Pine and Gilmore argued in 1998 that the world had left behind the service economy to enter the experience economy—but what did this theory mean, and how should it be understood?
Progression of Economic Values
Image source: ResearchGate
The graph of Pine and Gilmore's economic value shows how the value of raw materials and products has decreased over time while customization has become increasingly important within organizational strategies. Based on this, Pine and Gilmore argue that any personalized product is no longer a product but a high-value service.
To efficiently implement customization in a product, it is essential to take into account two key-points:
1. The competitive advantage of a personalized product tends to diminish when its customization is not focused on the customer. Companies that understand and meet users' needs through tailored solutions are more likely to form valuable relationships with them. Inaccurate data analysis can result in erroneous personalization, which damages the relationship between the user and the brand.
2. When our competition offers more customization options, we must emphasize our other services to compete effectively. Being at the forefront of technology and trends allows us to have a competitive advantage over the competition, increasing customer loyalty and brand recognition in the market.
When personalization is utilized strategically, a positive customer experience results. The term coined by Pine and Gilmore to describe this experience is "the way in which brands connect with customers, beyond the delivery of the service, through an emotion.
What Is Happening Today With the Economy of Experiences?
The advent of smartphones has revolutionized humanity in the terms of connectivity and immediate access to information, in the same way that Gutenberg's printing press did in 1448 by spreading literacy and knowledge throughout Europe.
The transmission of large volumes of data has become commonplace in today's world. Information is no longer confined to computers and their users but reaches a large percentage of people worldwide, establishing itself in various physical spaces where only imagination limits its uses.
Currently, we are in the era where experiences are no longer just physical or digital but rather are multi-experiences (MX), where the satisfaction of the user experience (UX) and the experience of the collaborators who deliver the service (EX) are key components in the delivery of customer experience (CX) satisfaction, thus promoting the total experience (TX).
The experience economy, in which consumers experience deeper emotions related to products, services, or brands, has become more important as a strategy for organizations.