The Role of Online Rewards Programs in Experience Economy

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 todays 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
users 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
:
1. 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.
2. 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.
3. 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.

Steve Damerow
CEO of The ISI Group
sdamerow@isicorporate.com
Direct Contact: 678-514-0203

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, 19602008. 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-persp
ective?page=1