If you’re in business today – and even if you aren’t – you can’t go too long without hearing, reading or talking about customer experience, and more broadly the experience economy. That wasn’t always the case. In fact it wasn’t until Joe Pine and his co-author James Gilmore introduced us all to the term experience economy in a 1998 article, then authored the seminal book The Experience Economy a year later. And things in business really haven’t been the same since.
Recently my CRM Playaz co-host Paul Greenberg and I had the pleasure of having Joe Pine join us for a LinkedIn Live conversation on how the ideas put forth in the book have evolved over time, and how companies have done putting those principles in the book into action – especially over the past few turbulent years. Below is an edited transcript of a portion of our conversation. Click on the embedded SoundCloud player to hear the full conversation.
Origins of the Experience Economy
Joe Pine: People use the word epiphany a lot. And it wasn’t even an epiphany. It was a blurt. As you know, my first book was Mass Customization. And I’d often talked about how mass customization turns a good into a service. I give all the economic distinctions in goods and services. You can see that if you mass customize a good you’re really in the business of helping people figure out what it is that they want. Then you make it and deliver it to them individually – services are delivered on demand and goods from inventory.
Back in late 93 or early 94 this this guy at the back of the room with this workshop I was doing is sort of a smart aleck. And he raised his hand and he said, you talk about service companies that mass customize so what does it turn a service into?” And I said, mass customization automatically turns a service into an experience.
Hmm. Well, that sounds good, I’m going to use that! So literally, it was a blurt, right? It just came out. But then I thought about it, and that’s where the epiphany happens, that this is really true. If you design a service, it’s so appropriate for somebody you can’t help but make him go, wow. And turns it into a memorable event…it turned into an experience. Therefore, experiences would be a distinct economic offering. And you’d have an economy based off experiences and everything flowed from that. That’s almost 30-year-old work.
Experiences, Service and Moments
Joe Pine: Most people, when they use the term CX or customer experience, they are not talking about memorable events. They’re not talking about distinctive experiences in this context. They’re actually just talking about good service. That’s all CX gets you, good service. All the technology you’re talking about gets you good service.
Basically, what we talk about is making our interactions with customers nice and easy and convenient. Those are all well and good but those are service characteristics. I mean, nice is nice, but rarely does it rise to the level of memorability?
A distinctive experience, it has to create a memory. If you did not create a memory, then it wasn’t an economic distinctive experience. When we talk about making things easy, what it often devolves into is it routinize things for our employees, make it easy for them to serve customers. That gets in the way of being personal and experiences are inherently personal. They actually happen inside of us as reaction to the events that are staged in front of us. That’s one of the key distinctions. Services, commodities, good services exist outside of us, experiences happen inside of us.
Finally, convenience is the antithesis of what I’m talking about because it means get in and out as quickly as possible. As a company, let’s spend as little time with customers as possible. When with the experiences and what people value is their time, right? Services and shorter time well saved, nice, easy, convenient, but experiences are time well spent. They value that time that they spend with the company and the experience that they stage and they’re very distinctive.
Brent Leary: It seems like they’re counterintuitive. The companies think this way, and you’re talking about that way. How hard is it for companies to make that U-turn?
Joe Pine: Incredibly hard. It really is a mindset issue. They have a mindset that includes getting people off the phones quickly as possible because that’s being productive. We’ve got to be productive, right? And so forth and not recognizing the value in spending time.
Sometimes it takes drastic measures to change or I’ll say it, sometimes it takes stopping a drastic measure, which is in contact centers… average handling time. Stop measuring average handling time. Stop measuring how little time we spend with customers. Like Zappos, let people spend as much time, instead measure the success of the calls, measure what Zappos calls a personal-emotional connection. Measure the connections that we have with customers rather than measure how little time we spend with them. That can then change the mindset, but it’s a chicken or egg problem.
Paul Greenberg: How do you, in effect, create these simple ideas out of the complexity of this? It’s complicated.
Joe Pine: Well, first is start with American Girl. I’ve long said it was the best retail experience in the world. The amazing thing about it of course is, they’re not a retailer, they’re a manufacturer. They actually make the dolls. A lot of the best retail venues in the world are from manufacturers, not retailers per se, because so often they don’t get it.
The American Girl in Chicago was the case that the average person that walked through that store, the average girl walking to the store didn’t leave for over four hours. If you imagine that four hours.I’d often do experience expedition where I take people to various cities including if we’re in Chicago or New York or LA, you got to go to an American Girl just to see it. I’d often tell people who didn’t have girls or from… I’d bring people from foreign countries over. I say, “Okay, you may not get this. This are all I want you to do. Watch this kids’ faces, just watch your girls’ faces and then you’ll get it”, right? What’s going on?
Paul Greenberg: Exactly.
Joe Pine: You got that memory?
Are more companies getting it now?
Brent Leary: Wow. AHT, Zappos… Is this 2022? These examples have been around for years. Does it mean that dominant thinking in business has not progressed in the past 10 plus years?
Joe Pine: Well, there are many sectors of the economy where it has not progressed much. We just talked about contact centers in retail, right? Those are two that still don’t get it. Don’t understand what the possibilities are. Don’t understand that, somebody calling in with the problem is a sales opportunity that you can handle in the contact center. You got to spend time to be able to figure that out.
There are other sectors that do get it and have made tremendous strides. Like I said, manufacturers in particular go into retail or create flagship experiences like the Guinness Storehouse in Dublin or the Heineken Experience in Amsterdam, Volkswagen, and so forth. Those are the companies that more than get it.
There’s been a lot of progress made in technology industries and financial services and hospitals in particular, although there’s still a lot of work to go. I’ve actually worked probably more with hospitals and other healthcare companies than any other industry in the world for the simple reason that research shows that the better the experience that patients have, the better the outcomes they get.
That’s what hospitals are about, is that better outcome. There’re scores of examples of hospitals that really create a great experience and focus on that but it does again, require rethinking, require summary measurement, requiring… Analogous to the contact center is, our job is not to get the person out of the hospital bed as soon as possible. That’s not the job, even though that maybe how you get paid, right? It’s the end outcome. That often requires being in contact with him and so forth. The payment system in hospitals, the measurement system in hospitals is so screwed up relative to other industries because you have third party payers instead of the person having the experience, having the control over the [inaudible 00:06:10] of how much you get from that experience that it tends to screw things up.
Paul Greenberg: How do you start looking at millennials and Gen Zers and designing and creating the memorable moments for them, as opposed to what has been the historic way that we’ve done it as we were coming into power?
Joe Pine: Whenever somebody brings up generations, I always want to talk about the fact that differences in generations are merely shifts, not wholesale changes. They merely shift in hundreds of bell curves. When you get down to every individual, the fact that you know that they’re a member of a particular generation tells you nothing about who they are as an individual and what they want. That’s where the modularity, the consumability as you call it, of experiences are so important that you still need to treat them as an individual, living, breathing, human being and not say, “Oh, you’re a Gen Xer, therefore this is true”. That’s simply not the case.
I used to tell clients that the worst thing that can happen is if a customer pulls out their phone in the middle of your experience, because it means they’re leaving your experience effectively, right They’re immersing themselves in what’s on the phone. Now, obviously that’s not true. Now you design ways for them to use social media in there. That’s obviously the biggest difference and there are many others. Like you’ve said about digital, I also think the millennials are the first generation to grow up in the experience economy, right? Not just in the service economy, in an experience economy. That makes a big difference for how they treat things where it’s experience first and services and goods second.
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This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.