For those of you who have never experienced an earthquake, they are unsettling. During an event, you become hyper-aware of your surroundings, and you can lose your balance and equilibrium. They come in all forms — from a slight tremor to a catastrophe.
Economists suggest we are experiencing an “economic earthquake” that has crept up on us over time. Whether it is the constantly moving shift of the “tectonic plates” of tariffs, the commoditization and parity of products, or the changing landscape of what and why people buy, it can be unsettling.
‘It’s the Economy, Stupid’
Political pundit James Carville famously opined on what would most affect the outcome of elections: “It’s the economy, stupid.” What will most affect our AV and digital signage outcomes is the economy and all it entails. This is all changing in real time, and we must become aware of and prepare for those changes.
At the root of a mercantile society, it is all about perceived value. We must consider how value is created. Historically, value has been created in manufacturing and selling tangible products. Reaching a high level of maturity, this has resulted in parity of products and commoditization, a situation in which everything “appears” to be the same. Over the last couple of decades, necessity has become the mother of invention, and we have evolved from product-centricity into a service economy, selling both.
Unlike most products, however, service is not static. The quality of service varies from vendor to vendor, and it ranges from poor to excellent. Research has shown that service is increasingly becoming a reason to buy, but that too can appear to be a commodity. The next step in this economic journey is the migration from a product and service economy to what economists call “the experience economy.” Today, this is what clinches the deal.
The Experience Economy
The experience economy is an economic model in which businesses sell memorable experiences — rather than just selling goods or services — to customers.
Coined by B. Joseph Pine II and James H. Gilmore, it represents a progression beyond the service economy, catering to customers who value time well spent through engagements that stir feelings, create vivid memories and offer personal fulfillment. According to Pine and Gilmore, the key elements of the experience economy include the following:
- Personal and memorable: Experiences are designed to be personal and leave a lasting impression, meeting a need for personal fulfillment.
- Time well spent: Unlike services, which are about time saved, experiences are about the quality of time spent.
- Distinct economic offering: Experiences are a tangible category of economic value, distinct from commodities, goods and services.
- Customer engagement: Businesses aim to engage customers actively, rather than just providing something for them.
- Transformation: Experiences are often transformative, impacting people’s lives.
- Economic value: Experiences have a higher perceived value and can command a premium price, as they have an emotional impact that builds loyalty.
Several Growth Opportunities
Let’s relate this to traditional product-based AV markets. We know that many are struggling to find their voices and create a compelling narrative in “the experience economy.” The good news is that there are several growth opportunities under the umbrella of creating experiences.
On the product side, there are obvious elements like AV-over-IP, software and cloud solutions, artificial intelligence (AI) and extended/augmented reality (XR/AR), but there are also others. Creating experiences does not necessarily mean entirely new products or technologies; instead, it can be incremental improvements that add value and focus on a narrative of experience enhancement and ease of use. One writer noted that a positive experience can be achieved by removing “friction” that had been actively damaging business productivity.
Organizations can create positive experiences (and command premium pricing) by solving business problems, rather than by simply selling equipment. AV integrators can offer substantial rewards for companies by bridging legacy systems with next-generation platforms. Organizations are no longer asking, “What AV equipment do we need?” Instead, they’re asking, “How can we create experiences that drive business results?” This consultative-experience shift requires integrators to evolve from technology vendors to business-outcome partners.
The Economic Migration
The economic migration from goods to services to experiences describes a shift in how value is created and exchanged in an economy. This transition moves from a focus on tangible goods to intangible services and, finally, to curated and memorable experiences in which businesses provide distinct and immersive experiences to differentiate their offerings and build customer loyalty.
Leading-edge companies — whether they sell to consumers or businesses — will find that the next competitive battleground lies in creating experiences.
Alan C. Brawn, CTS, DSCE, DSDE, DSNE, DCME, DSSP, ISF-C, is principal of Brawn Consulting.
