We Were Promised An Experience Economy. So, Where Is It?

By Doug Stephens

I can still recall reading Joseph Pine and James Gilmore’s seminal 1999 book The Experience Economy. Like so many of my colleagues in business at the time I believed wholeheartedly in the book’s central thesis –that the consumer economy had, until then, been about the sale of goods and services but that as those products and services became increasingly commodified in a global market, the winners in the new era would be those businesses that differentiated through customer experience. Eighteen years later, I was fortunate to tap Joe Pine to write the foreword to my second book Reengineering Retail, a book that sought to extend this thinking into the post-digital age by painting a vision how technology would completely reshape consumer experiences and our entire view retail as a business.

Yet a quarter of a century after Pine and Gilmore’s book, one might justifiably ask, “So where the hell is this so-called experience economy?” It clearly doesn’t seem to inhabit the storefronts of most local shopping malls, the vast majority of which continue to struggle. It doesn’t appear to have tipped the scales of success away from companies that are extremely good at simply delivering products and services. And it certainly doesn’t seem to have permeated the strategies of most telcos, banks or insurance providers, many of which show as much indifference to consumers today as they always have – perhaps more.

In such an experiential desert, one could easily jump to the conclusion that Pine and Gilmore’s vision of an experience-driven consumer economy, while inspiring, was simply wrong.

Many of the hi-tech experiential brand laboratories, once believed to be essential investments for any brand serious about the future of customer experiences have now been abandoned. And even experiential locations like Showfields and Neighborhood Goods which, less than a decade ago, were hailed as the future of retail and have since shuttered their operations.

On the technology side, augmented reality, robotics, AI, location-based marketing, indoor navigation and other technologies have offered utility in the right conditions. Yet, how many of these applications and technologies do we, as consumers, engage with in an average day of shopping? Precious few, if any.

In such an experiential desert, one could easily jump to the conclusion that Pine and Gilmore’s vision of an experience-driven consumer economy, while inspiring, was simply wrong. It would be easy to point to brands like Walmart and Amazon and conclude that, in fact, products and services remain the primary things consumers seek, and not much more. That the average shopper might be saying, “No experiential fanfare required, thanks! Just get me my stuff!”

I, however, take a very different view. The problem, as I see it, is not that consumers don’t want new and amazing experiences or that retailers don’t have sufficient raw materials with which to build them. It’s that most brands don’t even have a clear sense of what “experiential retail” means, much less how to create it.

The Big Rethink
So, how do organizations break free of the inertia that’s preventing them from entering and dominating in the experience economy? How do we grease the wheels of innovation in companies that are stuck? It starts by rethinking three key things. Media, Messaging and Measurement.

Media
In 2023 in the U.S. alone, brands spent upwards of $225 billion on advertising. Trusting that the classical marketing funnel still works and will drive traffic to their doors, provided they fill it with enough of the right media. They are wrong.

The average human today has only 47 seconds of attention to spare before the next notification, email, text message or other distraction hits their mobile device.

In fact, media has never been more expensive and less effective than it is today. To put a point on it, the Association of National Advertisers estimates that 70 percent of every dollar spent by brands on programmatic advertising is actually never seen by consumers. The reasons for this span everything from the use of ad blocking software by growing numbers of consumers to dollars being eaten up by agency fees, to poor ad rendering and off-target ad placements. Bottom line, most digital ads are practically invisible to the majority of consumers.

Furthermore, even if your ad manages to get within eyeshot of a consumer, studies have shown that the average human today has only 47 seconds of attention to spare before the next notification, email, text message or other distraction hits their mobile device. In roughly the same amount of time it takes you to read this paragraph, most consumers will have already moved on, oblivious to your ad message.

The good news is, there’s a new media channel that is less expensive, more measurable and infinitely more effective. In fact, it’s already a sunk cost in most businesses. It’s called the customer experience, and I would argue that there is absolutely no more powerful media available to your brand than the experience your customers, potentially millions of them, are having right now!

Rethinking Messaging
Somewhere along the line “experiential retail” seems to have been misconstrued by many businesses to mean something inherently conceptual, technologically driven and/or experimental in nature. We came to believe that there were brand experience stores that did cool stuff and regular stores that actually sold stuff.

As a result, through the 2010’s many brands began building “brand experience stores” only to quickly become disenchanted when the cost of operating them became a burden. And so, in the absence of any other form of measurement beyond sales, many ended up closed.

This is why it’s essential that we first understand that every single store a brand owns is a brand experience store, whether a brand knows it or not! As such, every store a consumer sets foot in must be both a functioning point of sale while also being a tangible, experiential representation of the brand’s ultimate purpose and value to the consumer.

For example, take Walmart, a brand one might not immediately consider to be an experiential retailer. In fact, I believe they are one of the best examples. From their beginning in 1962, Sam Walton’s battle cry was low price. And to this day, every aspect of the shopping experience with Walmart reinforces that same message. From the no-frills way stores are designed and merchandised, down to the (very intentional) lack of customer service, Walmart is supremely focused on low price leadership. This intense focus on that message connects with a strong need by consumers to save money. Technology implementations by Walmart undergird this same brand mission by lowering input costs to deliver value at the shelf. Even the brand’s  sustainability initiatives work to lower operating costs through energy savings and other efforts. Walmart uses its stores as a powerful media channel to generate almost 250 million brand impressions per week among customers who cross their threshold.

The experience may not be theatrical or highly conceptual and it doesn’t need to be.

Or consider Amazon. From its beginning in 1994, Amazon’s core purpose was to be the most convenient store on the planet. A promise that is reinforced and supported at every junction in the consumer’s experience with the brand. Every technology investment and every new product or service in the Amazon marketplace is aimed at making buying and delivery faster and easier. Every experience we have with Amazon reinforces this focused brand message. And regardless of whether every visit to Amazon.com results in sale, the brand generates hundreds of millions of consistent brand impressions per month across its sites! Not to mention that both Amazon and Walmart are also leveraging these consumer impressions to fuel valuable media networks driving billions in revenue.

Consequently, both Walmart and Amazon have become what I call cognitive defaults in our lives. We choose them not because of their slick advertising but because they simply and consistently deliver on their brand promise with every shopping experience. The experience may not be theatrical or highly conceptual and it doesn’t need to be. And whether the consumer chooses to buy something from either brand in a given visit is less relevant than the overall impression of the brand they leave with. For Walmart and Amazon, the store is both the media and the message.

Of course, we also have brands in our lives that become emotional defaults. Brands that deliver value through building community, leading social change, offering us entertainment, sharing deep expertise or creating remarkable product designs – each of which can become the emotional hook that draws us in. But the same rigour applies. They must deliver the experiential manifestation of that value through every consumer experience. Any technology investments should work to support the conveyance of that message. Every aspect of the store, its design, signage, and staffing should reinforce that clear and singular brand purpose to the customer.

One of the best examples of an emotional default I can think of is Patagonia and their all-in commitment to environmental protection through every single nuance of their customer journey from the recycled materials they use to build their stores to the perennial financial contribution they make to environmental protection efforts. Every store – online and offline – is a living, breathing advertisement for the brand.

So, experiential need not mean futuristic, tech-heavy or conceptual. It simply means telling the brand story and delivering on its promise at every junction in the customer’s journey, in every store, every day!

Rethinking Measurement
Retailers tend to obsess over measuring sales. Sales per store, per hour, per square foot, per associate etc. But if we agree that every store is both a point of distribution for products and as importantly a distributor of brand experiences, then we obviously need to be measuring the value of both. If we concede that stores have the power to create meaningful brand impressions, then we also need to value those impressions as a form of media. While there’s no exact science as to how we arrive at a value, it can certainly be done, and used as an internal metric.

It starts by calculating (even approximately) what it would cost our brand to buy those consumer impressions on the open market. If, for example, a brand sees a million consumer visits annually in their digital and physical stores and also knows that the average duration of each visit is, let’s say for round numbers, 10 minutes, then we can already begin to formulate the media value of our stores by answering a simple question. How much would it cost for your brand to buy 10 million minutes of attention on Facebook, Instagram or Tik Tok? The agency fees? The production and placement costs? The cost-per-impression itself? How much would you lay out for 10 million minutes in which consumers could engage with your brand, your culture, people and products?

Furthermore, through disciplined measuring of net-promoter-scores by store, we can even drill into the relative media value of individual locations. You may find, for example, that two stores with similar sales levels are in fact generating entirely different brand media values, if one is consistently delivering disappointing experiences,  while the other is delighting its shoppers.

The Experience Economy Is Already Here. Figure out what to do with it!
So, regardless of what your business sells, if you have a customer and they have an experience, then you’re already part of the experience economy. But to dominate in that economy will require three key adjustments in organizational mindset.

First, every store is a media channel. Every store in a given chain is delivering brand impressions to consumers every day. Those impressions have a value beyond sales. Value that we need to capture.

Secondly, “experiential” doesn’t necessarily mean conceptual, technological or theatrical. It means having the discipline to deliver an experience that reinforces and delivers on the brand’s promise and value to consumers.

Thirdly, and perhaps most importantly, if we are going to ever make cogent operational decisions about physical and digital stores, then we need accept that sales cannot tell the whole story. We need to apply a dollar figure, even a rough one, that captures the media value stores are generating. And the degree to which the media our stores are producing is either a positive or negative daily advertisement for the brand.

The bottom line is this, Pine and Gilmore were right. Not only is the experience economy real, but it’s also here, now, hiding in plain sight. And brands that understand that are already winning.
Everything you need to become a part of the experience economy exists. The only question now is, what are you waiting for?