To find an answer I decided to do some research on how the economy has changed over the last 50 years. It was evident that consumers are willing to pay a premium for a product or service based on it's perceived value; such as does it save me time? does it create a memorable experience? does it have long lasting qualities?
Thanks to Joseph Pine II and James H Gilmore they made it quite simple to understand with an article on HBR called 'Welcome To The Experience Economy.' They simplify the entire history of economic progress across the four stages of evolution using a birthday cake as the example:
- The Commodities Economy: As the agrarian economy advanced, mothers made birthday cakes from scratch, mixing farm commodities such as flour, sugar, butter and eggs. That together it would cost a dollar - however it took time to buy the ingredients and make the cake.
- The Goods Economy: As the goods-based industrial economy boomed, mothers paid a few dollars to Betty Crocker for premixed ingredients, where all you had to do was follow the recipe and bake the cake - you saved time and ingredients by buying it all in one box.
- The Services Economy: When the service economy took hold, busy parents ordered quality made cakes from the bakery or grocery store. It would cost $10-$15, far more then packaged ingredients however it was convenient, desirable and saved you time in the kitchen.
- The Experiences Economy: In the time starved late 90's, parents neither make the birthday cake nor even throw the party. Instead, they spend $100 or more to outsource the entire birthday event to Mc'Donald's so they can stage a memorable event for the kids - and the cake is thrown in for free.
Today the concept of selling experiences is spreading beyond theatres and theme parks
The Digital Evolution = The Intelligence Economy
Good businesses today meet customer expectations through seamless, invisible service that predicts their needs and wants. Welcome to the intelligence economy where experiences are driven by customer data, underpinned by artificial intelligence and personalised to the individual through the channel of their choice. Let's simplify it by bringing it back to the birthday cake.
The Intelligence Economy: In the digital evolution during the internet boom, parent's want to be able to order the cake or book the event while on the go from their mobile phone, they would also like personalised recommendations based on there searches, inspiration from social sources and access to the information (recipes) and tools (applications) so they can recreate the experience themselves if needed. Delivery to the front door will be included in the cost of the cake.
The businesses that utilise their data and serve it in meaningful powerful ways to help there customers will charge ahead in 2017. Creating intelligent and smart tools that allow consumers from their homes to have meaningful interactions with your brand are the next battleground.
How about a bank that provides you the tools to scenario plan and budget for your future using your real-life data, such as transactional history i.e where am I spending my money? what investments can I make? How about a gym that tracks your activities on the treadmill, then through a Fit-bit to provide tailored food plans to help you reach your desired weight? How about a real-estate agency that guides you through a lifestyle application online and then can recommend a suburb for you to live in based on it's demographic profile? The list of possibilities goes on when you combine data, technology and creativity...
2017 is the year of Artificial Intelligence
The goal is to turn data into information, information into insight and insight into actions