In 1999, Joe Pine and Jim Gilmore brought out a seminal book on experience innovation. The Experience Economy explored how the most successful companies offer compelling experiences for customers, resulting in consumer allegiance, and a profitable bottom line.
Joe Pine and Jim Gilmore‘s The Experience Economy was translated into 15 languages. It fast became the indispensable handbook for businesses of any size.
Now, twenty years on, a new edition is set to hit the shelves. The book, revised and with new models and insights, will be launched at an event in Cleveland, Ohio on November 19.
Blooloop spoke to Joe Pine to hear about the book and its insights. He also talked about the evolution of the concept.
The Experience Economy
Explaining the genesis of the book, he says:
“I wrote my first book, Mass Customization: The New Frontier in Business Competition, while still at IBM. In it, I discuss how if you mass customise a good, physical thing, you automatically turn it into a service.
“I was asked the question in a workshop: ‘What happens when you mass customise a service?’ And the answer I gave was that ‘Mass customisation automatically turns a service into an experience.’
“Afterwards, I wrote that down, thought about it, and decided that it was true. If you design a service that is appropriate for a particular person and it is exactly the service that they need at this moment in time. Well, then you can’t help but make them go ‘wow’, and turn it into a memorable experience.”
“I realised that meant experiences were a distinct economic offering, as distinct from services, as services are from goods. It followed that there would be an economy based on experiences. Just as there had been a growing economy based on commodities, an industrial economy based on goods, and a service economy.
“I realised that meant experiences were a distinct economic offering … It followed that there would be an economy based on experience.”
That was the genesis of the idea.”
Joe Pine and Jim Gilmore
Pine says that Jim Gilmore was originally one of his clients:
“I shared the idea with him and we started researching. Eventually, he decided to quit his consulting company, and join me. We started writing the book together in January 1996.”
Their Harvard Business Review article was published in July 1998, and the book came out in April 1999. Its detailed anticipation of the experience economy seemed prescient.
“We are not futurists,” says Pine. “We don’t tell you what is going to happen, we tell you what’s already happening, but you don’t yet see it. In terms of the Experience Economy, now, everybody sees it. Then, nobody did.
“When the book first came out, I used to have to argue my case, defending it. Now, I just have to say it, and even somebody who has never heard of the experience economy goes: well, of course, I see that.
“That is a key difference. In the first book, we talked about the forthcoming Experience Economy, and now we say it’s here.”
The second edition
In 2011, the pair released a revised edition of The Experience Economy.
“We didn’t change the thrust of it, because it was just as valid as it had been in its first iteration,” says Pine. “But we updated it, cutting out old exemplars, adding new ones, as well as new ideas and frameworks.”
“And also by 2011, the digital age was underway. We had to talk about that, and we talk further about it in the new version. Smartphones and access to the internet is the number one difference.”
It is a difference that has altered expectations. While people still seek passive experiences, to an extent – the success of Netflix is a testament to that – there is an increasing desire for experiences people can drive themselves. More and more, people want to be the more active heroes of their own stories.
“More and more, people want to be the more active heroes of their own stories.”
“The rise of the smartphone allows us to centre the universe around us, personally. We can summon a car by magic; we can access any piece of information.
“One of the things it drives is the need for more customised goods and services within those experiences, so they are more personal.”
Personal and shareable experiences
Growing out of that is the need to have that experience witnessed, and instantly shareable.
“A new kind of experience has come about over the last two or three years. This is one that seems to exist solely for Instagram or Twitter,” says Joe Pine.
“But in any experience, people want to make a record of it. For instance, we have always bought memorabilia. That is shifting increasingly towards wanting the instantly shareable photographs. Ones that say look, this is what I experienced
“I used to tell those who stage experiences that if somebody pulls out their phone in the middle of an experience, it means they are disengaged, not a part of that experience anymore. Now it’s the opposite. The first thing you want is for everyone to pull out their phone and take a picture that recognises they are engaged with the experience. That is a big change.”
“The first thing you want is for everyone to pull out their phone and take a picture … That is a big change.”
Immersive experiences are another trend, where people ‘enter’ an imaginary world. This is not, says Pine, a matter of ‘suspension of disbelief’, which is a term coined in 1817 by the poet Samuel Taylor Coleridge.
“I am with JRR Tolkien on this. He challenged Coleridge’s concept in his short work On Fairy-Stories, saying that it is not Coleridge’s suspension of disbelief, but about creating secondary belief.
“With experiences, you create an internally consistent fictional world. You make that belief possible. It’s a much more powerful thing.”
Time, Attention and Money
The latest edition of The Experience Economy, which will be released in hardcover on the 5th November, has a new subtitle: Competing for Customer Time, Attention and Money.
“We first used that term in 2002. These are the currencies of the experience economy.
“Because of the shift in the Experience Economy, every company in the world is competing against every other company in the world. And they are competing for the time, attention and money of every individual customer. The prologue to the new edition covers this, in what is effectively a new chapter. We have also introduced new examples and frameworks.”
So how can a company compete successfully with every other attraction in the area?
“You have to realise that the bar has been raised and that you must up your game,” says Pine.
“As an attraction, you are competing with whole new genres of experiences that are out there. Concepts like escape rooms; like The Museum of Ice-Cream. This week I went to an axe-throwing room. These experiences just didn’t exist, ten years ago.
“You must recognise, therefore, that what made you successful in the past isn’t enough today. Companies don’t necessarily have to make wholesale changes, but they do have to be engaging.
“You have to think about how you better customise that experience for individuals.”
“You must recognise, therefore, that what made you successful in the past isn’t enough today.”
Joe Pine on good practice
In the book, Pine uses the British-American cruise operator, Carnival Corporations, as an example of good practice:
“Of all the companies in the world, it seems to be doing most everything that I’m talking about.”
Carnival has brought out a game-changing wearable device, the Ocean Medallion. This enables a frictionless guest experience with a high degree of personalisation. It also allows the cruise ship operator to stay engaged with its guests anywhere on the 17-deck vessel.
“Basically, their Medallion is an IoT device. It allows them to identify every customer, every family, wedding or reunion group, or business meeting. And then it can mass customise their experience itinerary.
“It will learn what it is that they like, and then be able to customise that to them. It gets better the second time you go on a cruise, and even better the third time. Because it can take advantage of all the things that it has learned in the past.
The Medallion understands context. For example, it can learn that when you are on the pool deck with your kids, your favourite drink is an iced tea with no lemon, but when you are in the bar with your buddies it’s a Mojito. Or, when you are in the restaurant with your spouse it is a glass of Shiraz.”
The need for a digital experience platform
All attractions, Joe Pine contends, need to create a similar digital experience platform.
“It doesn’t have to be through an IoT device. It can be through the smartphone they are carrying around. But you need that experience platform layer that will allow you to identify the customer, and customise to them.
“If you take the friction points out of everything, it frees up the staff to serve the guests, and provide that great experience for them.
“It is an effective tweak most companies could make easily. It’s just a matter of applying the right software. No invention is required.”
Experience Economy Expert Certification
Alongside their groundbreaking book, Pine and Gilmore offer an annual Experience Economy Expert Certification course. This is an intensive instruction in the ideas, frameworks, and approaches of experience staging.
“It is a four-and-a-half day immersion in the experience economy,” says Pine. “We walk through the frameworks, exercises and techniques that aren’t in the book.
“You end up with a certificate, with a logo that says you are an experience economy expert. And you also meet a network of other experts that you can work with.
“We now have 289 satisfied Experience Economy experts around the world and it is so rewarding. We are going through stuff we know, we get many of the same questions each time, but we get to see the light bulbs go on. You see the ideas they come up with: it’s very rewarding to do.”
OnStage Customer Experience Training
Pine & Gilmore have also created an interactive internet training programme tailored for specifically for customer-facing personnel.
Recognising that front-line employees can play the make-or-break role in how customers feel about brands, OnStage empowers them to transform routine engagements into engaging experiences.
The evolution of The Experience Economy
The new release of The Experience Economy deals with emerging trends.
“I’ve mentioned that customisation is key already,” says Pine. “Not just delivering mass experience, but knowing who your individual guests are. That’s the first thing.
“At number two is the notion of charging admission. We wrote in 1999 that the future would see retailers, restauranteurs, manufacturers and other companies charging admission for the experience. Many people thought we were crazy. Now you see it all over the place.
Many people are afraid to price themselves out of the market, but Pine says that if you don’t charge for an experience people won’t value it:
“If you charge, you are sending the signal that this is a place worth experiencing. That is key. And admission fees are going to go up. This is a key trend.”
“If you charge, you are sending the signal that this is a place worth experiencing.”
The value of time
“People talk about the time value of money, but there is a money value of time. What is the expenditure per minute for people at your experience, in admission fees, but also in F&B and memorabilia?”
Pine uses the example of movies as a benchmark:
“Everyone goes to the movies. They cost, allowing for regional variation, around 10 cents per minute, just for the admission fee. But Disney theme parks are around 20 cents per minute. So, are you at the level of the Disney theme park? Can you get to that 20 cents per minute in admission fees?
“Then there are the dollars-per-minute experiences. For example, the iFLY or bungee jumping. Those experiences are often short, but very intense.
“Providers have to ask themselves, where do I compare? How valuable is my experience?”
“I was talking with a client the other day, and we calculated that their business was at the level of Six Flags. The questions that arose were: Is that you want to be? Do you think you are a better experience than that?
“Then maybe you are not charging enough. How are you going to show the value that is there? It is very worthwhile for people to calculate the money value of time.”
What do customers want?
Then there is authenticity. This is something Joe Pine and Jim Gilmore wrote about previously in Authenticity: What Consumers Really Want.
“Authenticity is another key trend. People do want it real. They want to buy the real from the genuine, not the fake from the phoney.
“People do want it real. They want to buy the real from the genuine, not the fake from the phoney.“
“Are you true to self, and are you what you say you are? If you are both of those, you are ‘real real’. If you are neither of those, you are ‘fake fake’. In between, you can be ‘real fake’, or ‘fake real’.”
Expanding on this, he says:
“Many attractions- Disney, for example – have a fantasy element are ‘fake real’. They are fake realities. Disney is not really the magic kingdom, and if they sprinkle pixie dust on you, you’re not really going to fly.
“But it’s wonderfully, marvellously true to itself in the way it manages that experience. It gives you the impression that you are there and creates the belief that this is a real place; that this exists, and that for this time period you are in a real world.
“Tolkien called it a ‘sub-creation’: within the real world, you create this thing that is its own world. That is something attractions need to do.”
Transformative experiences are something else the book explores.
“We talk in Chapter Nine of the book about the economic offering after experiences: what happens when you customise an experience. That is where you design an experience that is so engaging that you call it a life-transforming experience, or a transformation. It’s an experience that changes us in some way,” says Pine.
“Increasingly, people are looking for transformative experiences, particularly when they travel. In fact, transformative travel is one of the key trends in the tourism industry.
“Increasingly, people are looking for transformative experiences.”
“So how do you fit into that? What even normal attractions need to think about, particularly if they are multi-day, and even if they are a day-long, is to think about family relationships. One of the reasons that people go out as a family is that they want to improve relationships. If you design around facilitating family interaction, then I think you’ll be more successful.“