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Experience Management

A peek into the future with the godfather of the Experience Economy

When Joe Pine and James Gilmore first coined the phrase ‘the experience economy’ over 20 years ago, they started a revolution that would see tens of thousands of businesses transform how they operate in order to go beyond goods and services to start selling ‘experiences.’

We caught up with Joe Pine to find out more about how the Experience Economy has evolved and where he sees the opportunities for businesses to grow with experiences over the coming years.

It could so easily have been called the Mass Customization Economy or, who knows, even the Mass Customization Platform — if only it wasn’t for the ‘ah-ha’ moment Joseph Pine had when explaining his theory to a student at the IBM Advanced Business Institute.

His rationale — and the topic of his first book in 1993 — was that the days of the mass market were over and that future success was about customization at scale, providing each and every customer with what they want at a price they’re willing to pay.

That customization turns goods into services. Asked by one of his students what services become in the new economy, Joe replied, ‘an experience.’

And the Experience Economy was born.

“I literally went, ‘Whoa, that sounds good — I’ve got to write that down’,” he says. “So it came in a flash like that. Then I thought about it more and more and I decided it was true.

When you design a service that’s so appropriate for a particular person and it’s exactly what they need at this moment in time, you can’t help turn it into a memorable event.

“And once I figured it out, I could see it everywhere.”

Since that fateful conversation, Joe’s theory was published in his 1999 book that changed how tens of thousands of organizations view their business,  The Experience Economy: Work Is Theatre & Every Business a Stage.

It articulated for the first time a distinct economic offering separate from commodities, goods and services — an offering that has been growing 4 times faster and driving growth for the world’s most successful companies.

“Today, we are in an economy where experiences are the primary drivers of growth, jobs and GDP,” he says.  “Goods and services have been commoditized, so experiences are where businesses can create unique value.

“It’s funny I used to have to argue with people that this was going on — often using just statistics, analogies and frameworks. But today, even if nobody’s ever heard of the Experience Economy, when I explain it everyone goes ‘Well, yes — of course!’”

Time well saved or time well spent?

There’s no doubt that the Experience Economy and experience management are now firmly planted in business lexicon — you only have to look at the number of organizations hiring Chief Experience Officers or transforming their businesses around customer or employee experiences to see the importance it’s being given at the highest levels.

But for Joe, for all the growth of CX as a business discipline, something has been lost along the way when it comes to ‘experiences.’

Customer experience has so often come to mean ‘let's just be nice and easy and convenient,’” he says.

“Nice and easy and convenient are all well and good, but they’re service characteristics; they don't rise to a level of memorability. They don't rise to the level of increasing engagement. And convenience is the antithesis of an experience because it is getting in and out as quickly as possible.”

Instead he says,

Staging great experiences is around intentional design.

“When you think about experiences, you’re designing time — you’re designing the time your customers spend with you whether that’s with your product, in your store or online,” he says.

“Some places provide a great experience sort of by accident. You know, where they just have great people and they're very engaging — they just happen upon a design or format that works.

“But you do have to be intentional about it. You have to intentionally design the place — and this applies online too — and you need also need to theme the experience. The theme is your intention, it's what you want this experience to be.

“And so you end up having a cohesive experience because everything is designed to fit the theme that you have.”

Experiences are theatre, employees the actors

One element of Joe’s seminal work on the Experience Economy that’s often overlooked is the role of employees in staging experiences – the idea being that day in, day out employees are on stage in front of customers and they need to perform.

When workers are in front of customers — and again this applies not just in a physical place but applies over the phone, in chat bots, email conversations and so forth — they are on stage and need to act in a way that engages the audience.

“If I'm working in a hospital for example, I have my job — I have to check people in, give them directions, route them, take their temperature and all these other things you need to do. But how you go about doing what you do can turn any mundane interaction into an engaging one.”

He points to the Geek Squad as the perfect example. “Their functional task is to repair computers. But how they go about doing that is what makes it a memorable experience — by showing their badge, by wearing the Geek Squad uniform with the white shirts and the thin black clip-on ties,  you know, just in case they get caught in the printer!

“They turn that service into an experience and they are memorable because they thought intentionally about doing it, even down to the white socks they wear because it makes the black pants and shoes pop.”

What comes next after experiences?

There’s still a long way to go for the Experience Economy — the vast majority of organizations have yet to fully embrace it.  Joe points to retail as just one sector that has not yet learned the lessons, leading to more store closures every year.

But it’s moving on at a fast pace regardless and the next frontier, Joe believes, is being able to customize the experience.

“One of the things that you'll see is more and more is programmability of experience,” he says.

“The easiest way to do that of course is to make things more and more digital, allowing you to deliver fresh experiences to the customer every time they interact with you.

“Carnival Corporation, for example now has an offering called the Ocean Medallion. It’s an IoT device that enables them to know who you are and what you want to do, based on what you told them before you get on board.

“Once you’re on board it starts to learn more and more, like how highly you enjoyed something. So they can begin to create a mass customized itinerary — they remember things like when you’re on the pool deck with your kids, your favorite drink is iced tea with no lemon; but if you’re in the bar with your buddies it’s a mojito; in a restaurant with your spouse, it’s a glass of Shiraz.

“We’ve gone from mass market to understanding that each person is a market in themselves, but now we’re realizing that each person is in fact multiple markets. These kinds of technologies will help organizations identify what market you are in this very moment. It’s a huge thing we’re going to be seeing more and more of in different places.”

From experiences to transformations

That level of customization is the ultimate frontier in the Experience Economy, and opens up what Joe refers to the 5th and final economic offering — transformation.

“When you customize an experience and stage experiences so appropriate and tailored for this particular person,” he says. “you can't help but create a life-transforming experience that changes us in some way.

“And that is a distinct economic offering from commodities, goods, services and experiences.”

Any business would be wise to heed his advice too — after all, you’d be a fool to bet against the man who predicted the power of experiences and, in the process, gave a name to a way of doing business that will continue to define the winners and losers over the next twenty years.

But ask Joe about future predictions and he’ll tell you himself he’s no futurist.

“I just tell you what’s happening now,” he says. “You just don’t see it yet.”

Webinar: How to customize customers' experiences

Learn more from Joe Pine in this webinar