Ron Immink on the emergence of the experience economy
The world’s a stage, and each of us must play a part according to both Shakespeare and Elvis (are you lonesome tonight). That is what the updated edition of “The experience economy” by Joseph Pine and James Gilmore is all about. Every business is theatre. Use performance art to deliver the best and most memorable experience you can.You must plan in detail the time your customers spend with you. Experience orchestration is becoming as much a part of doing business as product and process design.
Experience is the new black
We have moved from commodity to good to service and now to experience. The service economy has peaked. A new economy has arisen to increase revenues and create new jobs, one based on a distinct kind of economic output. Goods and services are no longer enough. Experiences have emerged to create new value.
• If you charge for stuff, then you are in the commodities business.
• If you charge for tangible things, then you are in the goods business.
• If you charge for the activities you execute, then you are in the services business.
• If you charge for the time customers spend with you, then you are in the experiences business. •
• If you charge for the demonstrated outcome the customer achieves, then you are in the transformations business.
The Economist summarised recent economic research into happiness as “‘experiences’ over commodities, pastimes over knickknacks, doing over having”.
Time is the currency
The Internet is the greatest known force of commoditisation for goods as well as services. Its capability for friction-free transactions enables instant price comparisons across myriad sources. Just as people have cut back on products to spend more money on services, now they also scrutinise the time and money they spend on services Today, people more highly value experiences that engage them in personal and memorable ways. And the options for how to spend time in physical places have exploded. Time is limited. Attention is scarce. And money is consumable.
The questions to ask yourself are:
• Are your customers increasing or decreasing the amount of time they spend with you?
• Do you have to exert ever more marketing and sales efforts to gain the attention of customers, or do the experiences you offer create robust demand in and of themselves?
• Is the money customers pay you derived entirely from the sale of commodities, goods, and services, or have you found ways to explicitly charge fees for various experiences?
• Are your customers are willing to pay for the time they spend with you
• What would you do differently if you charged admission?
To capture customers’ attention, you must stage experiences worthy of attention. Experiences that are transformative, immersive, enticing, entering, engaging, exciting, and even extending. Preferably create flow. Pre, during and after the show.
Wean yourself off the increasingly unfit and intrusive activity that is advertising. Instead, create an entire portfolio of memorable and engaging experiences—a rich mix that in total can even reach an equally great number of people as advertising does, maybe more, especially when amplified via social media to quickly disseminate news, photographs, and videos of unique experiences.
You need to -ing the thing. Surrounding your goods with services that add value to the activity of using them and then surrounding those services with experiences that make using them more memorable—and therefore make more money. You need to sensorialise the goods. Kevin Kelly has written about this extensively. Think words like puffin birding, cross-golfing, no boarding, and housecationing. But also current words such as greeting (how are your client greeted —> is it theatre?).
Examples of -ing
Collaborative customizers Andersen and Paris Miki create new window- and eyeglass-designing experiences. Adaptive customisation yields unique Lutron lighting, Select Comfort sleeping, and Peapod grocery-shopping experiences. Hertz offers a distinctive car-renting experience through cosmetic customisation, while Whirlpool uses this approach to stage a one-of-a-kind appliance-delivering experience for retail dealers and home builders. ChemStation, on the other hand, uses transparent customisation to enhance the soap-dispensing experience, and Ritz-Carlton uses the same approach to turn a room into a truly memorable lodging experience.
There’s no business that’s not show-business
Long-haul airlines will increasingly be seen not only as transport systems but as entertainment systems. Shops will become theatres. Your products will be on stage. Not clients, but guests. Every business is a stage. Imagine you are a theatre, an actor or a street performer. Think active/passive, think senses, think set, think theme, think drama, think motif, think props, think actors, think scripting, think storytelling, think cast, think acting, think technology, think cues, think memorabilia, think costumes, think space, matter, and time.
In the experience economy, companies should realise that they must make memories (and not goods) and create the stage for generating higher economic value (and not deliver services). It is time to get your act together, for goods and services are no longer enough. Customers now want experiences, and they’re willing to pay admission for them.
You are what you charge for
Charging admission is the final step; you must design an experience worth paying for. With an admission fee, guests rightly perceive each offering they consume. There are six forms of admission available to experience stagers:
• Entry fee
• Per-event fee
• Per-period fee
• Initiation fee
• Access fee
The act of acting
In the Experience Economy, performers of all sorts, executives, managers, and other labourers, must take a different view of their occupations. Work is theatre. Acting is the taking of deliberate steps to connect with an audience. Everyone needs to get into character to do so. Getting into character gives all the workers in an organisation a sense of purpose, uniting them in the overall theme of the experience offered to guests.
Where you are the director. Where you set the drama. Strategic planning by narrative. To effectively stage its [drama = strategy] a company must have the right [cast = people] to implement that strategy. Where the human resources department must become the casting director. Where each role is the part that one or more workers play. It is divided into functional responsibilities to support the acting out of the [script = processes]. The [cast = people] must take on [roles = responsibilities] by each making choices to develop a compelling [characterisation = representations] that form a cohesive[ensemble = organisation] to engage guests in memorable ways. This structure constitutes the essence of an experience economy businesses.
It reminds me of “Work Clean“, and particular is the mise-en-place that master chefs have, the sense of place. The wanting to be there. The commitment. Being present all the time. Where everything has a place. Where excellence is a choice. Where preparation and planning are key. The sense of place is ultimately what it is about. Because once the Experience Economy has run its course in the decades to come, the Transformation Economy will take over.
We are living more and more in an intangible economy, in which the greatest sources of wealth are not physical. We are moving to an economy in which beauty, amusement, attention, learning, pleasure, even spiritual fulfilment are as real and economically valuable as steel or semiconductors.In the Transformation Economy manufacturers will of course transformationalise their goods, design and sell goods that help customers become something distinct. Here the focus moves from using to user. How the individual changes while using the good. Find out to what do customers aspire? Think of diagnosis of your offering as a description of from–to.
You need to care
The first requirement for workers in a transformation business is that they truly care. That means authenticity and transformative purpose. It requires a willingness among leaders to sacrifice their own needs in favour of the employees’, and for employees to sacrifice their needs in order to eliminate the sacrifice of customers. Making you loveable.
This is marketing
In the forthcoming Transformation Economy, aspirants will entrust their futures only to those with whom they share a common worldview. Leading eventually to companies that practice worldview segmentation. Which is why after reading “The experience economy”, you should read “This is marketing“. Combining theatre, immersive and memorable with super-niche, fanbase and a clear choice of who you are and what you stand for.
No longer can an enterprise take an agnostic attitude toward moral rightness and wrongness, hiding from such sensitive issues beneath the cloak of mere goods and services. All enterprises promote a worldview. Transformation issues cannot be avoided. And transformations turn aspirants into “a new you,” with all the ethical, philosophical, and religious implications that phrase implies. All commerce involves moral choice. Read “The Zeronauts“.
Today, the only thing better than being in the business of staging experiences is being in the business of guiding transformations. The very idea of transforming people (or companies) demands that we think about and apply a word little used in businesses today: wisdom. Nothing is more important, more abiding, or more wealth-creating than the wisdom required to transform customers.
More and more companies, and the people within them, are moving up the value chain to supply “chika”. Translating somewhat awkwardly into knowledge-value, this “means both ‘the price of wisdom’ and ‘the value created by wisdom. In the new society that is now forming, the life-style that will earn the most respect will be one in which the owner’s conspicuous consumption of wisdom (in the broadest sense) is displayed, while the products that will sell best will be those that reveal their purchaser to be a person “in the know.”
The wisdom economy
We are entering a new phase of civilisation in which the value attached to knowledge and wisdom is the driving force. From experience to transformation economy and from transformation economy to wisdom economy. And that is good news.
Ron Immink is a Dutch-Irish entrepreneur and self-confessed business books geek