were even born of, the experience economy, from my point of view, the experience economy remains somewhat of an enigma in the B2B realm. We talk often about companies struggling to move beyond a product focus to seize the potential of service, and embracing experiences is a significant step further.

Now I do believe most companies recognize the importance of the “experience” aspect of what they deliver, which is why leaders are quick to emphasize that “service is a people business.” But is this lens too narrow through which to view the full experience opportunity? As is, the relevance of experiences is constrained to a box to check within their current value propositions and processes versus its own potential strategic driver.

Beyond Customer-Centric Service

While focused on consumer spend, this article from McKinsey shows an interesting trend that, despite an overall pessimistic view on the economy, in the U.S. that isn’t correlating to spending less. Instead, there’s a trend of economizing on ‘lower value’ items to afford to splurge on those deemed ‘high value.’ This Forbes article underscores the importance of B2B brands creating a unique experience that companies associate with the company. And I find the premise of this article especially intriguing, which is proposing that the era of B2B is giving way to that of H2H (human-to-human).

So, with the experience economy being a long-proven concept and such relevant supporting evidence of its potential, why then haven’t more companies learned to thrive versus survive?

I don’t think the issue is understanding – there’s a strong consensus around the value of experiences. The understanding is overshadowed, however, by some of the complexities orienting around the experience economy presents to businesses – especially those with a legacy.

First, experiences are intangible. To deliver valuable experiences, you must deeply understand your customers and what they need, want, enjoy, and care about. What often makes an experience an experience, in other words memorable or special, is immaterial – it’s a feeling. And most businesses aren’t adept at dealing in intangibles.

Experience Management: More Than a Mindset Shift

The second hurdle here is that how success defined and measured in the experience economy is far different from how businesses are accustomed to measuring success in a product or service-centric environment. It’s a new language fraught with a number of myths and falsifications.

I recently invited Alan Nance, a strategic technology leader and pioneer of XLAs (Experience Level Agreements), to join me for a podcast deep-dive on XM (experience management) and XLAs. Alan is recognized for his transformative work in digital experience management and had a wealth of knowledge to share on how to consider the shift from service economy to experience economy.

One of the major myths that Alan clarifies is that the experience economy will replace the service economy. “I’ve lived through a number of these shifts, and in my experience the old economy doesn’t go away – it just gets absorbed,” he says. “But there are a lot of people today who have put their kids through college or plan for their retirement based on their ability to do service management. A lot of those people will tell me that we can just add experience to service management, and we’ll be fine. They miscalculate the change that’s actually occurring. This isn’t about adding a sentiment score to your uptime – that’s not going to bring you where you need to be.”

Over the two-part discussion, Alan and I dig into a variety of topics related to what it will take for companies to move from surviving to thriving in the experience economy, including:

• The Evolution from Service to Experience Economy
• Other Common Misconceptions about Experience Management
• The Core Elements of XLAs
• The Role of Enlightened Leaders
• A Critical Distinction Between Productivity and Efficiency
• The Importance of Ecosystems in the Experience Economy
• And much more!

If you’d like to listen to learn more, check out part one and part two of our conversation as well as the work Alan and his team do at xla.institute.