Time is running out, and attention is becoming scarce. Are you actively engaging with your customers? Apple Stores, Disney, LEGO, and Starbucks are just a few examples. Do these names evoke images of mere goods and services, or something more—something visceral? Welcome to the Experience Economy, where businesses must create unique and memorable connections to capture the hearts of their customers and ensure their own economic viability. Joe Pine and Jim Gilmore's seminal book on experience innovation examines how savvy businesses excel by providing compelling experiences for their customers. This results not only in increased customer loyalty but also in a more profitable bottom line.
The basic premise of their book is that society has entered a new era where experiences are the most in-demand economic offerings, generating the highest value returns. Pine and Gilmore contend that the evolution of economic value has undergone three stages to date, and that we are about to enter a fourth: the experience economy. The extraction of various substances from the world around us was central to the early commodity economy. This type of economy dominated the hunter-gatherer world, where the primary job was extracting useful (and thus economically valuable) materials from the environment. The manufacturing economy followed, with the primary economic offering being the production of goods. Of course, this did not completely replace the commodity economy, but rather added a new type of economic offering to the mix. The service economy followed, with the delivery of intangible services being the most valuable offering. (In recent years, the service economy has been referred to as the "post-industrial era.")
Pine and Gilmore contend that we have entered the "experience economy," in which the highest-value economic offerings are experiences. Beyond simply providing services, businesses in the experience economy create memorable experiences for customers (who are referred to as "guests") that are entertaining and/or educational in nature.
"A newly identified offering of experiences occurs when a company uses services as the stage and goods as props to engage an individual." Experiences are memorable, whereas commodities are fungible, goods are tangible, and services are intangible. The company, which we will refer to as an experience stager, no longer sells goods or services in and of themselves, but rather the resulting experience, which is rich in sensations created within the customer. All previous economic offerings remain at a distance from the buyer, whereas experiences are inherently personal. They can happen to anyone who has been involved on an emotional, physical, intellectual, or even spiritual level. The end result? No two people will ever have the same experience. Each experience is the result of the interaction between the staged event and the individual's prior state of mind.
The authors discuss how manufacturers should "experientialise" their products and how service providers can turn their services into engaging theatre. The authors contend that the price that can be charged will be higher than what could be realised for the good or service alone because of the quality of the experience provided (meaning the extent to which it is enjoyable, memorable, educational, useful, and so on).
Many businesses, fully committed to the concept of the experience economy, have begun to offer themed experiences to their customers (or guests). The authors present five principles that they believe are essential for staging a successful themed experience for a customer:
1.An engaging theme must alter a guest's sense of reality
2.The richest experiences use themes that fully alter one's sense of reality by affecting the experience of space, time and matter
3.Engaging themes integrate space, time and matter into a cohesive, realistic whole
4.Themes are strengthened by creating multiple places within a place
5.A theme should fit the character of the enterprise staging the experience
When a company realises that it is in the business of staging experiences, there are four types of theatre to consider. The authors developed a portfolio approach to classify these various forms of theatre based on two dimensions: whether the performance is stable (the same each time) or dynamic (changing each time), and whether the audience itself is stable or dynamic (i.e. likely to provide feedback and input that must be incorporated into the performance) to guests.
The Experience Economy assists businesses in creating personal, dramatic, and even transformative experiences by providing a script from which managers can generate value in ways that are consistent with a strong customer-centric strategy. The primary question for every company, then, is: How will you compete in today's Experience Economy on the three competitive dimensions of time, attention, and money?