Lessons from a cab driver, a birthday cake and the new experience economy

In my last gold nugget I talked about how we’re entering unchartered territory.  The old economy – the way things used to be – is never coming back (in case you missed I reposted it on my blog - just look a couple of posts back) What does this mean for entrepreneurs and small business owners everywhere?  It means that we all have to adapt to the new rules of the new economy so we can thrive and prosper. Or else face imminent extinction.

This new economy could also be called the “experience” economy.  The best way for me to explain this to you is by showing you the evolution of the birthday cake.

Back in the day Moms used to make birthday cakes from scratch, mixing real eggs, flour, sugar, butter together.  It all cost mere dimes.  As we moved to a goods based economy, mom’s then paid a buck or two to Betty Crocker for premixed ingredients.  Later when the service economy grabbed hold, busy parents ordered cakes from bakeries or the grocery store which at $15, $20 cost ten times as much as packaged ingredients.  Now as time starved parents, many of us don’t make a cake or even throw a party.  Instead at $150 or more we outsource the whole thing to The Discovery Zone, the RainForest Café or some other business that’ll stage a memorable event for the kids and often throws the cake in for free.

Welcome to the emerging experience economy.

There’s a BIG difference between services and experiences.  If you ever watched any rerun’s of the old tv show Taxi – you might remember Iggy, a somewhat deplorable but fun loving cab driver who decided he was going to be the best cab driver in the world.  He served sandwiches, soda, conducted personalized tours of the city and even sang Frank Sinatra showtunes.

By engaging his customers in an actual experience, he created something else completely different from an ordinary cab ride.  One that was far more valuable and memorable, which he could charge more for.

If airlines did a better job of creating an actual memorable experience for their customers, more passengers would shop in their in-seat pocket catalogs for momentos from their flight.

So – what can you do in your business to differentiate yourself from the pack and create an actual memorable experience for your customers? That’s your homework for the week.  

Have a great week!

Julie