From Service Economy to Experience Economy

For years now, the world’s developed nations have seen a steady migration from producing goods to providing services.  Based on current figures available, on average the service sectors represent 65% to 80% of total GDP, with Industry around 30% and Agriculture ranging from a 1% for the United Kingdom, 1.7% for the United States and 7.4% for New Zealand.

Much of the manufacturing has moved to the lower cost emerging economies, which have seen a migration from the Agriculture sectors to Industry.  As the emerging economies have competed with each other for manufacturing business, their competency and capacity to add value through services has increased and become a strategic competitive advantage.

In the United States, 65 of the top 100 companies are from the service sector and the Bureau of Labor Statistics figures for the decade ending in 2010, predicts that goods-producing industries (like mining, construction, and manufacturing) will create 1.3 million new jobs, compared to 20 million for the service sector.

So the service sector continues to provide the majority of new jobs and fuels economic growth for most of the world’s economies.

The most significant trend in the service economy is the move towards experiences.  It is no longer enough to provide an adequate service that meets or even exceeds expectations.  In order to build a long-term relationship that compels clients to return over and over it is necessary to provide a WOW Experience that is unforgettable and has them telling all their friends and associates.

WOW Experiences are the strategic differentiator that will have one service provider stand out from another.

Here are some examples of WOW Experiences in action.

On a business trip we checked in to one of our favorite Hotels – the Ritz-Carlton.  We stay with them frequently so they have gotten to know us, and our preferences.  On this occasion we not only paid the lowest rate possible for a standard room, but were automatically upgraded to a $750 a night Club Suite.  One of the best features of this property is their Ritz-Carlton Club.  They serve complimentary drinks, breakfast, lunch, dinner and snacks in between.  We proceeded to have back to back meetings and not only had our meetings in the Club meeting room, but our guests also helped themselves to meals, drinks, and cappuccinos all day.

We were fully expecting to be billed for the extra guests and at the end of our stay the Club Manager winked and said don’t worry about it!  WOW!

On another occasion we were at the Ritz-Carlton Resort & Spa in Bali.  This has got to be one of the best resorts on the planet!  The Hotel made a small mistake around our allocated room – and before we could say anything asked "how can we make it up to you?  Would you like a free meal, or perhaps a massage for you both?"

We both spoke in unison "the massage would be nice!"  Upon returning to our room, we noticed that there was an incense burner in the bathroom.  It was filled with the most beautiful smelling oils.  So we called the Butler in the Club and asked if they had any in the shop that we could buy to take home with us.  They called right back and said, "I am sorry the shop is out of stock, so is the spa and housekeeping has run out also.

We were disappointed but quickly let it go.  A half our later the door bell rang and a Balinese Maid was standing at the door with a huge beaming smile "here you go" and handed us a huge unmarked bottle.  WOW, they had searched high and low around the resort to locate the only bottle on the property – in order to make us happy.  "How much do we owe you?" we asked.  "Nothing" she replied. WOW.

At the end of our stay we asked for a car to deliver us to the airport.  No problem.  "How much do we owe you," we asked.  "Well, the usual charge is US$25 to airport, but for you no charge."

WOW, thank you!

We take the concept of WOW Experiences very seriously and are constantly looking for ways to provide these to our clients.  On one occasion a client was flying in to meet us from Hong Kong.  At the time we had rented a beachfront Villa at the Le Meridien Resort & Spa, which was over an hours drive from the airport.  As this client had never flown in a helicopter, we arranged to have them met at the airport and secretly whisked to the helipad.  You can image the delight and surprise of their first flight in a helicopter!  A definite WOW Experience!

Contrast these experiences with a recent stay at the Five Star Stamford Plaza Hotel in Auckland, New Zealand.  In this case we paid for an upgrade to an Executive Club Room.  The first thing that went wrong was our first room service order, and then our second order and then the third was wrong too.

Then on the second day as we were in the Club Lounge surfing the Internet, a carpenter began to dismantle the room around us!  Huh, "what is going on?" we asked the carpenter.  "We are renovating the Lounge and the Business center" he said.  Oh, "how come no one mentioned this to us, and why are we paying for an upgrade when we can’t even use the Lounge?" we asked the Hotel Staff.  "Not to worry" they said, "it will be finished by the end of next week, sorry for the inconvenience."

What?  We called the front office and asked for the upgrade to be refunded.  To give you the short version we had to argue with the Hotel to get what we wanted, and in the end they never made any attempt to make amends for the problems and only did the minimum necessary.

This is what you would describe as a "negative wow experience" where we will advise our friends, and associates to not stay with this Hotel.

More than any other time in history it is no longer adequate to do the minimum necessary.  In order to make it in the hyper-competitive economy of the future, it is necessary to provide WOW experiences.