It was great to hear Joseph Pine II of Strategic Horizons, LLP at the TIBCO NOW 2018 conference. Joseph is the author of The Experience Economy and spoke on “Innovating Beyond Goods and Services.”
Joseph began his presentation talking about the Wizard Gumball Machine which was introduced in 1993 and provides an experience for kids to pay 25 cents for a gumball. It's essentially a slot machine for kids where they'll get a quarter from their parents for a gumball. Watch the gumball go around and out the bottom of the machine and then ask their parents for another quarter.
The Wizard Gumball Machine is a great example of the progression of economic value that all commodities go through. Today, most goods are commoditized to price and services are being commoditized. Goods and services are no longer enough. To differentiate your product or service, you need to move to a new level by staging experiences for customers providing a distinct economic offering.
Create a memory which is the hallmark of the experience. Experiences are where we need to innovate.
Starbucks has driven innovation in the coffee drinking experience = Starbucks and now Nespresso is attempting to do the same thing by getting coffee drinkers to prepare their daily breakfast drink at home with the tagline, "the best café is your café." Nespresso innovated the capsule system. They designed their Nespresso machines to be an experience, and they innovated in their stores – a.k.a., espresso boutiques. They provide a service with an espresso club which replenishes your supply before you run out.
Coffee is a great example of the progression of commoditization. The grower of the beans gets two or three cents for the beans necessary for a cup of coffee. Maxwell house gets 10 to 15 cents a cup for providing a product. While the Starbucks experience is anywhere from three to seven dollars a cup.
Disney is the world’s experience stager. If selling B2B you need to provide an experience. The Consumer Electronics Show in Las Vegas is Disney for adults. Case Construction Equipment has an "Experience Center" in Tomahawk, Wisconsin where prospects can come and try the equipment in a veritable playground for construction equipment. According to Case, 20% of prospects that go to a dealer close. The close rate is 80% if the prospect goes to Tomahawk.
We’re living in an experience economy – design accordingly. Provide distinctive experiences. Make the customer's life simpler, easier and better. Distinctive experiences are memorable, reach inside, engage, create memories the customer wants to share with others.
Convenience is the antithesis of this. Services are about time well saved. More and more people spend time and money on experiences they enjoy – they value the time they spend with you = time well spent.
Las Vegas is the epicenter of the experience economy. The iPhone is the antithesis of the digital experience economy. Once you get the iPhone in your hands you customize it with your contacts, pictures, email accounts, and apps. Everyone's iPhone is unremittingly unique. That's the power of customization, it turns a good into a service.
If you customize a service you are providing an experience – a memorable experience. Progressive Insurance takes a negative experience of coming to your accident and delivering you a check on the spot along with a rental car thereby turning a horrible experience into a positive and memorable one.
We have been living in the age of mass customization. We have a portfolio of customers and everyone is unique. We offer a portfolio of capabilities. Customers get what they want at a price they are willing to pay. Anything you can digitize you can customize. That’s how you lower your cost – only give the customer what they want, nothing else, don’t overwhelm with too many choices
Know who everyone is to mass customize around each individual guest. Creating a learning relationship with every interaction. Learn > Customize > Benefit > Innovate.
If you don’t stage experiences for individual customers you will be commoditized.