How to compete in the experience economy

How to compete in the experience economy
Published: 
March 2014

As consumers become more sophisticated, tourism and leisure businesses are no longer simply providing a service but selling an experience. Now research is casting new light on what tourists really want and how to design experiences to meet their expectations.

There has been an enormous growth in our ability to understand people’s behaviours but as yet this knowledge has remained in the field of psychology.

It’s morning in the grasslands of Mongolia and a group of figures dressed in traditional black tunics are gathered outside their village, clutching bows and arrows. On the instructions of their leader, they stop their conversation and prepare to take aim.

To the uninitiated, they could be locals on a hunting trip, but they are in fact foreign tourists on a course to learn 13th century Mongolian battle skills.

Cultural activities like these are amongst the increasingly diverse range of options on offer to the modern tourist. Top trends for 2014 include culinary tours, creative holidays, whole living breaks which mix luxury with wellbeing, and bleisure – for executives who want to mix business with pleasure.

Gone are the days when families automatically settled for a week at the Gold Coast – today’s tourists are more sophisticated than ever and are in search of an experience. As competition grows, holiday destinations, hotels and attractions are having to find new ways to provide it.

The growth of the ‘experience economy’ was first highlighted in 1998 by Joseph Pine and James Gilmore. They noted how services, like goods before them, had become increasingly commoditised and experiences were emerging as the next step.

“From now on, leading-edge companies—whether they sell to consumers or businesses—will find that the next competitive battleground lies in staging experiences,” they predicted.

According to Associate Professor Noel Scott from UQ Business School, today’s tourism destinations are increasingly basing their attraction on intangible experiences rather than the facilities themselves. The goal is to design tourism experiences to meet the expectations of the new generation of tourists.

A former Strategic Services Manager for Tourism Queensland and an expert on destination marketing, Professor Scott is one of a small number of academics leading research into the design of tourism experience. He believes the results are equally applicable to shopping centres, hotels, restaurants and many other businesses in the tourism and leisure sector.

The aim is to shape the tourist’s journey from start to finish. “A trip involves a series of different events, all of which contribute to our overall evaluation of it. Once we start to think about it in this way, we can then start to explore how these experiences tie together and how to design experiences to match customer needs.

“Experiences are different for each individual and a large part of achieving person’s goals are about understanding person’s emotions and being able to provide them with the outcome they want out of the trip.”

Research by Professor Scott and his students show that tourists may have different motivations and expectations. Some are looking for pleasure – to relax in a good environment, enjoy the scenery and have fun – while others aim for self-improvement, to increase their knowledge or experience cultural differences.

Not all are seeking the experience of a lifetime either – some are more easily satisfied. For example, for business travellers seeking a hotel, their goal may be simply to find a comfortable bed and enjoy a good night’s sleep.

The results of research are already helping resorts to adapt to meet the needs of new audiences. In the Gold Coast for example, Professor Scott and his team have been advising resorts on how to cater for the growing number of Chinese tourists, who are often less confident about watersports and more risk averse. Following their research, a number of measures have been introduced which include the use of group promotions to encourage Chinese tourists to surf in groups, and lightweight surf tops to protect them from the sun.

Many of the new directions in tourism have been inspired by new developments in psychology, but one of the biggest barriers to understanding the tourism experience remains the fact that people don’t always remember or report things accurately after the event.

However, Professor Scott says that new breakthroughs in technology will help us overcome this. Eye glasses that track people’s eye movements, skin conductors and advanced software analysis – tools like these will allow researchers to measure people’s reactions and even predict how they will respond in different circumstances.

“There has been an enormous growth in our ability to understand people’s behaviours but as yet this knowledge has remained in the field of psychology,” he says. “However of all the places it might be applied, tourism would be one of the most interesting. This is an area ripe for further exploration.”

Tips for tourism businesses:

1. Consider the complete experience

For a holiday or tourist destination, it begins with imagining the trip and ends when the customer returns home. For a restaurant it starts when the customer comes in through the door and includes the sights, smells and the atmosphere – not just the food and service.

2. Use strong symbols

Giving your business a strong visual identity will help build your brand, create a greater impact on visitors and make their trip more memorable. At Disneyland, the familiar figure of Mickey Mouse helps lift visitors’ mood.

For visitors to the Chinese water village of ZhouZhuang, the images of rivers and small bridges stick in their minds. An ‘entrance statement’ is a good idea too – the gates of the Moet & Chandon vineyard in France make a lasting impression on all who visit.

3. Understand your customers

Your audience may well have diverse goals but you need to know what outcomes they want in order to fulfill them. For example, theme parks are designed for excitement, but many visitors are parents whose main goal may be simply to see their children having a good time in a safe environment.

4. Involve them in the experience

Encouraging visitors to play a part in activities will make their visit more meaningful. Encourage them to interact with other customers, take part in any role play or entertainment, or help with tasks such as building a camp fire. Being involved in the action is more fun and will make it stand out in their memories, and therefore more likely to lead to word of mouth recommendations.

“The tourist experience is both a journey and an outcome, involving positive memories,” adds Dr Scott. “Experience design involves shaping the process to help tourists enjoy a more meaningful visit and one which results in more pleasant and lasting memories.”