Joe Pine on How To Create Experiences in Retail

August 30, 2016

At a moment in which many companies are focusing on streamlining their websites, reducing the length of lines at stores with self-checkout, and cutting the number of clicks required to get their app to do something, Joe Pine has a counter-intuitive idea: Maybe you can win by getting customers to spend more time with you, rather than less. Pine is the co-author of the 1999 book “The Experience Economy,” which posited that people want to be engaged in memorable experiences, rather than just buying goods and services.

Joe Pine

“If you look at convenience, convenience means spending less time with a customer,” Pine said on a recent conference call with InnoLead members. “What I’m talking about is spending more time with a customer, where customers actually value the time they spend with you. Instead of time well-saved, a commoditized service, they view it as time well-spent.

We spoke with Pine about how social media and virtual reality are changing the nature of experiences; new experience models like Story and Kellogg’s NYC cereal restaurant in Manhattan; Uber, Hilton, and Capital One; and the metric Walt Disney used to discern whether what he was doing at Disneyland was working with visitors. He would walk through the theme park at the end of the day, Pine says, and evaluate “the percentage of people that had big smiles on their faces.”

InnoLead: In 2016, what is your definition of the experience economy?

Joe Pine It actually hasn’t changed since I first discovered the experience economy over 20 years ago now. Basically, what’s happened is that we’ve moved from an agrarian economy based off commodities, to an industrial economy based off goods, to a service economy.

Today, we’re in an experience economy, meaning that goods and services are everywhere becoming commoditized, and what people want are experiences — memorable events that engage each person in an inherently personal way.

Social Media as Memorabilia

InnoLead: Has the way you think about experiences changed? I first became aware of your work I think around 1999, when the Experience Economy book came out. In the 16 or so years since then, digital and social media and mobile have become such a big part of our lives. Does that change anything, or does it just make experiences different, and maybe more hybrid today?

Pine: It certainly has changed a lot. What we talked about back in 1999 was a very fundamental change in the very fabric of the economy…

What you see is that [with] everything that is coming out, technology is being embraced into the experience economy and used to create better experiences, and/or used to commoditize goods and services so people can spend their hard-earned money and their harder-earned time on the experiences that they enjoy.

Certainly, the rise of social media has had a big impact. I was just having a very big discussion with someone about how experience stagers really need to take into account social media, as a form of intangible memorabilia.

Whenever we go to experiences, we want to take back memorabilia with us, but now increasingly that memorabilia is in fact in digital form on our phones, shared on Instagram, and Twitter, and Facebook, and whatever, and that’s a huge difference.Also, the rise of virtual reality and augmented reality is allowing us today to create experiences that fuse the real and the virtual.

InnoLead: I was out at this conference last week, and the CEO of Hyatt was on a panel about how digital is changing the service economy.

He was talking about, “We’re going to give iPads to the people that check you in at Hyatt hotels. We’re going to lower the height of the check-in desk, so you don’t feel like you’re at the bank teller, but you feel like you’re having a conversation with somebody.”

But it just strikes me that for a lot of companies giving somebody a device, whether it’s an iPad or something else with an app on it, is maybe not what you’re thinking about when it comes to creating an experience.

Pine: No. I think that all that does is make it a better service, not let it rise to the level of an experience.

I do in fact like the notion of lowering the desk. That actually is something that gives a physical cue that this is a welcoming environment. As one element among many, that can help [you] rise to [the level of] experience.

It’s funny, but just this morning on Twitter, a guy copied me on a tweet about a different hotel, which is Hilton and their Waldorf-Astorias. They just announced that they’re going to let guests test-drive Lamborghini cars at their hotels. Now, that’s an experience. (See below for a 360-degree video.)

Nice is Nice, but It’s Not Memorable

InnoLead: Yeah. It changes the dynamic of a business trip, staying at Hilton. But you also brought up the word, when we were talking before [the call begain], “customer experience,” or sometimes people talk about CX or UX, user experience.

There has been a lot of focus on design, and how do you streamline, and how do you simplify, and how do you make a digital or an in-person experience more elegant. But you really are talking about something different, a different use of the word experience.

Pine: What [those terms] generally mean is, let’s make our interactions with our customers nice, and easy, and convenient. That’s really the antithesis of what I’m talking about. Nice and easy and convenient are all great service characteristics.

When you want to provide an experience, recognize that nice is nice, but it’s not memorable. If you don’t create a memory, then you didn’t stage a distinctive experience.Easy is easy, but often that means we routinize things so that they’re not personal. Experiences are inherently personal. They happen inside of us.

Finally, if you look at convenience, convenience means spending less time with a customer. What I’m talking about is spending more time with a customer, where customers actually value the time they spend with you. Instead of time well-saved, a commoditized service, they view it as time well-spent.

Successful and Failed Experiences

InnoLead: Joe, let’s talk about some of your favorite experiences, or failed attempts at creating experiences today.

Pine: One of my favorite experiences [that] I love to talk about is the Library Hotel in New York City. It’s a boutique hotel that only has 60 rooms. It’s got 10 floors, six rooms on every floor.

But the theme of it — every great experience needs a theme, it’s simply the organizing principle for the experience — is the Dewey Decimal System. Every floor is a different classification in the Dewey Decimal System. There’s a social sciences floor, a language floor, math and science, the arts, and so forth.

Then, every room on every floor is a different sub-classification. When you go to your room it’s filled with books and art objects that are inspired by that particular classification. One of the things I love about it is 10 floors, six rooms on every floor — how many times do you have to go to experience it all?

InnoLead: That’s cool. I’m looking at the website now. It’s not a stratospherically-priced hotel for New York City. You can get a $280, $300 room there.

Pine: Right. It’s not a high-end luxury hotel. A lot of people think, like we mentioned Hilton’s Waldorf-Astorias and driving Lamborghinis…

It doesn’t have to be a high-end thing. It can be low-end experiences, where you’re not spending a lot of money, but how you spend that money is in a way that engages the guest. You can look at a place like in restaurants, Ed Debevic’s in Chicago. You ever been there?

InnoLead: Yeah.

Pine: It’s low-end, just a corner diner, but they put on this really great theater. I still remember one time I went there with my partner, Jim Gilmore, and the guy at the front had a name tag that said, “Smiley.” That was the character that he was playing.

He asked how many people in our party and proceeded to lead us through the restaurant. He started walking very briskly and then he stopped every once in awhile to talk to other guests. We cooled our heels behind him as he was engaging them.Then at one point, he started walking around the table and then on top of the chair and the table and back down the other side.

We kept following him until he delivered us to our table — right back at the front of the restaurant. It’s a wonderful, engaging experience.InnoLead: What about failures? I always feel like sometimes people think they’re creating an experience when really they’re just creating a giant flagship store that carries every product that they make, but it’s not particularly fun.

Pine: In terms of actual failures, one of the industries that really comes to mind is theme restaurants. The Planet Hollywoods of the world and others that really didn’t make it. Hard Rock Café is still around 45 years later.

But there aren’t very many that have done well. The reason is that they didn’t realize experiences are built on top of services, which are built on top of goods. If you have poor service and lousy food, you’re not going to have a great experience no matter what you do to the environment. You’ve got to bring it all together.

I don’t necessarily think of them as failures, but as lost opportunities if they don’t do enough. You mentioned the flagship stores like the Niketowns of the world. I can still remember the first Niketown, they had one in Portland, but the first one outside of that was in Chicago.

It was such an amazing experience that there was actually a queue outside waiting to get in, because they’d hit their number that the fire department says is the max. How many stores do you know that do that?You could actually play basketball on a basketball court inside a Niketown. There were other things that they had and it took them about three, four, five years before they wiped away the basketball court.

They put down merchandise on it. It became just another outlet for merchandising. I think there is a key lost opportunity for a company that’s focused on “Just do it” — well, provide experiences for us to do.

Uber and ‘Marketing Experiences’

InnoLead: Let’s talk about Uber. I would say they’re a company that is more about delivering a simple, easy, reliable customer experience most of the time. But then every once in awhile, it’s almost like they decide to stage an experience, I think for marketing reasons. You can request an ice cream truck to show up at your office, or I think they do Uber puppies sometimes, where they partner with the Humane Society and if you want to meet some puppies that you might adopt, you can use Uber for that. Here in Boston, they’ve done Uber boats, where you can go and request a ride from point A to point B in the harbor.

Is that an example of somebody deciding every once in awhile to be in the experience economy?

Pine: Yes. First of all, when Uber first came out, I do think for most people it rose to the level of an experience because it was so different. But then you get used to it and so it becomes less and less [of one] over time.

The things you’re talking about, it’s like what Hilton is doing [with] Lamborghini. It’s not actually changing the hotel experience. They’re giving you something else there. Same with Uber, giving you ice cream and so forth.

That’s what I call a marketing experience. It’s an experience that does the job of marketing by generating demand for offerings. That’s one of the key places where we see so much being done in experiences.

A recent one that just came out this month in New York City is the Kellogg’s NYC experience, which is in Times Square, where you can go in and actually eat cereal, I think it’s like 24 hours a day. What they’re doing is they’re creating a place where they can expose you to their brand, and expose you to their product as a manufacturer.

I think a lot of the most interesting experiences today are by manufacturers creating marketing experiences, because they’re so far removed from that consumer that they need to get out there, create that direct relationship, and create an experience that really showcases their offering. That applies to [business-to-business companies] as well.

Can B2B Companies Deliver Experiences?

InnoLead: I was just going to ask you about B2B. Are there some people that are so infrastructure- or back end-oriented that they don’t need to bother with the experience economy?

Pine: I have said that not everybody needs to shift to the experience economy, but I don’t know anyone who couldn’t benefit from it. I think that’s true with B2B as well, and I increasingly see companies that are creating great experiences for their business customers.

For example, Whirlpool — although of course they sell appliances to consumers —  they’ve got their retail partners that they sell through. They wanted to create an experience for them.

What they did is, they gutted their trade show budget, and instead put their money into creating the World of Whirlpool in Chicago, where now instead of getting 10 or 15 minutes of a retail partner’s time at a trade show, now they can get them for hours or even a couple of days to expose them to the product, and get them to experience them directly with cooking demonstrations. You can actually bring a load of dirty laundry into it, and so forth. There’s many B2B companies that are doing such marketing experiences.

InnoLead: Both you and I have been to this place called Story in New York City, right near the High Line and Chelsea Market. (Pictured at right.) I think they remake the entire store into a different-themed retail environment about every six or eight weeks with different merchandise and different entertainment elements.

That constant refreshing seems like it’s something that’s very hard for retailers that operate at global scale to do, but maybe it’s something that’s really important in this world of short attention spans.

Pine: Yeah, I think it is. I know Rachel Schechtman, who founded Story, and she was actually inspired to create it in part by coming to our thinkAbout event years ago, where we had Chip Conley, [who was] one of our Experience Stager of the Year award winners for Joie de Vivre Hospitality.

Now, he’s the chief hospitality officer at Airbnb. But Chip themes each of his hotels differently. Each one’s [themed] different after a different magazine. That gave [Rachel] the idea of, “What if I had the same store, but I themed it differently over time?”

That’s exactly what she does with Story. You think about going to a Walt Disney theme park. Every year, there’s a new major attraction. Every X number of years, they redo an entire land. Every attraction itself has to have things that are changing, and that’s because we get used to that experience and need to have it different.

I do think you’ll see more and more companies that are able to do that, or thinking about doing things to really refresh the experience, and make it different every time.

Disney’s MagicBand Wearable Device

InnoLead: One of our listener questions is about Disney, so let’s take that one first. What are your thoughts on Disney’s MagicBand? Is that a wearable technology that enhances the experience they deliver, and are there other examples you see, of new technology building on experiences?

Pine: Yes, very much so.I had the opportunity to test it out for Disney on a visit to Walt Disney World a while ago. One, it starts to focus you on the experience b weeks in advance. You get the Disney’s MagicBand at your home, and you start to build that excitement about being at the place.

Then, the fact that it makes things so easy there in terms of being able to use it as your check-in, as your room key, to pay for meals, you get your credit cards tied to it, and so forth. It smooths away some of the irritations that you might [have had] at the Disney theme park.

But what it also does now is allow Disney to begin customizing the experience to you. Disney is very much a mass-produced experience. But now I know who you are. If you visit one set of characters in the park, and they know who you are because of the RFID with the MagicBand, and have a conversation, they can now make a record of that, so that the next character you visit with can build on that, and then begin customizing things about what ride you should do and at what times.

InnoLead: Another question is a clarifying question. What exactly is thinkAbout? I guess I didn’t really it well enough in my intro.

Pine: I love that question. ThinkAbout is the annual event that my partner Jim Gilmore and I stage every year. We are now doing our 19th annual one. We move it to a different place every year. This year, it is in New Orleans, on September 21st and 22nd.

It’s for people who love experiences. We gather a very intimate crowd. We experience the actual city. In this case, we’re taking a tour through Bourbon Street and the French Quarter to be able to experience things.It’s not a conference where you are just going to sit down and listen. We go out, and we experience things, and we come back. We deep breathe. We see what we learned.

Then in particular, we apply principles [of experience staging] to our own businesses. We also give out an Experience Stager of the Year award.

Measuring the Impact of Experiences

InnoLead: This is a good question: “We are a very metrics-oriented company. What metrics do you recommend, in addition to sales and customers coming in the door, if you’re creating an experience rather than just a retail store?”

Pine: It is said that Walt Disney used to measure his experience at the end of a day at Disneyland, when everybody else was leaving the park. He would walk from the front gates back down Main Street, and he would measure the experience by the percentage of people that had big smiles on their faces.

To a degree, that is a great thing. It’s how engaged are they. Actually with facial recognition technology, we’ll be able to do that in the very near future. The actual key measure, which is one that few [companies] actually use, is in fact time.

As I mentioned before, time is the key distinction between a service and an experience. Within the experience, customers want to spend more time with you rather than less.

If you’re creating an experience, the question is how much more time are people spending with you? And recognize that the more time they spend with you, then the more money they’re going to spend as well.

Related to revenue, one of the things we increasingly see is that when it’s a real experience, people are often willing to actually pay for the time that they spend with you. They’ll pay an admission fee, for example.

You wouldn’t imagine going to a theme park, or a sporting event, a concert, a play, a movie without paying an admission fee, because you know that this is an experience.

Think about what would you do differently if we charged admission? How could we do that? You’ll find places like REI, Recreational Equipment Incorporated, charging $15 to be able to climb the mountain in the store, $5 if you’re a member of the REI Co-Op.

Or American Girl Stores, where you pay an admission fee, originally for a live theater show, or also for a lunch, or tea, or dinner, a hospital, a hair salon, a photo shoot, all of these are admission fees to experiences. They get customers to enjoy the time that they spend there.

Augmented Reality and Virtual Reality

InnoLead: Let’s see if we can get in a couple more questions here before the half-hour is up. You mentioned VR and augmented reality. Are you seeing companies doing anything impactful with those technologies yet?

Pine: You can’t help but see what’s going on with Pokémon Go. It’s all over the papers and everything. It will actually be a revenue-generator for Nintendo and its partner, Niantic. They’re still early in terms of being able to do that, but yes, there will be impact.

Marriott has a fairly famous experience with a [virtual reality] teleporter, where they teleport you to Hawaii or to London to get you to spend your time at their hotels in those places.

There’s a company in Utah, called The Void. They want to be a virtual reality company where they actually create a purpose-built space, so you have a virtual reality experience where you can actually walk through the space, and it physically creates the environment that you’re seeing virtually. When you encounter a bomb, for example, they actually have heat that comes out, and flames you can feel, but in a way that is safe.

That’s where I really see the future. It’s the fusing of the real and the virtual. There’s a lot of economic value that is going to be created with that.

InnoLead: What do you think the line is between a genuine and a superficial experience — an engaging experience versus something that appears as if the company is trying too hard?

Pine: Consumers increasingly wants the real from the genuine, not the fake from some phony.

There is a line there. You need to make sure that you stand on the right side. Often, that relates to who you are as a company, and where you’re trying too hard is where you basically go back on things that define you.You become not true to yourself. That’s when you’re trying too hard. We see that with people. They try too hard to be friendlier, whatever, and they go beyond what is truly them as individuals. Companies can do the same thing as well.

Capital One Cafés: Building the Brand and Breaking Even

InnoLead: I want to take the latest question that came in: “We’re in financial services, and we’ve been observing the Capital One cafés and InnoLead has written about the Society of Grownups from Manulife. Do you think some of the business case for that has been built around marketing and brand-building?”

Pine: Absolutely. The Capital One Café was originally the ING Direct Café, before ING sold them to Capital One. They were my favorite marketing experience examples, because they got people to come into this place and expose them to their financial products.

The first café they opened up in New York City resulted in over $200 million in new accounts for ING with a single, very small café. Every time they open up another one, they get $200 million in its first year, and so forth. They’re great demand generators, but [customers pay for the coffee, and] they actually break even as a café…. That’s the way to do it — make money on the marketing experience itself.

InnoLead:: I think your point earlier, about getting people to slow down in this day and age, and actually drink a latté and talk to somebody about home equity loan, or a checking account, or whatever it may be. It’s really a challenge, because people have always thought about banks as you want to get in quick, you want to get out quick.

Pine: I think no industry has more commoditized itself than banking, because they came to view spending time with customers as costing them money.

InnoLead: Let me just see if I can squeeze in this one last quick question here. It’s a good question from a company that’s old/seasoned and wants to continue to innovate and reinvent experiences. Are there any best practices you see, in terms of reinvigorating and constantly looking to refresh and implement new ideas?

Pine: [The question points to] the need in today’s experience economy to innovate in experiences. People only tend to think of innovating goods and services. You need to innovate in experiences as well. One great place to look is looking what other companies are doing. We do this at thinkAbout, but you can go on your own experience expedition. Go out into the city wher you live and seek out the best experience-stagers.

What you want to do then is not do best practices, which is copy what they’re doing. What you want to do is what I call best principles. You want to understand the principle which they’re applying to their business and their situation, and then extract out that principle and apply it to your business and your situation, and say, “What would be a great experience for us?”

I think then you can develop a whole set of ideas for how to innovate in experiences.

InnoLead: And by principles, you mean what we were talking about just now, with the Capital One Cafés, which is, how do we get people to spend more time with us versus sending them through the drive-in with the ATM?

Pine: Right. Even opening a café is a principle, because the easiest way to get into the experience business is open a cafe. You can see that all over the place. That’s the principle. Spend more time with us. Charge admission. Understand work as theater. All these are principles that you can apply.