Handbook

Experience economy
Handbook Experience economy

ased
Experience b

Introduction
People want experiences.
Theyve become more qua-
lity conscious. Who isnt 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.

2
 www.exbased.eu

ABOUT THIS HANDBOOK

The 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:

An introduction to the concept experience economy, based on the major

and standard academic works/theory in this field;
Some basic, practical tips on how to add experiential elements to products
and services; and
several inspiring case studies from across Europe.

TABLE OF CONTENTS
1. WHY? 5
2. WHAT? 6
HOW TO STAGE EXPERIENCES 8
3. HOW? 11
TEN CHARACTERISTICS OF MEANINGFUL EXPERIENCES 11
SIX DESIGN PRINCIPLES 12
EXERCISE 16
A CHECKLIST FOR CREATING AN EXPERIENCE BASED BUSINESS 18
4. NEXT STEPS 20

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

3
Handbook Experience economy

N o r d is k s k o letavle fabrik
Case:

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.

NSFs 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 companys 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.

Weve gone from being very unit-based to very knowledge-based. Weve 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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 www.exbased.eu

Why?
WE COMPANIES ARE MOVING INTO A
We are shifting to an experience
economy where experiences are
NEW ECONOMY becoming the predominant eco-
nomic offering.
The world is changing. Companies (mainly in the western world) are no longer able to
- Joseph Pine (A cofounder of
compete just on price or quality. Several trends and evolution have given rise to a new
Strategic Horizons LLP, writer
economic era. (Daniel H. Pink)
and veteran consultant)
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 some-
thing unique
Rising consumer demands: rising brand awareness, politically correct consum-
ers (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 them-
selves day after day?

In the 21st century, people consume and Businesses need to orchestrate

shop in new ways and expect products and WHAT memorable events for their cus-
services not only to fulfill a function but also COMPANIES tomers so that the memory itself
to provide them an experience. becomes the product
Consumers are in a search of something more.
SHOULD DO? the experience.

Did you know? 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!
Why?

Because candles give us more than just

light > an intimate dinner for two; an indul-
gent bath-time soak; a cosy family evening. 5
Handbook Experience economy

What?
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 chutesa 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 werent 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.

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 www.exbased.eu

erience
Heineken Exp

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 cafs. 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.

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Handbook Experience economy

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 caf 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 caf, 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.
Competetive position

Stage experiences
Starbucks
five-star restaurant
Deliver services
order coffee in a caf

Make goods
box with coffee
Douwe Egberts
Customers
Extracted commodities needs
coffee beans

Price

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 www.exbased.eu

M PARTY
Case: PIM PA

Pim Pam Party offers unique party boxes for

unique childrens parties. The boxes offer a
full 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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 Handbook Experience economy

hoes
Case: TOMS S

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 include an annual One day without shoes walk (for which TOMS provide a
downloadable toolkit) and a Style your Sole party where customers are encouraged
to get together to customise their TOMS.

Website: www.toms.com
Read the case study at www.exbased.eu

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 www.exbased.eu

How?
EXPERIENCES ARE INDIVIDUAL AND
Any experience concept will fail
if the business model is not con-
PERSONAL sidered beforehand and con-
tinuously adjusted as learning
Based on: A new perspective on the Experience Economy - Meaningful Experiences
proceeds in time.
Albert Boswijk, Thomas Thijssen and Ed Peelen
- Boswijk, Thijssen & Peelen
The 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 individuals personal experience: his or her everyday world and societal context.

HAVE YOU THOUGHT OF

Which experiences actually changed your life, and that you will never for-
get?
Which experiences, in a context with other people, will you never forget in
your life?
Which experiences you will never forget in your life which you paid for?

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

EXPERIENCES
Experiences 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. There is contact with the raw stuff, the real thing.
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. 11
 Handbook Experience economy

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12
 www.exbased.eu

e t h e e x p eri e n ce a theme
Giv iv e cues
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 Handbook Experience economy

Examples of Using
Positive Cues

ith
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Example of Avoid-
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 www.exbased.eu

Example of Engag-
ing all Five Senses

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Example of Natural
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15
 EXERCISE

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

Using a theme
Does the business concept have a theme?
Yes
No
What is it?

Natural and holistic approach

Does the business concept leave an impression of being natural and authentic? How?

Use positive cues & avoid negative cues

Are all the impressions harmonized by means of positive cues in the business concept?
Yes
No
Is there something that could be done better?

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 www.exbased.eu

Is there a risk of negative cues?

Yes
No
How can business avoid/eliminate those negative cues?

Include memorabilia
What 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 senses

What senses is the business concept engaging?

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

What other senses could be engaged and in what way?

17
 Elmystalouden ksikirja

A CHECKLIST FOR CREATING AN

EXPERIENCE BASED BUSINESS
Based on: The Experience Economy and Commercial Experiences
Susanne 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.

Personal Relevance is the individuals internal state of emotion, activation,

and preparedness to engage in a specific experience.

Novelty can be defined as a change in stimulating conditions from previous

experience. The novelty principle is based on the fact that people are
attentive and attracted to something that is new and different.

Surprise: An experience will be considered surprising if it contains outcomes

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

Learning: The elements that further learning are motivation, 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-
tion to motivation. Response encapsulates an individuals reaction to the
cues, and reinforcement increases the likelihood of specific responses
occurring in future.

Engagement can be induced in an experience through interacting with the

customer. By actively involving the customer through asking for customer
input, and by providing him/her with positive feedback, the customers
engagement with an experience can increase.

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omy
Exbased econ

An illustration
To 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
of experience providers. The table below presents Franks scorecard for the various
experiences, 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
aProduct/ Personal
novelty, with surprises Novelty
at every turn and twist. Surprise Learning aEngagement
Learning to manoeuvre kayak on his
service Relevance
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.

Franks Experience Scorecard

Experience Personal Novelty Surprise Learning Engagement

Relevance
River Rafting x x x x x
Wine Tasting x x x x x
Ghost House x x
Football Game x x

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:

Product/ Personal Novelty Surprise Learning Engagement

service Relevance

Experience Personal Novelty Surprise Learning Engagement

Relevance 19
River Rafting x x x x x
Wine Tasting x x x x x
Ghost House x x
 Handbook Experience economy

conomy
Experience e

Next steps
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 creativity

Some 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 model

Finally 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,
nor do they know how. They will benefit from the consultants assessment of the
potential 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.

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BUSINESS PLAN Diagram highlights contents of

Case Study Examples the ExBased toolkit
Local Partner Contacts
Consultants expertise

INNOVATION & CREATIVITY

5 Senses tool
Prioritising tool
Personal Recollections Exercise

AWARENESS & INSPIRATION

What is Experience Economy?
Presentation Customer Experience
Tool

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: info@flandersdc.be
Denmark: South Denmark European Office, www.southdenmark.be
Contact: info@southdenmark.be
Denmark: Business Academy South West, www.easv.dk
Contact: vest@easv.dk
Denmark: House of Business Aabenraa, www.ehaa.dk
Contact: post@ehaa.dk
Finland: Ideone Oy, www.creativetampere.fi , www.ideone.fi
Contact: ideone@ideone.fi
United Kingdom: North Staffordshire Chamber of Commerce, www.nscciprojectteam.co.uk
Contact:
United Kingdom: Creative Industries Development Agency, www.cida.org
Contact: info@cida.org

21
 Handbook Experience economy

RECOMMENDED READING, REFERENCES

AND BUSINESS CASE STUDIES
A 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.
22 The European Commission is not responsible for any use that may be made thereof.
 www.exbased.eu

Case stories: summary table full case studies available at

http://www.exbased.eu/tool-box.aspx

Manufacturing

Business field
Wholesale

Country
Services
Repairs
Retail
B2C
B2B

Broadcasting station that offers digital media

ViaPlaza X X Belgium
with a social added value
Pim Pam Party X X Party boxes for chidrens birthdays Belgium
Todi X X Indoor diving and snorkelling centre Belgium
Bank services: objective to make bank business
Jyske Bank X X X Denmark
less serious and pretentious.
Company producing chocolate by creating a
special taste experience, based on the finest
Summerbird X X Denmark
raw material, and the story that follows
these raw materials.
A conference centre that offers classroom
X X X X X facilities and at the same time, a coffee bar,
Nordisk Skoletavle Fabrik Denmark
fitness and wellbeing facilities and experience
offerings for employees and visitors.
Designed waste bins and bathroom equip-
VIPP X X X Denmark
ment.
A center, which offers events , stores with
food specialities, their own spring water,
Krsumolle X X X lifestyle products, interior design accessories, Denmark
workshops for different arts and crafts and
rooms for parties or meetings.
Tuoni Studiot X X Controlled party game and interactive play. Finland
Individually-fitted shoes for men with the
Left Foot Company X X X Finland
help of technology.
Center that specializes in traditional
construction and building materials. They also
Rakennusapteekki Oy X X X Finland
offer repair services, seminars and professional
education.
A design hotel that differentiates itself based
STROOM X X Netherlands
on specialized bathrooms
Marketing and communication consultancy
Plinkfizz/ Emma that developed an experiental marketing
X X X X X United Kingdom
Bridgewater strategy for Emma Bridgewater (tableware
brand).
Apple product and software knowledge,
Apple-certified training, regular seminars and
MCC Group X X X United Kingdom
events, competitions, technical support and
maintenance.
Film production company that offers services
from scripting and planning, through filming, United Kingdom
Inspired Film and Video X X editing, voiceovers, graphics and soundtrack
to DVD design and duplication.
Magic Number Three X X Fashion store United Kingdom
Maria Lau X X Fashion jewellery United Kingdom
Shoes & charity: for every pair of shoes
X X bought by a TOMS customer, a pair is given to
TOMS Shoes USA
a child in need in some of the poorest
countries in the world. 23