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  /  Project   /  Blog: Sell an Experience, NOT a Product or a Service

Blog: Sell an Experience, NOT a Product or a Service


If you Google “Why did Toys “R” Us fail”, you are given a summarizing account from a CNN Business article of the burdening debt that the company was enduring and the bad leadership decisions that were made against the backdrop of competition from the likes of Amazon. It is true, a massive debt against poor sales was certainly the final nail in the global toy store’s coffin and the ultimate reason for it filing for bankruptcy. According to that same article, when Toys “R” Us filed for bankruptcy in September 2017, it disclosed that they had about $5 billion in debt and were spending about $400 million a year just to service that debt.

I would counter that argument and hypothesize that if Toys “R” Us had a healthy balance sheet, they would still have continued to lose market share, if they had continued with the same business model. The reason is that I believe Toys “R” Us failed to understand what it was that they were actually selling and who their actual competitors were. The leadership of Toys “R” Us always focused on Toys as their “Product” and it seemed that they pointed fingers, first at the mega-retailers like Walmart or Target, as their initial competitors, and then to Amazon.

In reality, even though these mega-retailers were selling toys, what they were actually selling was the experience of the convenience of buying those toys while shopping for groceries. Toys “R” Us, in the meantime, had always been selling the experience of allowing kids to be in a Toy Wonderland. The failure to capture the experience, that children across the world felt walking out of a Toys “R” Us, as their prime product was, I believe, the root cause of the company’s declining sales and eventual demise. Debt, bad leadership decisions, a stubborn focus on the wrong competitors, and poor customer service leading to diminishing sales were just the numerous other symptoms of not being able to recognize that experience as their prime product.

I would also assert in my challenge that if we could turn back time and make the leadership of Toys “R” Us recognize that they could never compete against the mega-retailers or the retail-apocalypse brought on by Amazon, and forced them to change their go-to-market strategy to recognize that their product was not toys but the experience of buying toys from a toy store, that they would not only be relevant today but would possibly even be thriving. I believe they would have captured their Experience-as-a-Product if they had, as an example, gotten rid of two-thirds of an already limited inventory (and the aisles housing that inventory) and used that space to put in sections where kids could play with slime, building blocks, Barbie castles, train tracks, the latest video games, and other toys.

Toys “R” Us would have then sold an experience that allowed these kids to touch, feel and experience joy and get their parents to not only empty their wallets on the subsequent impulse but even possibly pay for the experience itself. They would have actually competed with overpriced amusement parks by providing an amusement experience in thousands of neighborhoods globally. The generation of children today and even of tomorrow would be dragging their parents to the 1,734 locations Toys “R” Us owned or were affiliated with globally at the time of their bankruptcy. These children would continue the tradition of the previous generations and experienced what Toys “R” Us originally sold which was “The experience of the joy of walking into and out of a Toy Store.”


Since there is no Time Machine that will reverse the fate of the countless artifacts that riddle the corporate graveyard of “has-beens”, enterprises still surviving today need to understand that in order for them to stay relevant in the future, they need to identify their “Experience-as-a-Product”. Once they understand that they are not selling a product anymore but rather the experience garnered from their product or service, they need to then refocus their go-to-market strategies to be able to not only sell that experience but figure out how to leverage technology in order to understand their customers and the needs of those customers.

Understanding your “Experience-as-a-Product” and ensuring your business differentiation aligns within the categories of what humans relate to as experiences, is key to positioning your business against eventual failure.

The beginning of an Experience — Human Interaction or Machine Interaction?

Today we are faced with a growing number of choices at our fingertips. The rapid penetration of self-serve options available to us allow us to base our decisions on how we wish to experience something. The first decision we take is if we wish to interact with a machine or with human beings. Self-checkout lanes at grocery stores, mobile access to our accounts, chatbots for customer service, shopping online vs. going to a physical store or even texting vs. calling someone are all examples of actions we take based on our desire to limit our interaction with other human beings.

Coupling that experience of self-service with the experience of convenience is the go-to-market model for a plethora of relatively new companies that are disrupting age-old businesses in virtually every industry. Convenience with minimal human interaction, as the Experience-as-a-Product, is the go-to-market differentiator for the likes of Amazon, Uber, Airbnb and other industry disrupting giants of today in their respective market segments. When you can order products online from limitless choices and inventories and have them delivered within hours to your doorstep, the decision to physically have to go to a store and interact with other human beings becomes a consciences decision consumers take first. Even ordering high-end cuisine with services like UberEATS or Grub Hub change the way we plan out an evening and inevitably may impact a business like a restaurant. With that said, physical retail outlets need to understand that they are not competing with online business offering the same products. Their visitors have already decided to inconvenience themselves and are now looking for an experience that involves human interaction and physical presence.

Understanding your Experience-as-a-Product and your Actual Competition

If you are running a business that requires your customers to physically come to your premises to spend, it is imperative for you to understand what the experience of your customer is and to position your marketing strategy to highlight that unique experience and not the product or service that they are coming to purchase. If you are an online only business, then it becomes imperative to enhance your experience beyond just that of convenience. If you are rendering a service, it is not only important to understand the needs your customers have for that service but to also understand the experience of fulfilling that need through your specific services or the medium through which your business is providing that service.

Another example of misidentifying the experience based competitive landscape is the journalism industry. Historically, when looking for information on current events as they unfold, consumers would have turned to the News outlets offering their journalism across a variety of mediums. Today most News outlets, especially those offering their journalism through print, face declining revenue as they compete for audiences receiving that experience from other sources. Misidentification of the experience based competitive landscape will inevitably misdirect a business’s spend on attracting new or retaining existing customers. For example, a News outlet delivering journalism may consider an online sensationalistic tabloid as their competition. In reality, “News” and quality journalism is not competing with click-bate websites, if they understand that the experience garnered from their business is fact-based accounts of current events as those events unfold.

A News outlet is sharing its competitive landscape more with Social Media that is bringing current events to the masses at the speed of NOW. According to the Pew Research Center, 68% of responders claimed they received their news on current events from social media sources. Therefore in order for a News outlet to grow its revenue, they need to understand that their product is not journalism but rather the experience of receiving that journalism at the same speed that that information is buzzing on social media platforms. Semantic trend analyzing technologies can better equip News outlets to ensure they capture more of the market share in their space by, not only providing fact-based journalism of events as they occur but, providing that information as it is occurring and associating themselves with the experience of getting that information to their audience as it is trending. In the absence of this understanding, the experience the News outlets are selling is that of journalistic opinions of events that have already occurred in the past.

Invest in your Experience-as-a-Product and Leverage Technology

AI-driven technologies and predictive models will help businesses understand their customers, lower inventory costs by predicting needs, validate decisions that need to be taken and allow those businesses to get ahead of their customers by dictating the customer’s decisions instead of being reactive to those decisions. These tools can overall lower the cost of a business’s goods or services sold, increase profit, and enable a competitive advantage before their competitors. To leverage these tools though, a business must first understand the experience they are providing their customers and package that experience as their go-to-market strategy. The fuel required for businesses to take advantage of these tools is the data they need to better predict customer behavior. Business leaders must immediately understand their Experience-as-a-Product, capture all the data needed to deliver that experience and invest in the tools that will enable them to provide that experience to their customers first. Their customers must associate them with that experience and not with the product or service.

As the next generation of experience-driven consumers grow in terms of their spend power and data-dependent services required to provide those experiences become more and more integral to a company’s survival, legacy businesses and industries need to reallocate their investments on attracting this coming generation by going back to what drove their legacy customers to them before the disruption began. Online businesses need to go beyond the concept of convenience. Traditional businesses that are dependent on a physical presence need to provide a unique experience to force customers out of convenience.

Consumer demand will continue to drive innovation at those organizations playing catch-up. Finally, those organizations and industries that are led by disrupters, creating and marketing go-to-market Experiences-as-a-Product or service, will continue to dictate how the others conform to provide those experiences or what they blame their eventual bankruptcies on.


Kory Farooquie is CEO of iNVATERRA (www.invaterra.com). iNVATERRA engages clients to become future-focused Digital Enterprises by:

  • Deploying Intelligent Automation to lower cost and streamline data
  • Strategize towards a data-driven transformative future state by leveraging AI to gain competitive advantages
  • Implementing, customizing and custom developing the next generation tools to ensure a competitive advantage
  • Building dedicated teams of future-focused skillsets to enable your AI transformation journey

Source: Artificial Intelligence on Medium

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