Understanding The Experience Economy in 5 Minutes
We work hard to be innovators. But we are only able to do this because we are standing on the shoulders of giants.
Two giants in particular are Joe Pine and James Gilmore, authors of the seminal experience book: The Experience Economy. It was actually reading their book that birthed the very drive of Aaron+Gould towards experience marketing. Writing in 1999, they show keen insight into the industry that was to develop over the 2000′s, and encouraged me to push our agency in the direction that I previously had a gut feeling to but was unable to articulate.
Pine presented this concept at TED (this was the video that first exposed me to it), so I would recommend you have a watch of this.
The History of Economic Progression
Ok, I only have 3 minutes left after my long introduction, so to save time, join me in thanking Triball DDB for this image:
So we extracted commodities – gold, wheat, iron, etc. Then we started customising them into goods. Cereal, tinned baked beans, cars. Fruit isn’t good enough anymore, we want a fruit smoothie. The economic offering is now a good – commodities that have been customised into a product.
Goods, however, become commoditized – they became common and lost their uniqueness. So, the service industry was born. Not longer is the customer buying the goods, they are actually paying for the service. Restaurants, hair dressers, car washing, etc.
The history of economic progression is one of paying for others to do what used to be free to do yourself. Say to a peasant 200 years ago that they would pay someone else to cut their hair, and they’d laugh at you. But indeed today, the working class will gladly pay £50 for someone to cut their hair.
The service industry, however, became commoditsed and common. The economic offering that has risen is the customisation of services into experiences.
What distinguishes an Experience?
In the Experience Economy, the customer is not paying for a good or a service. The customer is paying for an experience. Think Disney World. Think a grand Opera. Also, think Starbucks.
Starbucks is a prominent case study for the experience economy. The coffee is actually poor quality. The café itself is faux coffee house design. However, the customer is not paying for this. The customer is paying for the pleasure to order a ‘hand-crafted beverage’, customised exactly how they want it, and then taking their marked cup onto the street and back to work as a memento. Mean while, the coffee shop around the corner from their office is cheaper, but the difference is, Starbucks aren’t selling coffee – they’re selling an experience.