Handbook Experience economy - ExBased - Home Experience economy 6 “A few years ago, I saw some teenagers at a Wal-Mart putting quarters into one of those elaborate gumball machines

HandbookExperience economy

Handbook Experience economy

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Experience based

“People want experiences. They’ve become more qua-lity conscious. Who isn’t tired of dreary luncheon buffets at course venues? People want more than that now.”- Pia Thybo, director of Nordisk Skoletavle Fabrik.

This handbook is the result of the ExBased project, funded by the European Commis-sion. ExBased (experience-based business development in conventional SMEs) is aimed at local and regional public-sector business consultants. It has developed a struc-tured train-the-trainer programme, which includes a tool kit that enables consultants and local/regional small and micro-companies to work strategically with experience-based business development as a tool for company and product development.

Introduction

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ABOUT THIS HANDBOOKThe current economic climate has led to an increase in turning goods or service offer-ings into commodities. Companies are finding it more and more difficult to differenti-ate and to work out the right strategy on quality and price to help them to remain sustainable.

How does your company differentiate between your offerings?

How does your company stand out?

This is when your business needs to embrace the Experience Economy and let it take centre stage.

In this handbook you will find:

• Anintroductiontotheconcept‘experienceeconomy’,basedonthemajor and standard academic works/theory in this field;• Somebasic,practicaltipsonhowtoaddexperientialelementstoproducts and services; and• severalinspiringcasestudiesfromacrossEurope.

TABLE OF CONTENTS1. WHY?

2. WHAT? HOW TO STAGE EXPERIENCES 3. HOW? TEN CHARACTERISTICS OF MEANINGFUL EXPERIENCES SIX DESIGN PRINCIPLES EXERCISE A CHECKLIST FOR CREATING AN EXPERIENCE BASED BUSINESS 4. NEXT STEPS

In addition the Exbased project has trained several consultants to assist companies to enter the exciting field of the Experience Economy. Interested? Please visit www.exbased.eu

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Case: Nordisk skoletavle fabrik

Nordisk Skoletavle Fabrik was a traditional industrial company that produced blackboards for classrooms and conference facilities. During the 20th Century the business had lost market share in Japan and elsewhere and needed to reinvent it-self and its image. When faced with having to construct new headquarters, the com-pany saw an opportunity to carefully consider its business goals and development.

As a result of this development process the company created a showroom that pro-vided not just a passive experience but also a conference centre with classroom facilities. At the same time they added a coffee bar, fitness and wellbeing facilities, and other experience based offerings for employees and visitors which serve as a focal point for new corporate concepts.

NSF’s new concept started out as an attempt to create an alternative to a classic showroom, but has now become a huge marketing tool for the business. Since NSF opened the doors of its new conference facilities, more than 2,000 business man-agers have visited the company and that was before any money had been spent on marketing the new facilities. If NSF had sent a sales rep on the road to get in touch with the same number of business managers, this would have taken several years.

NSF is beginning to notice the synergy effects between the company’s new initiatives and the production of blackboards. Through contacts established and built up in the conference facilities, NSF has received many orders for blackboards and has high expectations for the future.

“We’ve gone from being very unit-based to very knowledge-based. We’ve actually done a huge about-face. So I must have been smarter than I thought.” – Pia Thybo, Director of NSF.

Case study available at http://www.exbased.eu/Website: http://www.nsf.dk/

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“We are shifting to an experience economy where experiences are becoming the predominant eco-nomic offering.”- Joseph Pine (A cofounder of Strategic Horizons LLP, writer and veteran consultant)

WE COMPANIES ARE MOVING INTO A NEW ECONOMYThe world is changing. Companies (mainly in the western world) are no longer able to compete just on price or quality. Several trends and evolution have given rise to a new economic era. (Daniel H. Pink)

• Asia and globalisation: how are we going to compete with China and India?• Automation and technological development: computers can outperform hu- man left brains; the world is changing constantly from one technological revolution into another.• Abundance: people have too much of everything, they are looking for something unique• Rising consumer demands: rising brand awareness, politically correct consumers (environment; production ethics), personalisation (self-staging)• Increased levels of commoditisation: increasing focus on price (internet; discount wave; growing competition)• Increasing wealth: how do customers spend their money?• Product life cycle and company life cycle: how do companies re-invent themselves day after day?

Why?

WHAT COMPANIES

SHOULD DO?

Businesses need to orchestrate memorable events for their cus-tomers so that the memory itself becomes the product – the “experience”.

In the 21st century, people consume and shop in new ways and expect products and services not only to fulfill a function but also to provide them an experience.Consumers are in a search of something more.

That in the United States of America there are 307+ million people and 90%+ of households can access electricity.But the candle business is worth $2 billion a year!

Because candles give us more than just light > an intimate dinner for two; an indul-gent bath-time soak; a cosy family evening.

Did you know?

Why?


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“A few years ago, I saw some teenagers at a Wal-Mart putting quarters into one of those elaborate gumball machines with flashing lights, spiraling tubes, and cascad-ing chutes—a roller coaster of sorts for gumballs. They were feeding coin after coin into the machine only to watch gumball after gumball circle around and around. And they weren’t consuming the gumballs after they came out! What were they buying? An experience! This gumball-spiraling episode struck me as an iconic representation of the emerging Experience Economy. Today, consumers increasingly desire neither goods, nor services but sensation-filled experiences that engage them in a personal and memorable way.”- J. Gilmore

The term Experience Economy was first described in a book written in 1999 by B. Joseph Pine ll and James H Gilmore titled the “Experience Economy”. In it they de-scribed the experience economy as the new emerging economy to follow the agrar-ian economy, the industrial economy and the most recent service economy. They define the experience economy as companies which “stage meaningful events to engage customers in a memorable and personal way”.

What?

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The Heineken Experience is an example of a traditional beer manufacturer providing a staged experience through a museum which is dedicated to the beer brand Heineken through its brewery in Amsterdam. This museum offers you tours, interactive exposi-tions and two cafés. It also takes you back into the history of the company and the development of the brewing process over the years. With this museum, Heineken not only adds value to its business but also promotes and creates brand loyalty.

Heineken Experience


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HOW TO STAGE EXPERIENCES If we take Coffee as an example we can observe progression of economic value lead-ing to a staged experience as follows;

1. Companies harvest coffee beans or trade it on the future markets at a relatively low value.

2. The manufacturer grinds, packages and sells those same beans to supermarkets, turning them into a good, the price to a consumer is around 0,10-0,20€ per home-made coffee cup (depending on the brand and package size).

3. When this coffee is then made in a café and served to a customer the price jumps to between 2-3€

4. However when a coffee cup is served in Starbucks with special combinations such as spices and nice surroundings it costs a little bit more than in normal café, 4-7€, and much more, 10€ when it is prepared in a five-star restaurant or espresso bar in a special setting. The customer is willing to pay more for the experience.

Make goods ‘boxwithcoffee–DouweEgberts’

Deliver services ‘ordercoffeeinacafé’

Stage experiences ‘Starbucks’´five-star restaurant´

Com

pete

tive

posit

ion

Price

Customers needsExtracted commodities

‘coffeebeans’

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Case: PIM PAM PARTY

Pim Pam Party offers unique party boxes for unique children’s parties. The boxes offer afull package for a dream party making it pos-sible to create a fun party creatively, easy and fast. The company works locally and de-livers pre-ordered packages themselves with last minute tips and guidance. “Pim Pam Party … let the party begin!”

Website: http://www.pimpamparty.be/Read the case study at:http://www.exbased.eu/


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Case: TOMS Shoes

TOMS Shoes was set up by an American traveller, Blake Mycoskie, after he met chil-dren in Argentina and discovered they had nothing to wear on their feet. The simple principle behind TOMS is One for One – for each pair of shoes bought by a TOMS customer, a pair is given to a child in need in some of the poorest countries in the world. TOMS have now given away more than 1 million pairs of shoes.

In addition to selling shoes, TOMS have a growing community (both on- and off-line) which encourages customers to hold events that raise awareness of their plight. These includeanannual ‘Onedaywithoutshoes’walk(forwhichTOMSprovideadownloadabletoolkit)anda‘StyleyourSoleparty’wherecustomersareencouragedto get together to customise their TOMS.

Website: www.toms.comRead the case study at www.exbased.eu

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“Any experience concept will fail if the business model is not con-sidered beforehand and con-tinuously adjusted as learning proceeds in time.”- Boswijk, Thijssen & Peelen

EXPERIENCES ARE INDIVIDUAL AND PERSONALBased on: A new perspective on the Experience Economy - Meaningful ExperiencesAlbert Boswijk, Thomas Thijssen and Ed PeelenThe European Centre for the Experience Economy, the Netherlands

Boswijk, Thijssen and Peelen argue that the experience economy is about more than just offering a staged setting for an experience. The point of departure needs to be the individual’s personal experience: his or her everyday world and societal context.

HAVE YOU THOUGHT OF• Whichexperiencesactuallychangedyourlife,andthatyouwillneverfor- get?• Whichexperiences,inacontextwithotherpeople,willyouneverforgetin your life? • Whichexperiencesyouwillneverforgetinyourlifewhichyoupaidfor?

All these experiences are personal, some more or less social and cultural and have to do with discovery, adventures and new initiatives.

TEN CHARACTERISTICS OF MEANINGFUL EXPERIENCESExperiences are not static units like products. Experiences occur in a process during which interactions take place in a certain setting – whether physical or not – between the individual and other people. This makes experiences, just like services, intangible. What do we need to do in order to bring about a meaningful experience in a commer-cial setting? We need to provide the customer a product/service which ensures that:

1. Their concentration is heightened and the focus is more intense, involving all senses.2. Their concept of time is altered.3. They are touched emotionally.4. The process is unique for them and has intrinsic value.5.Thereiscontactwiththe‘rawstuff’,therealthing.6. They are engaged or undergo a transformation.7. They feel there is a sense of playfulness.8. There is a feeling of having control over the situation.9. There is a balance between the challenge and their capabilities.10. There is a clear goal.

How?


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Six Design principles

• Useatheme

Doesthecon

cepthaveat

heme,astoryora

’storyline’?

Isthereaphi

losophybehin

ditthat

visitors and customers can clearly recognise? An effective theme is concise and compelling.

It is not a corporate mission statement or a marketing tag line. The theme must drive all the

design elements and staged events of the experience toward a unified storyline that wholly

captivates the customer. See examples on page 13: De Efteling, Autostadt.

• Usepositivec

ues

Are all the impressions, that a visitor gets, harmonised by means of positive cues? Are all

impressions in sync with each other? To create the desired impressions, companies must in-

troduce cues that affirm the nature of the experience to the customer. It is the cues that

maketheimpressio

nsthatcreate

theexperienc

einthecusto

mer’smind.Seeanex

ampleon

page 14: The Lairesse Apotheek.

• Avoidnegative

cues

Unplanned or inconsistent visual cues can leave a customer confused or lost. Even an oth-

erwise beautiful environment can often leave a negative impression on the visitor. It could

be overflowing ashtrays, or boxes stacked up in a stunning lobby. If you start paying atten-

tion to them, you can discover distracting elements in practically any environment. See an

example on page 14: Disneyland.

• Includememorabilia

Are there things that you would like to take home with you to remind you of your visit and

remember the experience? We all know the little souvenir shops in tourist destinations, but

also the museum shops where you can buy reproductions, cards and books that can be last-

ing keepsakes. Most museums and amusement parks, such as Disney, lead you past this kind

of shop. Naturally, this is also possible on a qualitatively higher level, whereby visitors are

given (or can buy) meaningful souvenirs that they will use for a long time. See an example

on page 14: Adidas.

• Engageallfiv

esenses

The sensory stimulants that accompany an experience should support and enhance its

theme. The more senses an experience engages with, the more effective and memorable

it can be. Many experience settings are based on visual impressions. The rest of the senses

often remain unengaged. See an example on page 15: Porsche.

• Naturalandh

olisticappro

ach

The whole concept must make leave an impression of being natural and authentic. Some

spaces seem as if they were merely thrown together at random, and therefore feel uncom-

fortable. The entire concept should make you feel welcome, and synergy should be felt

between all the various elements. See an example on page 15: Eden Project.

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Examples of using a theme

VolkswagenAG’sAutostadt spent $417million to build a new facility

in Wolfsburg, Germany, which consists of a museum, six restaurants, a

hotel,andseveralpavilionsshowingoffalltheVWgroup’sbrands–all

in effort to transform industry stereotype from just another dealership

that sells cars to a car buying experience extravaganza.

www.autostadt.de/en/

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The Efteling Hotel is just near to the Efteling theme park and offers

guests the opportunity to live in a fairytale world for one or two nights,

or more. www.efteling.com

Harmonise impressions with positive cuesGive the experience a theme

Eliminate negative cues

Mix in memorabilia

Engage all

five senses

Natural and holistic approach


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In the Real Berlin Marathon after 42 km each runner received a green plas-

tic bracelet from Adidas that they could engrave with their personal best

time in the Berlin Adidas store. More than 65 000 runners were very eager

to take up this offer and were willing to wait quite some time (surrounded

by Adidas runner gear) to get their personal bracelet. www.adidas.com

DisneylandDisney characters can only be seen in one place at any one time.

www.disneylandparis.com

At the Lairesse Apotheek in Amsterdam, all im

pressions are in sync with

eachoth

er.Youc

anexper

ienceth

ispharma

cy’svisio

nthroug

hyourse

n-

ses, as it were. www.delairesseapotheek.nl

Examples of Using Positive Cues

Example of Avoid-ing Negative Cues

Example of Includ-ing Memorabilia

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Eden Project is a rich, global garden where people can learn about nature

and get inspiration about the world around them. They offer for example,

unforgettable learning experiences and fantastic arts, theatre and music

events in the greenest possible way.

www.edenproject.com

Automobile manufacturers have specialists who make sure a new car

smells just right. When Porsche switched from an air-cooled engine

to a water-cooled one, they received numerous complaints. What was

the matter? The familiar Porsche sound had disappeared. Porsche moved

heaven and earth to develop a new exhaust system which incorporated a

sound which was as close to the old, familiar one as possible.

Example of Engag-ing all Five Senses

Example of Natural and Holistic Approach

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Below are some questions which you can apply to you own business.

Using a themeDoes the business concept have a theme?

Yes

No

What is it?

Natural and holistic approachDoes the business concept leave an impression of being natural and authentic? How?

Use positive cues & avoid negative cuesAre all the impressions harmonized by means of positive cues in the business concept?

Yes

No

Is there something that could be done better?

EXERCISE

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Is there a risk of negative cues?

Yes

No

How can business avoid/eliminate those negative cues?

Include memorabiliaWhat would the business want customers to remember from this business concept?

Are there things customers can take home to remind them of the business concept/experience?

Engage all five sensesWhat senses is the business concept engaging?

Sight? Hearing? Taste? How?Smell? Touch?

What other senses could be engaged and in what way?

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Elämystalouden käsikirja

A CHECKLIST FOR CREATING AN EXPERIENCE BASED BUSINESSBased on: The Experience Economy and Commercial ExperiencesSusanne H. G. Poulsson and Sudhir H. Kale

Poulsson and Kale argue that for an encounter to be labelled an experience, one or more of the following sensations and feelings need to be apprehended by the cus-tomer: personal relevance, novelty, surprise, learning, and engagement.

• PersonalRelevanceistheindividual’sinternalstateofemotion,activation, and preparedness to engage in a specific experience.

• Noveltycanbedefinedas‘achangeinstimulatingconditionsfromprevious experience’.Thenoveltyprincipleisbasedonthefactthatpeopleare attentive and attracted to something that is new and different.

• Surprise:Anexperiencewillbeconsideredsurprisingifitcontainsoutcomes that are unexpected, and these unexpected outcomes contrast with domi- nant expectations of the consumer.

• Learning:Theelementsthatfurtherlearningaremotivation,cues,response, and reinforcement. Motivation acts as a catalyst for learning, with needs and goals serving as the stimuli. Cues are those stimuli that provide direc- tiontomotivation.Responseencapsulatesanindividual’sreactiontothe cues, and reinforcement increases the likelihood of specific responses occurring in future.

• Engagementcanbeinducedinanexperiencethroughinteractingwiththe customer. By actively involving the customer through asking for customer input,andbyprovidinghim/herwithpositivefeedback,thecustomer’s engagement with an experience can increase.

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Exbased economy

An illustrationTo illustrate how one or more of the above elements contribute to create various experiences, let us present Frank. Frank has had an eventful year and visited a range ofexperienceproviders.ThetablebelowpresentsFrank’s‘scorecard’forthevariousexperiences, assessed in relation to the five elements. Frank had a very intense experi-ence when doing a river rafting course. Just sitting in a kayak going down the rapids was a novelty, with surprises at every turn and twist. Learning to manoeuvre a kayak on his own was something that engaged him fully. In the end, he felt that the course had also given him a new sense of self, and confirmed his identity as that of somebody, who was always up for a challenge.

Frank’s ‘Experience Scorecard’

The wine tasting session similarly scored well in all categories, but the experience was a lot less intense on each element. The trip to a ghost house had some illusions that Frank had never seen before, and he had no idea how they got it to work; the illusions startled Frank on more than one occasion. So while the experience was clearly high on novelty and surprise, neither a lot of new learning, nor personal relevance was experienced in this visit. Watching his favourite football team play in the stadium, he found that the game itself did not hold much novelty for him, and nothing new was learned either. Still, Frank felt a strong sense of personal relevance, watching the game with his friends and other supporters of the team. For another person, the same four experiences could very well have resulted in a quite different scorecard. Someone who hates soccer and has no feelings for the teams involved would find the football game personally irrelevant, not to mention, boring.

These five elements of experience can thus act as a checklist for experience business.

Does your product/service have:

Learning

Learning

River Rafting Wine Tasting Ghost House Football Game

Experience PersonalRelevance EngagementNovelty Surprise

xx

xxx

xxx

xx

xx

xx

Product/service

PersonalRelevance EngagementNovelty Surprise

AWARENESS & INSPIRATIONWhat is Experience Economy?Presentation Customer Experience Tool

INNOVATION & CREATIVITY5 Senses toolPrioritising toolPersonal Recollections Exercise

BUSINESS PLANCase Study ExamplesLocal Partner ContactsConsultant’s expertise

Learning

Learning



xx

xxx

xxx

xx

xx

xx

Product/service





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Experience economy

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This section offers suggestions on how a business can be built or reshaped by applying experience economy principles. This section also introduces further links, innovation techniques and contact details.

The ExBased project was developed to present experience economy ideas and prin-ciples in a structured manner which can be accessed by a variety of clients whether they have had some or no knowledge of the Experience Economy. This has been achieved by putting together a modular training session which was tested on more than 50 consultants and a toolkit which has been compiled and finalised following feedback from both consultants and businesses who took part during the pilot stage of the project. As a result the toolkit has been developed in a way which assists con-sultants to help small companies to work strategically with experience-based busi-ness development.

Consultants are likely to meet companies at various levels of insights into the experi-ence economy:

Awareness and Inspiration Some companies will never have heard of, or thought about, the business potential in the experience economy. They will benefit from the consultant raising awareness of, and inspiring them to look at, the possibilities. This requires that the consultant has some insight into the company. To assist the toolkit contains a presentation on what the experience economy is, the Customer Experience tool, a link to this handbook and a list of recommended reading.

Innovation and creativitySome companies will have started to think about incorporating experiences into their business model, but they need one good idea, and/or help to prioritise from a large pool of ideas. They will benefit from the consultant assisting them with brainstorming sessions and creation of ideas, as well as prioritising these ideas, so they are able to work with the best of them. To assist the toolbox contains the following tools; The Five Senses, The Prioritising Tool and an exercise on personal reflections.

Development of a sound business modelFinally some companies will have a specific idea in mind, which incorporates experi-ences into their business model, but they do not know if they should implement it, nordotheyknowhow.Theywillbenefitfromtheconsultant’sassessmentofthepotential of their ideas, as well as assistance in developing a sound business plan. To assist the toolkit contains case studies highlighting what other businesses have imple-mented and contact details for local partners who will be able to link the business with a trained consultant.

Next steps

•

•

•

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Diagram highlights contents of the ExBased toolkit

For more information and full details on all the tools please visit the project website: www.exbased.eu

Or please contact your local partner for assistance

Partners/Contact details:

Belgium: Flanders District of Creativity, www.flandersdc.be Contact: [email protected]: South Denmark European Office, www.southdenmark.be Contact: [email protected]: Business Academy South West, www.easv.dk Contact: [email protected] Denmark: House of Business Aabenraa, www.ehaa.dk Contact: [email protected] Finland: Ideone Oy, www.creativetampere.fi , www.ideone.fi Contact: [email protected] United Kingdom: North Staffordshire Chamber of Commerce, www.nscciprojectteam.co.uk Contact: United Kingdom: Creative Industries Development Agency, www.cida.org Contact: [email protected]

www.exbased.eu

Learning

Learning



xx

xxx

xxx

xx

xx

xx

Product/service






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RECOMMENDED READING, REFERENCES AND BUSINESS CASE STUDIESA Whole New Mind: Moving from the Information Age to the Conceptual Age (2005) Daniel H. Pink

Welcome to the experience economy (1998) B. Joseph Pine & James H. Gilmore

THE EXPERIENCE ECONOMY A New Perspective (2007) Albert Boswijk, Thomas Thijs-sen and Ed Peelen

Handbook for experience stagers (2009) Sanna Tarssanen (edit.) Lapland Centre of Expertise for the Experience Industry

The experience economy and commercial experiences (2004) Susanne H. G. Poulsson and Sudhir H. Kale The Marketing Review 2004, 4

Disclaimer: The contents of this publication reflect the views of the author. The European Commission is not responsible for any use that may be made thereof.

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Case stories: summary table – full case studies available at http://www.exbased.eu/tool-box.aspx

Disclaimer: The contents of this publication reflect the views of the author. The European Commission is not responsible for any use that may be made thereof.

Broadcasting station that offers digital media with a social added valueParty boxes for chidren’s birthdaysIndoor diving and snorkelling centreBank services: objective to make bank business less serious and pretentious.Company producing chocolate by creating a special taste experience, based on the finest raw material, and the story that follows these raw materials.A conference centre that offers classroom facilities and at the same time, a coffee bar, fitness and wellbeing facilities and experience offerings for employees and visitors.Designed waste bins and bathroom equip-ment.A center, which offers events , stores with food specialities, their own spring water, lifestyle products, interior design accessories, workshops for different arts and crafts and rooms for parties or meetings.Controlled party game and interactive play.Individually-fitted shoes for men with the help of technology.Center that specializes in traditional construction and building materials. They also offer repair services, seminars and professional education.A design hotel that differentiates itself based on specialized bathroomsMarketing and communication consultancy that developed an experiental marketing strategy for Emma Bridgewater (tableware brand).Apple product and software knowledge, Apple-certified training, regular seminars and events, competitions, technical support and maintenance.Film production company that offers services from scripting and planning, through filming, editing, voiceovers, graphics and soundtrack to DVD design and duplication. Fashion storeFashion jewelleryShoes & charity: for every pair of shoes bought by a TOMS customer, a pair is given to a child in need in some of the poorest countries in the world.

ViaPlaza

Pim Pam PartyTodi

Jyske Bank

Summerbird

Nordisk Skoletavle Fabrik

VIPP

Krsumolle

Tuoni Studiot

Left Foot Company

Rakennusapteekki Oy

STROOM

Plinkfizz/ Emma Bridgewater

MCC Group

Inspired Film and Video

Magic Number ThreeMaria Lau

TOMS Shoes

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BelgiumBelgium

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Documents

Handbook Experience economy - ExBased - Home Experience economy 6 “A few years ago, I saw some teenagers at a Wal-Mart putting quarters into one of those elaborate gumball machines