Joe Pine of The Experience Economy; Companies need to create a memory

If you’re doing business today — and even if you aren’t — you can’t wait long without hearing, reading, or talking about the customer experience, and the experience economy more generally. That was not 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, and wrote the groundbreaking book The Experience Economy a year later. And things in business really haven’t been the same since then.

Recently, Paul Greenberg, my co-host of CRM Playaz, and I had the pleasure of having Joe Pine join us for a LinkedIn Live talk about how the ideas expressed in the book have evolved over time and how businesses have done to put those principles into the book especially in recent turbulent years. Below is an edited transcript of part of our conversation. Click the built-in 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 a revelation. It was a blunder. 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 economic awards in goods and services. You can see that when you do a good mass customization, you’re really in the business of helping people figure out what they want. Then you make it and deliver it to them individually – services are provided on demand and goods from stock.

In late 93 or early 94, this guy in the back of the room with this workshop I was doing is a bit of a smart idiot. And he raised his hand and said: you are talking about service companies that provide massive customization, so what does a service become?” 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 fluke, right? It just came out. But then I thought about it, and that’s where the revelation takes place, that this is really true. When you design a service, it’s so fit for someone that you can’t help but let them go, wow. And make it a memorable event… it became an experience. Therefore, experiences would be a clear economic offer. And you would have an economy based on experience and everything flowed from that. That’s almost 30 years old work.

Experiences, service and moments

Joe Pine: Most people don’t talk about memorable events when they use the term CX or customer experience. They are not talking about distinctive experiences in this context. They are really just talking about good service. That’s all CX has to offer you, good service. All the technology you’re talking about provides good service.

Basically, what we’re talking about is making our interactions with customers fun and easy and convenient. That’s all well and good, but those are service features. I mean, fun is fun, but does it rarely get to the level of memorability?

A distinctive experience, it must create a memory. If you didn’t create a memory, it wasn’t an economically distinctive experience. When we talk about making things easy, it often comes down to making things routine for our employees and making it easy for them to serve customers. That gets in the way of being personal and experiences are inherently personal. They actually happen in us in response to the events that are staged before us. That is one of the main differences. Services, goods, good services exist outside of us, experiences happen within us.

Finally, convenience is the antithesis of what I’m talking about, as it means getting in and out as quickly as possible. As a company, let’s spend as little time as possible with customers. When with the experiences and what people value is their time, right? Services and shorter time well saved, fun, 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 like they are not intuitive. The companies think so, and so do you. How difficult is it for companies to make that turnaround?

Joe Pine: Incredibly difficult. It’s really a mentality issue. They have a mentality that is to get people off the phone as soon as possible because that’s productive. We have to be productive, right? And so on and not recognizing the value of spending time.

Sometimes it takes drastic action to change or I will say so, sometimes it takes drastic action to stop, which is in contact centers… average handling time. Stop measuring the average processing time. Stop measuring how little time we spend with customers. Like Zappos, let people spend so much time measuring the success of the calls instead, measuring what Zappos calls a personal-emotional connection. Measure the connections we have with customers instead of how little time we spend with them. That may change the mindset, but it’s a chicken-or-egg problem.

Paul Greenberg: How do you actually create these simple ideas out of the complexity of this? It’s complicated.

Joe Pine: Well, start with American Girl first. I have long said it was the best shopping experience in the world. The amazing thing, of course, is that they are not a retailer, but a manufacturer. They make the dolls real. Many of the best retail locations in the world belong to manufacturers, not retailers per se, because they so often don’t get it.

The American Girl in Chicago found that the average person who walked through that store, the average girl who walked to the store, didn’t leave for more than four hours. If you imagine those four hours. I’ve been on many expeditions where I take people to different cities, also when we’re in Chicago or New York or LA you have to go to an American Girl to see it. I often told people who didn’t have girls or from… I brought people from abroad. I say, “Okay, maybe you don’t get this. This is all I want you to do. Look at these kids’ faces, just look at your girls’ faces and you’ll get it,” right? What’s happening ?

Paul Groenberg: Exactly.

Joe Pine: Do you have that memory?

Are more companies getting it now?

Brent Leary: Wow. AHT, Zappos… Is this 2022? These examples have been around for years. Does this mean that dominant thinking in business has not evolved over the past 10 years?

Joe Pine: Well, there are a lot of sectors of the economy where it hasn’t progressed much. We were just talking about retail contact centers, right? Those are two that still don’t get it. Don’t understand what the options are. Don’t get that, someone calling with the problem is an opportunity that you handle in the contact center. You have to make time to figure that out.

There are other sectors that do get it and have made huge strides. As I mentioned, manufacturers in particular are going to retail or create flagship experiences like the Guinness Storehouse in Dublin or the Heineken Experience in Amsterdam, Volkswagen and so on. Those are the companies that more than get it.

Much progress has been made in the technology industry and financial services and hospitals in particular, although there is still much work to be done. 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 experience patients have, the better the results they get.

That’s what hospitals are about, is that a better outcome. There are plenty of examples of hospitals that really create a great experience and focus on that, but it does it again, requires reconsideration, requires a summary measurement, requires… Analogous to the contact center, our job is not to take the person out of the hospital bed as soon as possible. That’s not the job even though you might get paid that way, right? It’s the end result. That often requires contact with him, and so on. The payment system in hospitals, the metering system in hospitals is so screwed up compared to other industries because you have third party payers instead of the person with the experience who is in control of the [inaudible 00:06:10] how much you get out of that experience that it tends to mess things up.

Generation experiences

Paul Greenberg: How do you start looking at millennials and Gen Zers and designing and creating the memorable moments for them, as opposed to the historical way we did when we came to power?

Joe Pine: Whenever someone brings up generations, I always want to talk about the fact that differences in generations are just shifts, not large-scale changes. They just shift in hundreds of bell curves. If you go into each individual, the fact that you know they are members of a particular generation doesn’t tell you anything about who they are as individuals and what they want. That’s where the modularity, the consumability as you call it, of experiences are 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, that’s why this is true”. That’s just not the case.

I used to tell customers that the worst that can happen is if a customer pulls out their phone in the middle of your experience, because it means they’re effectively leaving your experience. Now that is of course not true. Now you are designing ways for them to use social media. That is of course the biggest difference and there are many more. As you 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 to the way they interact with things, with the experience coming first and the services and goods second.


This is part of the One-on-One Interview with Opinion Leaders series. The transcript has been edited for publication. If it’s an audio or video interview, click on the embedded player above, or subscribe through iTunes or through Stitcher.

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