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The Experience Economy (Revised Edition)



No company sells experiences as its economic offering unless it actually charges guests an admission fee. An event created just to increase customer preference for the commoditized goods or services that a company actually sells is not an economic offering. But even if a company rejects (for now) charging admission to events that it stages, its managers should already be asking themselves what they would do differently if they were to charge admission. The answers will help them see how their company might begin to move forward into the experience economy, for such an approach demands the design of richer experiences.




The Experience Economy (Revised Edition)



We expect that experience design will become as much a business art as product design and process design are today. Indeed, design principles are already apparent from the practices of and results obtained by companies that have (or nearly have) advanced into the experience economy. We have identified five key experience-design principles.


In 1999, Joseph Pine and James Gilmore offered this idea to readers as a new way to think about connecting with customers and securing their loyalty. As a result, their book "The Experience Economy" is now a classic, embraced by readers and companies worldwide and read in more than a dozen languages. And though the world has changed in many ways since then, the way to a customer's heart has not. In fact, the idea of staging experiences to leave a memorable--and lucrative--impression is now more relevant than ever. With an ongoing torrent of brands attacking consumers from all sides, how do you make yours stand out? Welcome to the new Experience Economy. With this fully updated edition of the book, Pine and Gilmore make an even stronger case that experience is the missing link between a company and its potential audience. It offers new rich examples--including the U.S. Army, Heineken Experience, Autostadt, Vinopolis, American Girl Place, and others-to show fresh approaches to scripting and staging compelling experiences, while staying true to the very real economic conditions of the day.


In 1999 Joseph Pine and James Gilmore offered readers the idea of the experience economy as a new way to connect with customers and secure their loyalty. As a result, their book The Experience Economy is now a classic, embraced by listeners and companies worldwide and available in more than a dozen languages.


Welcome to the new experience economy. With this fully updated edition of the book, Pine and Gilmore make an even stronger case that experience is the missing link between a company and its potential customers. It offers rich new examples - including the US Army, Heineken Experience, Autostadt, American Girl Place, and others - to show fresh approaches to scripting and staging compelling experiences, while staying true to the very real economic conditions of the day.


In the updated edition of their book, "The Experience Economy," Joe Pine and Jim Gilmore discuss four types of organizations in the value chain: commodities, goods, services and experience. Here is a nutshell description of each:


By the end of the conference, attendees could not have been more clear on SAP's message: In order to compete in a digital economy you will need to mix your X-data with O- data to win. Or, as Ryan Smith noted in the opening keynote, "Companies are disproportionately rewarded when they deliver a great experience and absolutely punished when they do not. And it's predictable."


They were describing the experience economy as the next economy following the agrarian economy, the industrial economy, and the most recent service economy. The concept had been previously researched by many authors.


You can participate or you can just show up and participate passively. That is the main difference between the two and that is the beauty of the experience economy. It is completely and utterly dedicated to your needs.


In fact, technology giant SAP says that experience is now the organizing principle of the global economy, and solving the experience gap is a $1.6 trillion problem.[1] Clearly, this opportunity is too big to ignore and has serious consequences for those who do.


While the digital experience economy may feel like a natural outgrowth of the experience economy, the systems of experience necessary to support it require careful consideration. Cloud communications technology will become a hub for gathering, storing, distilling, and utilizing interaction data to fuel simple, powerful, and consistent experiences with your brand. The ability to connect those systems effortlessly with other technologies, like artificial intelligence, will become critical as well.


The Experience Economy is the sale of memorable experiences to customers. The term was first used in a 1998 article by B. Joseph Pine II and James H. Gilmore describing the next economy following the agrarian economy, the industrial economy, and the most recent service economy. The concept had been previously researched by many authors.


This kind of behavior in a society has been observed and analysed much earlier by various authors and researchers. A good example can be found in the pioneering book of futurists Alvin and Heidi Toffler, Future Shock, first published in 1970, which Pine and Gilmore quote in their work. The Tofflers discuss rapid change in American society and explore ways for humans to adapt. In Chapter 10, The Experience Makers, they say that an economy is being created geared to the provision of psychic gratification, that a process of "psychologization" finds place and humans will strive for a better "quality of life". Manufacturers of goods will add a "psychic load" to basic products, the psychic component of services will expand and we will witness the raise of experience industries whose sole output consists of pre-programmed experiences, including simulated environments that offer customers a taste of adventure, danger, or other pleasure.[3]


The thesis has also been criticized from within the fields of tourism, leisure, and hospitality management studies, wherein well-established theories on the role of experiences in the economy went unacknowledged by Pine and Gilmore. Although continuing to influence business thinking, the concept has already been superseded within the service marketing and management literature by the argument that the value of all goods and services is co-created or co-produced through the interaction between consumers and producers. According to this view, therefore, at one level of abstraction, all consumption can be understood in experiential terms.


As we enter the next phase of the experience economy, converging market forces and digital proliferation are changing end user expectations and the way that businesses must think and act. Those that consider experience as the north star for digital transformation will thrive. Others risk becoming obsolete.


For those that want to succeed in the experience economy, the time to start is now. These five principles provide core building blocks that are central to successful experience-led transformations. Let us know how you are embedding experience across your enterprise.


We try to counteract the experience economy as a threat to the crafts as we know them. It offers a chance to recover important ways in which crafted objects become part of our lives. But at the same time, we should be conscious of the potential loss of specialist skill and innovation. I doubt the experience economy will be able to support that. As with other elite pursuits, such as sport or music, there needs to be continued collective support for craft excellence.


The most recent data from the U.S. Census Bureau shows that Millennials outnumber baby boomers in overall population (83 million to 75.4 million), putting them in the lead as consumers and influencers of wider consumer behaviors and trends. As we discussed in our prior Insight Center article Millennials: Shaping a New Economy of Experience, Millennials are leading the way in the experience economy as a generation that overwhelmingly (78%) prefers access to goods over ownership of goods. 041b061a72


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