The “experience economy” theory, which emerged in the late 90s, is a philosophy that addresses the new ways in which modern consumers relate to the products and services they purchase. The theory dictates that experiences and customer-unique values are successful because consumers enjoy memorable interactions (B.J. Pine, J.H. Gilmore, 2011). Managers looking to boost morale among their employees or show appreciation for customer loyalty can use the experience economy method in their rewards programs. A successful online rewards program not only improves relationships with customers and employees, it also keeps up with the growing demand for experience in exchanges.
What is Experience Economy?
Experience economy has been around since the invention of theme parks and concert halls. The term was not coined, however, until B. Joseph Pine II and James H. Gilmore published their 1998 book The Experience Economy. The book described how consumers were showing greater preference toward companies that could offer experience along with their products and services. Pine and Gilmore promoted customization and interaction as ways to provide experiences to consumers. They updated their book in 2011 to follow the increasing influence of experience economy, citing enterprises like Build-a-Bear and Geek Squad as being lucrative because they adopted the experience economy theory (B.J. Pine, J.H. Gilmore, 2011). Two factors in today’s economic landscape can make experience economy even more appealing to consumers. In January 2014, Gallup reported that people were spending more money since 2008. Consumers are refreshed and in recovery from the recent recession. Additionally, we live currently in a self-focused society. A 2012 study published in Plos One uncovered increasing usage of individualistic phrases like “all about me” since the 1960s. Combining these two elements creates the perfect climate for experience economy to increase in popularity, as people are seeking out good and services delivered in exciting, personalized ways. A variety of organizations from Starbucks to Apple offer experiences to customers with great success.
How Do Online Rewards Programs Fit in with Experience Economy?
Online rewards programs are used by business managers to motivate employees or to retain customers. These programs offer rewards for behavior such as following company guidelines, bringing in revenue, or being a loyal customer. Features like personal point banks and wish-lists make every user’s reward program a tailored, unique experience. Rewards programs are different from cash incentives because they can offer rewards with personal value. This advantage makes rewards part of the experience economy. Mark Herbert, President Atlanta-based company Incentive Solutions, who offer online rewards programs to their clients, says that people are drawn toward rewards because “they expect money, and commission is payment for service, but cash is somewhat taboo. There is no memory with cash. With rewards, there is no stigma attached. Rewards are personal, they create memories, and people are excited to share and experience rewards.” A 2014 study by MeetingsNet and the Incentive Research Foundation found that “a number of respondents listed ‘custom’ or ‘personalized’ items as the most important hot new products, with everything from jewelry to cowboy boots getting a personalized touch. This again reflects the trend toward an experience economy, with recipients looking for products that create a more robust personal experience, or that have meaning for them” (2014 Incentive Merchandise/Gift Card Survey, 2014).
Online Rewards Programs Offer Personal Experiences in 3 Ways:
- Earning a reward is an experience.Rewarded items are not merely purchased with impersonal cash wages, but earned as recognition of extra effort. Whereas cash bonuses are usually quickly spent on goods, the process of earning and acquiring a reward is itself an experience with meaning, not just an exchange. The stigma against bragging is also removed with non-cash rewards, which make for great conversation. If a friend compliments the grill at a barbeque gathering, for instance, s/he may hear a response like “Thanks. I earned it by leading company sales last month.” Long after cash is spent, rewards have lasting experience and trophy value.
- Rewards programs can offer the experience of travelling or attending events.
The best rewards programs offer not only products, but travel rewards and sporting/concert tickets. From an experience economy perspective, travel and event rewards have perhaps the greatest value. People love to share memories of their vacations and outings, especially in our culture of social media sharing and boasting.
- Online rewards programs can be used via mobile or offer game-like experience.As social technology changes, online rewards programs have begun moving into realms like gamification and mobile app usage. Games, social media, and mobile communication comprise a good deal of experience economy for many consumers. An online rewards program becomes an experience when presented as a game with points accrual, or as a platform resembling social media in which information can be updated instantly.
Many companies have enjoyed success by offering experiences to consumers along with their goods and services. With the economy recovering and consumers being increasingly individualistic, they are even more prone to expecting experience and personalization for their money and efforts. Online rewards programs satisfy this expectation with an engaging, interactive set-up. When consumers are able to personally select awards, the transaction itself becomes an experience that can lead to many others. Customers and employees alike will return to transactions that come with meaningful experiences. Not only is this beneficial to a company with an online rewards program, it stimulates spending and keeps the economy moving in newer, interesting directions.
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References Gilmore, J.H., Pine, B.J., (1998, July). Harvard Business Review. Welcome to the experience economy. Retrieved from https://hbr.org/1998/07/welcome-to-the-experience-economy Gilmore, J.H., Pine, B.J., 2011(2011).The experience economy. Boston, Massachusetts: Harvard Business Review Press. Newport, Frank. (2014). U.S. Consumer Spending in December Highest Since 2008. Retrieved from http://www.gallup.com/poll/166742/consumer-spending-december-highest-2008.aspx Twenge, J.M., Campbell, W.K., Gentile, B. (2012). Increases in Individualistic Words and Phrases in American Books, 1960–2008. Retrieved from http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0040181 Van Dyke, Melissa. (2014). 2014 Incentive Merchandise/Gift Card Survey: The IRF Perspective. Retrieved from http://meetingsnet.com/merchandisegift-cards/2014-incentive-merchandisegift-card-survey-irf-perspective?page=1