Until now, most traditional business models from the Industrial Economy have succeeded for more than a century without changing, but to earn engagement in the Experience Economy, businesses must adapt.
So what does that adaptation look like?
There’s no better example than the automotive industry. In this post co-written by Tanya van Soest, we take a deep-dive.
Automotive was based on efficient and highly linear processes: Manufacturers sourced raw materials from suppliers, assembled them into vehicles, and sold them to consumers.
Ideally, this process was repeated when the customer was ready for an upgrade or a second car. The vast majority of industries used the same successful model, culminating in a robust consumption economy by the end of 20th century.
Typically, there was no significant customer engagement beyond the sale of a product, barring product servicing, or in the case of vehicles, leasing agreements.
Old business models are no longer immutable. The new paradigm is influenced by the consumer’s contextual experience and overall outcome far beyond a physical good.
A big shift in the attitude to car ownership is rounding the turn. If you can hail a car to take you anywhere at will, why do you need to own one? What subscription services will mean to the future of automotive.
How can companies adapt without overhauling their entire business? The starting point needs to be the point at which the consumer is most engaged.
When it comes to cars, this moment likely occurs when the consumer is behind the wheel. For drivers and passengers alike, their impression of the overall outcome will include not only the driving experience, but extend to the internal driving environment and any contextual experiences.
While driving, we generate data relative to our route and location, traffic patterns, road conditions, vehicle conditions, and even our driving style and behaviors.
Passengers – and to some extent, drivers – access the internet, consume digital content, listen to music and podcasts, and interact with the internal environment. Additionally, contextual data generates insight into points of interest, landmarks, shops, and of course other drivers we encounter.
It is precisely this wealth of data that fuels the Experience Economy. Just as industries benefited from the formula of the Industrial Economy, many can reap rewards now by capturing and analyzing data in real-time to enhance the customer experience, even inspiring a whole new ecosystem of services.
This data-driven value chain is fundamentally different from old value chains, and has the potential to disrupt the status quo across the vast majority of industries.
The new value chain is one reason the quote-to-cash process is so important, because it follows the CX through key engagement points, such as purchases and billing.
Types of customer data serve distinct purposes. Identity data, descriptive data, attitudinal data, behavioral data defined, with examples.
Across industries where entire ecosystems, business processes, and services are in flux, established business models and partnerships are changing, and only the most flexible and innovative companies are poised to survive.
These companies will rely on infrastructure and solutions that deliver flexibility, enabling them to meet constantly changing customer needs.
In addition, monetization and revenue sharing models will need to adapt, not only to the types of services offered, but also to the usage of these services and the partners involved in delivering value.
Circling back to our automotive industry example, here we have a space in a unique position to lead the economy – this time the Experience Economy.
The car is becoming a vehicle for delivering a level of customization through new revenue streams previously unattainable due to a lack of ubiquitous connectivity, market mindset, and the technology to support it. However, those limitations no longer exist, and the possibilities are endless.
McKinsey estimates that in-car data services and ride sharing could generate $1.5 trillion USD by 2030.
Google, Apple, Microsoft, and other tech giants are positioning themselves as the in-car connected system, while major automotive companies like Ford, GM, and Toyota are teaming up to develop or purchase connected systems and app stores of their own.
Insurance companies are eager to gain detailed insights into driving habits, vehicle service, and safety information, to provide targeted insurance plans and support pay-as-you-drive insurance for ride-sharing programs.
The connected, data-driven, Experience Economy is ripe with new growth opportunities for innovative companies and their partners, but must never lose sight of the fact that the customer is in the driver’s seat.The opportunity lies in ensuring that the overall outcome – beyond consuming a product – is exceptional, contextual, and deeply responsive on all fronts.
