If you’re in business today – and even if you’re not – you can’t go too long without hearing, reading about, or talking about customer experience, and the experience economy more broadly. This was not always the case. In fact, it wasn’t until Joe Pine and his co-author James Gilmore introduced us to the term experience economy in a 1998 article and then wrote 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 inviting Joe Pine to join us for a live chat on LinkedIn about how the ideas put forward in the book have evolved over time. and how companies have put these principles into the book. in action – especially over the past turbulent years. Below is an edited transcript of part of our conversation. Click on the embedded SoundCloud player to hear the full conversation.
Origins of the experience economy
Joe Pin: People use the word epiphany a lot. And it wasn’t even an epiphany. It was a stutter. As you know, my first book was Mass Customization. And I had 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 really help people understand what they want. Then you manufacture it and deliver it to them individually – services are delivered on demand and goods from inventory.
In late ’93 or early ’94, this guy in the back of the room with this workshop I was doing is kind of smart. And he put his hand up and he said, you’re talking about service companies that are mass-customizing, so how does that transform a service? And I said it, mass customization automatically turns a service into an experience.
Hmm. Well, that sounds good, I’m going to use it! So, literally, that was a spiel, right? He just went out. But then I thought about it, and that’s when the epiphany happens, that it’s really true. If you’re designing a service, it’s so appropriate for someone that you can’t help but let it go, wow. And turns it into a memorable event…it turned into an experience. Therefore, experiences would be a separate economic offering. And you would have an experience-based economy and everything flowed from that. It is a work of nearly 30 years.
Experiences, Service and Moments
Joe Pin: Most people, when they use the term CX or customer experience, are not talking about memorable events. They do not speak of distinctive experiences in this context. In fact, they only talk about good service. That’s all CX gives you, good service. All the technology you’re talking about gives you good service.
Basically, what we’re talking about is making our customer interactions enjoyable, easy, and convenient. That’s all well and good, but those are service characteristics. I mean, nice is nice, but does he rarely reach the level of memorization?
Unique experience, it must create a memory. If you didn’t create a memory, then it wasn’t a distinctive economic experience. When we talk about making things easier, it often means making things routine for our employees, making it easier for them to serve customers. It gets in the way of being personal, and experiences are inherently personal. They actually happen inside of us as a reaction to events unfolding in front of us. This is one of the main distinctions. Services, goods, 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 getting in and out as quickly as possible. As a business, let’s spend as little time as possible with customers. When with experiences and what people appreciate, it’s their time, isn’t it? Shorter services and times well saved, enjoyable, easy, convenient, but experiences are time well spent. They value the time they spend with the company and the experience they stage and they are very distinctive.
Brent Leary: It seems that they are counter-intuitive. Companies think this way, and you talk this way. Is it difficult for companies to make this U-turn?
Joe Pine: Incredibly hard. It’s really a matter of mindset. They have a mindset of hanging people up as quickly as possible because it’s productive. We have to be productive, right? And so on and not recognizing the value of spending time.
Sometimes it takes drastic measures to change or I’ll say it, sometimes you have to stop a drastic measure, which is in contact centers…average handle time. Stop measuring average handle time. Stop measuring how little time we spend with customers. Like Zappos, let people spend so much time, instead measure call success, measure what Zappos calls a personal-emotional connection. Measure the connections we have with customers rather than measuring how little time we spend with them. This can then change the mindset, but it’s a chicken or egg problem.
Paul Greenberg: How do you, indeed, create these simple ideas out of the complexity of that? It is complicated.
Joe Pin: Well, the first is to start with American Girl. I have long said this is the best retail experience in the world. What is amazing, of course, is that they are not a retailer, but a manufacturer. In fact, they make the dolls. Many of the best retail outlets in the world come from manufacturers, not retailers per se, because very often they don’t get it.
The American Girl in Chicago was the case where the average person walking through that store, the average girl walking into the store didn’t leave for more than four hours. If you imagine those four hours I would often experience expeditions where I would take people to different cities including if we were in Chicago or New York or Los Angeles you had to go see an American Girl just to see him. I often said to people who didn’t have daughters or… I brought in people from foreign countries. I say, ‘Okay, you might not understand this. That’s all I want you to do. Look at those kids’ faces, just look at your daughters’ faces and you’ll understand’, don’t isn’t it?
Paul Greenberg: Exactly.
Joe Pin: You have this memory?
Are more companies getting it now?
Brent Leary: Wow. AHT, Zappos… Is it 2022? These examples have been around for years. Does this mean that the mainstream thinking in business has not progressed over the past 10+ years?
Joe Pin: Well, there are many sectors of the economy where he hasn’t made much progress. We just talked about contact centers in retail, right? These are two who still do not understand. I don’t understand what the possibilities are. I don’t understand this, someone calling with the problem is a sales opportunity that you can manage in the contact center. It takes time to be able to understand this.
There are other sectors that are getting it and have made tremendous progress. As I said, manufacturers in particular are going into retail or creating flagship experiences like the Guinness Storehouse in Dublin or the Heineken Experience in Amsterdam, Volkswagen, and so on. It is the companies that have more than understood this.
There has been a lot of progress made in the technology and financial services industries and hospitals in particular, although there is still a lot of work to be done. In fact, I’ve probably worked with hospitals and other healthcare companies more than any other industry in the world for the simple reason that research shows that the better the patient experience, the better the outcomes than they get.
That’s what hospitals are for, that best outcome. There are dozens of examples of hospitals that really create a great experience and focus on that, but this does it again, requires rethinking, requires sketchy measurement, requires… Analogously to the contact center, our job is not to get the person out of the hospital bed as soon as possible. That’s not the job, although that might be how you get paid, right? This is the end result. This often requires being in contact with him and so on. The payment system in hospitals, the measurement system in hospitals is so screwed up compared to other industries because you have third-party payers instead of the person with the experience, having control over the [inaudible 00:06:10] how much you get from that experience it tends to screw things up.
Paul Greenberg: How do you start looking at millennials and Gen Z and designing and creating memorable moments for them, as opposed to the historical way we did when we came to power?
Joe Pin: Whenever someone talks about generations, I always mean that the differences between generations are just changes, not massive changes. They simply move in hundreds of bell curves. When you examine each individual, the fact that you know they belong to a particular generation tells you nothing about who they are as an individual and what they want. This is where the modularity, the expendability as you call it, of experiences is so important that you still have to treat them as an individual, living, breathing, human being and not say, “Oh, you’re a Gen Xer , so it’s true”. This is simply not the case.
I used to tell customers that the worst thing that can happen is if a customer pulls out their phone in the middle of your experience, because that means they’re effectively leaving your experience, right? They immerse 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. This is obviously the biggest difference and there are many others. Like you said about digital, I also think millennials are the first generation to grow up in the experience economy, right? Not just in the service economy, in an experience economy. It makes a big difference in how they deal with things where it’s experience first and services and goods second.
This is part of the series of individual interviews with opinion 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.