B Joseph Pine - The experience economy

B. Joseph Pine II
James H. Gilmore

HARVARD BUSINESS REVIEW PRESS
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Copyright 2020 B. Joseph Pine II and James H. Gilmore

All rights reserved

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Library of Congress Cataloging-in-Publication Data

Pine, B. Joseph, author. | Gilmore, James H., 1959- author.

The experience economy : competing for customer time, attention, and money / B. Joseph Pine II and James H. Gilmore.

Boston, Massachusetts : Harvard Business Review Press, [2019] | Includes index. |

LCCN 2019023410 | ISBN 9781633697973 (hardcover)

eISBN: 978-1-63369-798-0

LCSH: Production management. | Marketing. | Diversification in industry. | Customer services.

LCC HF5415.15 .P56 2019 | DDC 658.5/6dc23

LC record available at https://lccn.loc.gov/2019023410

To the Author and Perfecter of our faith.

Time is the currency of experiences. If you get customers to spend more time with your business then they will spend more money on your offerings. To do so, however, requires gaining customer attention amidst an increasingly wide array of options available for spending that time.

Several factors account for this competition for time. First, people can now access an untold number of digital experiences. The smartphone represents the biggest source of competition for any business in capturing customer time, attention, and moneyproviding an ever ready means to be elsewhere whenever customers feel unengaged. Fail to offer a compelling experience, and customers will instantaneously leave you to spend time in the digital realm via some app.

Second, time-based competition has blurred the boundaries of how and where people spend money across industries. Consider vacations. In its State of the American Vacation, the U.S. Travel Association reports a precipitous rise in unused vacation time among workers: some 212 million days forfeited annually as employees fear falling behind on e-mail and other workplace tasks when taking a week off. Yet if one defines taking a vacation differently, thinking of it simply as not being at work nor at home, then every hour spent at Starbucks represents a mini-vacation taken in lieu of full days spent at some faraway resort. No wonder cafes now proliferate across industries, including food (Chobani), banks (Capital One Cafs), and too many cafes for pets to mention. Even further afield, automobile manufacturers now have theme parks (Volkswagens Autostadt, Ferrari World, etc.), spirit makers turn their factories into museums (Guinness Storehouse, Heineken Experience, etc.), and consumer brands create boutique hotels, from luxury goods (Bulgari, Armani, Versace, etc.) to home furnishings (Restoration Hardware, West Elm) and even fitness centers (Equinox). Stick only with your traditional offerings and youll fail to compete for the slices of time consumers now seek from their favored brands.

Third, the options for how to spend time in physical places have exploded. New forms of tourism constantly emergemedical tourism, film tourism, glamping, mindfulness retreats, voluntourism, culinary foodcationseven space travel. Just witness the various experiences taking place today in that most basic of venues: the single room. Most notably seen in escape rooms (with some twenty-three hundred open in the United States alone), people also consume time in rage rooms, salt rooms, nap rooms, boardgame cafes, and so forth. Monthly fulfillment subscriptions of select assortments of wares from apparel to toys (each with its own box-opening experience) increasingly shift time away from retail stores to consumers own homes, as does a proliferating number of digital games with ever-increasing levels of engagement, including virtual reality. With so many options, the competition for the free time of consumers is only getting more and more fierce.

One thing is certain: customers are less willing to spend time, attention, and money on mere goods and services. Today, people more highly value experiences that engage them in personal and memorable ways.

We articulated this point of view in the original edition of The Experience Economy, never doubting the world of business would shift away from commoditized goods and services and move more aggressively toward offering myriad new experiences. The anticipated shift to this distinct economic offeringas part of what we call the Progression of Economic Valuehas now fully arrived.

Indeed, every business now competes not only with players in its own industry, nor only with those in its immediate geographic area, but with every other company in the world for the time, attention, and money of individual customers.

Obviously, time is limited. We all have only twenty-four hours a day in which to experience. So, if another company gets a customer to spend time with it, what results? Less time spent with your business.

Similarly, attention is scarce. Todays media-fragmented and technology-saturated world makes it difficult to capture customers attention with normal advertising or other marketing campaigns. But when another company creates an engaging experience that does garner attentionwhether online or offwhat else happens? Less attention directed toward your business.

And finally, money is consumable, meaning if a customer spends a dollar on another economic offering from some other company, then what cant that customer do with that dollar? Spend it on your business.

Look at a laudable exemplar of the Experience Economy, the one used to lead off : Starbucks. Howard Schultzs key insight was recognizing the value customers place on spending time in cafes, sipping their coffees while socializing, working, or just relaxing. Starbucks limits its advertising and captures customer attention instead by offering places for coffee-drinking experiences. (Ever notice that Starbucks venues are not lit on the outside? The only light comes from within, putting customers themselves on stage to gain the attention of passersby.)

And, oh, how Starbucks captures money! It takes a true commodity, unroasted coffee beans worth a mere 2 or 3 cents per cup, and turns them into experiential offerings worth $3, $4, $5and $10 or more at its even more experiential Reserve Roastery venues. Assuming that just a quarter of its customers spend an average of an hour immersed in its experience places, Starbuckss $25 billion in annual revenue equates to well over a billion customer-hours per year.