The Experience EconomyPosted: April 17, 2008
If you’re interested, listen to Jim Gilmore, author of The Experience Economy.
What’s the Experience Economy you ask?
The Experience Economy is a new stage of economic offering. It began with the agriculture based economy that dealt mostly in raw materials: wheat to bake ones own bread, wool to knit the family garments. Then came the industrial revolution, where millions of people moved from countryside to town, from field to factory floor. Free time was short and so not only did the factories produce steel and iron, engines and ships, they also produced canned food and knitted clothes and the corner bakery produced the daily bread. The era of mass manufactured goods had arrived.
Further economic prosperity and increased automation increased wages and decreased the hours worked. But rather than use the increased non-working time to return to making our own bread and knitting our own clothes, we (in the advanced industrial economies) have chosen to spend our time purchasing services. Restaurants now cook and serve our meal and clear the dishes; personal shoppers advise on suitable fashion garments and then they spend time making the purchase.
This Service Economy has become so rooted and so prevalent that in many instances it is becoming commoditized in the same ways that raw materials such as wheat and oil certainly have. Now we find ourselves in the next form of economy, where in seeking to differentiate themselves, many companies are moving beyond services into experiences. Thus Chuck E Cheese offers more than a meal; it will host your child’s birthday party, complete with a candle lit cake and amusements. The Experience Economy has moved beyond merely selling raw materials, or providing services, but into selling experiences.
Take Starbucks for example. What’s with the proliferation of the coffee shop these days? It seems like you can’t go more than a block without taking in a whiff of the sweet aromas of brewing beans. (I bet heaven’s going to smell like fresh brewed beans). So have you ever thought of why Starbucks is so popular? Think about it for a second. Why the heck are we willing to pay $3-5 for a cup of coffee, when we can make a perfectly good cup at home for a fraction of the cost. It’s because of the experience you have when you enter a Starbucks, not just the service. How do we know this? As Jim points out, look at the percentage of square feet dedicated to actually making coffee in a Starbucks cafe. It’s miniscule! A huge majority of the space inside the cafe is taken up by chairs, couches, & tables. Why? Because they’re selling an experience along with the coffee. They want you to sit, enjoy the music, enjoy a good conversation, all the while, sipping on their brand new Pike Place House Blend coffee. That’s why they charge $5/cup. And that’s why we pay $5/cup. It’s no longer about the actual commodity or good, nor is it merely the service of producing a good that’s being marketed, but it’s the experience of consuming that good or commodity that’s being sold.
The ultimate example of the Experience Economy? Medieval Times! $40 to eat roasted chicken & drink Pepsi? No thanks! But wait a minute…Are you saying I can eat the chicken with my fingers & drink Pepsi out of a medieval goblet?! I’m in!! And not only that, but you get to cheer for your colorful knight in shining armor as they joust before your eyes. Ultimately, it’s not about just the chicken and pepsi. It’s not about watching a simulated joust. It’s about transporting you to another place and time for 2 hours. (all you need is a major credit card).
Why bring this up? Because our generation is hungry for experience. They want to feel something. They want to be immersed in something. They’re no longer “buying” Christianity, they’re wanting to experience it. There’s tremendous implications if we understood the mentality of our generation. Let us be the living example of Christ, so that our hungry generation can be fed by the life transforming power of the gospel!