The ‘HOW’ Factor : Why Experiences Trump Everything Else

“Ease of use may be invisible but its absence sure isn’t” – IBM

If you have ever lost anything (who has not?), you know what follows next. The pain of losing stuff is undeniable. Unfortunately, what can add salt to the injury is the unpleasant task of filing for a claim. (I, for one, can never stand documentation and paperwork, but that’s a story for another day). The process is cumbersome and the added uncertainty with respect to the outcome adds to the frustration. 

But what if someone flipped the script and your claims were handled instantly? What if you were paid your claim minutes after you filed for it? Well, the utopia is here (at least for a few American and European users). Lemonade Inc, an insurtech startup, has revolutionized the traditional insurance industry by focusing on the pain points. Welcome to a world powered by customer experience!

Lemonade Inc isn’t your usual insurance firm. It uses a combination of artificial intelligence and behavioural economics to sift out fraudulent claims while ensuring hassle free experience for genuine claims. And what makes it more unique is its annual Giveback Program. The leftover money (upto 40% of premiums) is donated to the charities chosen by the policy owners. This ensures people act more honestly, after all it’s their favourite cause that will lose if they act dishonestly. As fraudulent claims dip in number, the processing time also goes down. This is a win-win proposition for both the parties. Daniel Schreiber, CEO and Cofounder of Lemonade Inc acknowledges this when he says, “Giveback has created a virtuous cycle—a new Nash equilibrium—where aligned interests breeds honesty.” (Schreiber, 2020) 

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Lemonade Inc with its unique approach has made the traditional insurance industry rethink its model 

By focusing on the pain points, Lemonade Inc differentiates itself in an overcrowded market. It focuses on minimizing processing time, thereby making the customer experience seamless. And Lemonade Inc is not alone in this endeavour. Firms across sectors and geographies are trying to make it easier for customers to use their products and services. Customer satisfaction is an important metric and the experience counts as much as the product (probably, even more in some contexts). And no stone is being left unturned. From tapping into our behavioural quirks to changing our perceptions about the services to even personalizing experiences, firms are showing the world how it is done. 

Imagine getting on your favourite ride but it comes with a catch – long wait times. Even if you enjoy the ride, your perception will be marred by the waiting time, which unfortunately, might be your biggest takeaway from the experience. And in places as crowded as Disneyland, you don’t really have to imagine this scenario. Disney Imagineers (Yes, this is what they call their engineers) were asked to deal with the issue of longer wait times. What they did is probably a tutorial in customer experience and dives into what customer experience is at its core all about. They successfully changed the perception of waiting time without reducing the average waiting time. Sounds impossible? Here’s what they did. 

The expected waiting times were made intentionally longer than the actual waiting time thereby creating a false sense that queues were moving quicker than usual. Apart from that, they created the idea of the FastPass system. The system allows people to come back at a designated time and get into the special line quickly. However, contrary to customer perceptions, the FastPass system doesn’t really decrease average waiting time. It just allows people to explore other things in the park during their waiting time. Without increasing capacity or limiting the number of people, Disney Imagineers successfully managed to “reduce” average waiting time. Interestingly, even as queues become longer, customer satisfaction as measured by exit polls is rising. 

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With some smart tricks, Disney Imagineers ensure an experience that will stay with you for a lifetime

Though customer experience seems to be more of an art, it borrows ideas from the principles of behavioural science. Consider the idea of how our experience is usually colored by how it ends – a phenomenon well documented in the behavioural science literature. This implies paying at the end of an experience would probably overshadow the pleasure of the experience. This is why pay first, consume later is a strategy adopted by a lot of businesses. Noma in Denmark, ranked as one of the world’s best restaurants consistently over the years, tries to make you feel a little less guilty of spending so much money on one time dinner by using this concept. If you want to book a table at Noma, you are supposed to make prepayment on booking. This ensures that your epicurean experience of eating in one of the finest restaurants of the world isn’t eclipsed by the pain of shelling out large sums of money. So much for a seamless experience. 


Prepayment is a must. Who would want to sacrifice their Noma experience to post payments? 

Another term that’s probably thrown around quite frequently these days is loss aversion. The pain of losing is two times psychologically stronger than the pleasure of gaining the same amount of money. After all, losses loom larger than gains (Kahneman & Tversky, 1979). And if the payment process is too long, then the pain multiplies. So, probably the watch you so wanted wouldn’t be worth that much to you at the end. But then how would ecommerce behemoths that survive on our irrationality make money? Amazon, sensing the pain customers would feel everytime they paid for a product, filed for a patent of 1 Click Technology. This meant customers would have to enter their billing and shipment information only once and post this, 1 click would be enough to buy any product. (The patent expired in September 2017). By segmenting pleasure and combining pain, Amazon offers a smooth experience. Thus, with its 1-Click technology, Amazon not only sells products from A to Z but also ensures we buy everything from A to Z. 

The customer experience revolution has also reached the traditional hospitality industry and the experiences they now offer are a notch above. Big players like Radisson and Omni are using tech to curate personalized services as customers demand newer experiences. For eg. They offer virtual reality tours to their customers in order to allow them to explore the hotel and book a room of their choice, all seamlessly. Another player Hilton is taking it a step further. What if the hotel you are staying in alerts the music lover in you to a nearby music festival? Won’t that be a pleasant surprise? This is exactly what Hilton is doing. It is using location based services to provide customers with an experience that they would cherish by alerting them to nearby events and activities that cater to their tastes.

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Recommendation engines using predictive analytics make the customer experience seamless

As competition increases, customer experience is poised to be the key differentiator among different service providers. Who wouldn’t want a Netflix that recommends shows we would like or a Spotify that somehow magically knows what music we will love? (All this is due to predictive analytics). With markets getting more competitive and technology of the future at our command, consumers would not be satisfied with mediocre experience. The growing demands of the customers is encapsulated in this statement – “The experience of being in a driverless car goes from terrifying to thrilling to boring in 15 minutes” (McAfee, 2015). As consumers are fed with better experiences, their expectations will also increase which means satisfying them will become tougher. However, to be in the business in the long run, customer satisfaction is key. Otherwise, you stand to lose. As the saying in the business circles goes, ‘If you do not take care of your customers, your competitors will’.

– Durga Shirsat (Guest Writer)

TYBA, St. Xavier’s College – Autonomous, Mumbai

Edited by: Sanika Sawant (Editor, Econ Declassified)


Ariely, D. & Kreisler, J. (2017) Dollars and Sense : How We Misthink Money and How to Spend Smarter. Harper

Aziz, A. (2020, Mar 9) The Power of Purpose : How Lemonade is Disrupting Insurance with Goodness (And a New Foundation). Retrieved from :

Fung, K. (2010) Numbers Rule Your World : The Hidden Influence of Probability and Statistics on Everything You Do. McGraw Hill Education 

Knowledge@Wharton (2017, Sept 14) Why Amazon’s 1 Click Ordering Was a Game Changer. Retrieved from :

McCaig, I. & Choueke, M. (2016, June 30). Platform Thinking in the Expectation Economy. Vox. Retrieved from :

Morgan, B. (2020, Feb 20). 10 Examples of Customer Experience Innovation in Hospitality. Retrieved from :

Photo Credit

After-Dark Hangs at First Regular Tokyo Night Market- Tokyo Cheapo. By Victor Gonzalez

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