Welcome to the Experience Economy - Joe Pine

Summary

The speaker discusses the evolution of economic value, emphasizing a shift from goods and services to experiences. Highlighting examples like Starbucks and Nespresso, they argue that customers no longer seek just products or services but memorable experiences that engage them personally. The talk explores how creating distinctive, immersive experiences adds value in a commoditized world, where time and attention are scarce resources. Companies can thrive by offering 'time well spent,' making experiences the core of their offerings to build customer loyalty and drive economic growth.

Takeaways

• 😀 Innovation in experiences can create more value even without improving the product, as shown by the gumball machine example.
• 💡 The economy has shifted from goods and services to an experience-based economy, where experiences are distinct and more valuable.
• 🛠 Services and goods are becoming commoditized, meaning they are often judged only by price, forcing companies to differentiate through experiences.
• ☕ Starbucks revolutionized the coffee industry by focusing on the coffee-drinking experience rather than just the product.
• 🏠 Nespresso innovated by combining the home experience with their coffee machines and creating a distinctive brand experience through clubs and boutiques.
• ⏳ The key differentiator in the experience economy is time—customers seek 'time well spent' rather than just convenience.
• 🎭 Memorable and personal experiences are what create distinctive value, not just making interactions easy or nice.
• 🎹 Companies like Steinway and Procter & Gamble use immersive experiences to drive product demand and create strong marketing impact.
• 🌍 In the experience economy, businesses are competing globally for customers' time, attention, and money, which are limited resources.
• 🎯 The experience itself becomes the marketing, as seen with cases like Apple's stores and Zappos’ customer service model.

Q & A

What is the gumball machine example in the script meant to illustrate?

The gumball machine, specifically the Gumball Wizard, illustrates how adding an experience, like watching the gumball spiral down, increases perceived value, even though the product itself (the gumball) is unchanged. This shows how experiences can enhance value in the experience economy.

Why are goods and services becoming commoditized according to the speaker?

Goods and services are becoming commoditized because customers increasingly care only about price, due to features becoming similar and easily comparable. The internet accelerates this trend by allowing instant price comparisons.

What economic shift does the speaker suggest businesses need to adapt to?

The speaker suggests that businesses need to adapt to a shift towards an 'experience economy,' where growth and success come from staging unique and memorable experiences for customers, rather than just offering goods or services.

How did Starbucks innovate in the coffee industry according to the speaker?

Starbucks innovated by creating a coffee drinking experience, rather than just selling coffee as a product. They focused on the ambiance, environment, and overall customer experience, which added value beyond the coffee itself.

How does the Nespresso example demonstrate innovation in the experience economy?

Nespresso innovated by designing their coffee machines to deliver a unique at-home coffee experience, complemented by Nespresso boutiques where customers can try products. They also offer a service (Nespresso Club) that allows automatic replenishment of capsules, enhancing the overall experience.

What is the significance of time in the experience economy?

In the experience economy, time is crucial. Companies must focus on creating 'time well spent' for customers, where customers value the time they spend with a company. This contrasts with services, where 'time well saved' is more important.

What makes a distinctive experience different from just offering convenience or good service?

A distinctive experience is memorable and personal, engaging the customer on a deeper level. While convenience and good service are important, they are not enough to create a truly remarkable experience that leaves a lasting impression.

How does the concept of 'the experience is the marketing' work?

'The experience is the marketing' means that a well-designed customer experience itself generates demand. By creating engaging experiences, companies naturally attract attention, retain customers' time, and motivate purchases, as illustrated by examples like Steinway's in-home concerts and the Charmin restroom experience.

Why does the speaker mention Zappos' customer service as an example of time well spent?

Zappos encourages its customer service representatives to spend as much time as needed with customers, sometimes hours on a single call, to ensure that the customer has a positive and engaging experience. This approach exemplifies valuing customers' time well spent.

How can companies create memorable experiences for employees, and why is this important?

Companies can create memorable experiences for employees by offering engaging training and work environments, like Whirlpool's real-world program or Molina Hospital's focus on 'sowing seeds of abundance.' This helps ensure employees are motivated to create great customer experiences, which is essential in the experience economy.