Welcome to the Experience Economy
Quality products and good service may not be enough for ever-changing consumers
First, there were commodities: grain, lumber, wool, gold. Then came manufactured goods: bread, furniture, clothing, jewelry. Finally came services: takeout meals, interior design, dry cleaning and jewelry appraisal.
The next shift? Experiences will replace services as the economic unit of highest value, say retail consultants Joe Pine and Jim Gilmore. Services are already being commodified, Pine told retailers at this years GlobalShop store fixturing show in Chicago, IL.
Do you doubt whether experiences are the next big thing? Consider:
- Parents now spend an hour a day driving their young offspring from one experience to another from school to piano lessons to soccer practice, for example.
- A dentist in California slashed his cancellation rate by remodeling his office to resemble the set of The Flintstones. Children now badger their parents to keep appointments.
- To help customers experience its goods before buying, the REI sporting goods store in Seattle, WA, features a miniature indoor mountain to test climbing gear and a track around the store to try out bicycles and other outdoor gear.
Experiences are now a distinct economic offering, says Gilmore. Unlike commodities and goods, which are tangible, and services, which are intangible, experiences are memorable and this means inherently personal. Translation: There are different types of experiences and, as with any form of merchandise, customers have preferences.
Gilmore and Pine measure experiences on two scales:
- Active vs. passive. This measurement ranges from pure observation to active participation, with various mixtures of the two possible. Watching a show or viewing an art exhibit are passive; taking a class is active.
- Absorption (intellectual/emotional involvement) vs. immersion (physical participation). Listening to a concert is absorbing; dressing up military style to play paintball is immersion.
The ideal is to hit the sweet spot, the nexus of all four, says Gilmore, who lists five imperatives to the merchandising of experiences:
1. Harmonize impressions. Make each element of the experience work. At the Rainforest Café restaurant chain, for example, diners are summoned with the announcement, Smith party, your adventure is about to begin.
Jewelers Application. Usher your fine jewelry customers into your store as guests. Help them live the fantasy of buying fine jewelry by inviting them to try on your show-stopper piece of the moment the diamond necklace thats staggeringly expensive, for example. Be sure to reassure apprehensive customers its just for fun so they dont feel intimidated.
2. Mix in memorabilia. The American Girl store in Chicago uses hair scrunchies as napkin rings at its in-store restaurant and allows diners to take them home. (There is a universal desire for an artifact of experiences that people want to remember, says Gilmore.)
Jewelers Application. Buy inexpensive mineral specimens at the Tucson shows and give them to special customers. Be sure to nestle them in one of your boxes so the gift feels special.
3. Engage all five senses. Example: popcorn.
Jewelers Application. Brew fragrant coffee in the morning, offer expensive juices or tea in the afternoon, make it wine after five.
4. Direct employees to act. Script employee behavior to support the theme. Staffers with the Geek Squad, a Minneapolis-based computer service firm, arrive dressed in white, short-sleeve shirts with dark, narrow ties and wearing pocket protectors.
Jewelers Application. Hold glamour days in which employees come dressed to the nines. Let them wear your most expensive pieces. Also hold dress-down days in which employees wear casual, inexpensive jewelry. Have sport days, where employees come dressed for their favorite activities. Adorn them with sport watches, simple platinum chains and no-frill earrings.
5. Charge admission. Charging legitimizes the value of whatever you offer. Vinopolis, a wine store, collects a $5 entry fee for which it allows customers five wine tastings.
Jewelers Application. Hold repair and estate events where a small charge for evaluation can be applied to the service, if your store performs it. This may seem controversial to many jewelers, but theres no question people feel they get more value when they pay a price. Though repairs and estate events are services, they also can be experiences, where you promote ahead of time that expert jewelers will demonstrate filigree work, for example. A guest estate expert could give a lecture on the hallmarks of fine old jewelry.
6. Mass customize the offerings. Customers value products tailored to them. Dell Computer builds computer systems to order, for example. Levis provides a hot tub in its San Francisco store; customers don a new pair of jeans, then climb into the tub where they are stretched to an exact fit.
Jewelers Application. Train your staff to fit jewelry to facial shapes, skin tones and favorite colors. Form relationships with suppliers who can deliver tailor-made pieces quickly.
by Mark E. Dixon