Thriving in the Experience Economy

In 1998, Pine and Gilmore first described the Experience Economy as a natural evolution after the Service Economy.   They argue that businesses need to orchestrate memorable events for their customers and that the memory itself becomes the product.  In their book a “Field Guide to the Experience Economy”, they posit that Las Vegas is the epicenter of the Experience Economy and share a framework for observing and recording the elements that, combined, create memorable experiences.

Around ten years earlier, in 1988, Steve Wynn began working on The Mirage, his version of the Experience Economy.  With its volcano, waterfalls, shark tank and Siegfried & Roy headlined showroom, The Mirage was established to not just provide products and/or services to guests, it was created to “wow” them….in short, to provide an experience like nothing else seen (or experienced) before.  Mr. Wynn of course followed The Mirage up with Treasure Island, Bellagio, Wynn Las Vegas and more since then.

Some thirty years prior to Wynn, Walt Disney opened the world’s first choreographed and scripted collection of experienced-based environments in the form of Disneyland followed 15 years later by the even more ambitious Disneyworld.

Whether you subscribe to Pine and Gilmore’s original thesis, the evolution of the traditional product- and/or services-based business model is clear.  While it’s, arguably, most apparent in the deliberateness of Wynn’s work or the fantasy-meets-real-world approach of Disney, the market is sending a clear message about where they place their values and it’s felt by retailers of all sorts via their bottom line.

The fundamental exchange of value in malls, shopping districts, or the traditional Main Street was the dense concentration of products.  Today, the same mass concentration of products is available online so bricks and mortar retail outlets must look to experience as a differentiator. This phenomenon is also happening at a smaller scale, whereby individual retailers (Nordstrom for example) recognize that HOW a product is bought is as important (or perhaps more important) than the product or service itself.

As noted above, Pine and Gilmore call Las Vegas the epicenter of the Experience Economy.  Perhaps that is due to Mr. Wynn and others recognizing that Vegas is all about an aspirational, fanciful, escapist customer experience and that memories made here in Vegas don’t in-fact stay here in Vegas but live on. But what makes Vegas, Vegas?  Or for that matter Disney, Disney?  Or Nordstrom, Nordstrom?  What, exactly then, is the basis of this evolving concept of an Experience Economy? 

The answer is that the actual experience of acquiring a product or service becomes the transaction itself.  Any business-to-consumer based entity that wishes to elevate itself above the baseline commoditization offered by internet-based competitors must shift its focus to why the consumer is buying and the experience around that interaction. 

In other words, stop competing for the transaction. By and large, the internet has won. Compete on experience and emotional connections. Businesses that offer memorable experiences will find that these experiences create emotional connections with their consumers. Emotional connections are the building blocks of brand loyalty. Those that can successfully achieve this will succeed in today’s experience driven economy.

This is all easier said than done but the financial rewards for companies that are successfully able to play in this space are enormous. Las Vegas is a great case study to reference as you journey through the experience economy.