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Are you experienced? Featured

9:48am EDT July 22, 2002

Limousines pull up to the gated entrance, flash bulbs pop and visitors are hounded by television reporters armed with cameras and microphones as they make the long stroll down the red carpet.

It’s not Oscar night. It’s a $54 a plate restaurant in Anaheim, Calif., that is the rage among teens and baby boomers. Modeled after an evening at a Hollywood awards ceremony, restaurant visitors are given the star treatment, immersed in this alternate reality from the moment they enter the gates of Tinseltown Studios. There are even best actor and actress awards presented at the end of the night to a few lucky guests who were plucked out of line to perform famous movie scenes earlier in the evening.

Everything about the experience is scripted, while the food serves as just another prop to propel the illusion forward. James Gilmore, co-founder of Aurora-based Strategic Horizons LLP, believes escapist enterprises like these are the future of the service business. Although maybe not as calculated, he can rattle off dozens of other businesses already cashing in on the public’s hunger for unique experiences.

If Tinseltown Studios is Gilmore’s experience economy at the extreme, at the other end of the spectrum is the corner Starbucks coffee shop. It is one of Gilmore’s favorite examples of the experience-based economy’s arrival. Other evidence is found in the ambiance of chains such as Planet Hollywood and the Hard Rock Cafe, the staged theatrics of Johnny Rockets restaurants and the soothing environments of Barnes and Nobles and Borders bookstores.

Gilmore contends, however, that the experience economy is still in its infancy.

“The big idea is, at some point, businesses will charge explicitly for an experience,” he says, pointing out that Tinseltown Studios’ flat fee for dinner illustrates this. “We see some evidences of it today.”

For skeptics, he offers the fact that the economy has experienced major evolutionary jumps twice before. Think of how coffee progressed from the bean to the can of Maxwell House at the grocery store to the 50-cent cup at McDonalds. Starbucks, where customers now pay nearly four times that for a cup of coffee is, in Gilmore’s estimation, the next logical step.

Gilmore and business partner James Pine collected their observations in a book titled “The Experience Economy: Work is Theatre & Every Business a Stage.” Time will ultimately tell whether the pair’s expansive vision of this new economy will come to pass. After spending two hours with the very persuasive Gilmore, you’re convinced it probably will.

But even if it doesn’t, the ideas are an intriguing primer for executives looking for a way to differentiate their companies from the competition in a world where it becomes more difficult to do so every day.

Gilmore lifts the $2 cup of Starbucks coffee to his lips and takes a quick look around the room. There are mothers and children reading in the corner, a retiree looking over his morning newspaper and a group of young men sitting a nearby table scribbling away on legal pads.

“They are providing a place that people value and they command a premium for it,” Gilmore says of the Seattle-based coffee shop chain. “It still has to be a good cup of coffee, but the value people attach to it is largely around the place for coffee drinking ... Hanging out like this has always been there, but now it’s increasingly the basis of business enterprises.”

Starbucks scores high on Gilmore’s first rule of creating an experiential business: Appeal to the customer’s senses. The coffee shop has it down perfectly, from the large wall murals and bright thematic decor that is even carried out to the bathrooms, to the comfortable chairs and, of course, the sweet coffee aroma.

“One thing service businesses can do to layer on top of what they currently do is determine what are the sensory things that can be layered on top of the service,” says Gilmore. “Taste is the easiest one. Serve food. In fact, pick a signature item. Look at each of the senses and what you can do.”

Every business with a physical location that customers visit needs to consider this question, from retail clothing stores to dentist offices. “What’s the sound of a car dealership?” asks Gilmore. “Do they throw on any old local radio station, or do they think very explicitly about the music and how it fits them.”

Connecting with the customer in a memorable way doesn’t have to be capital-intensive. Creating a unique “place” can be taxing on the finances, but scenery is only part of the equation. Equally important is the interaction of a company’s employees with its customers.

Simple good manners won’t cut it in the experience economy. Customers want original interaction, says Gilmore. They want to feel as if something important is happening. The right employee attitude, whether tightly scripted or not, can make even the dull reality of waiting in line a memorable event. Gilmore recalls an evening at the Cedar Lee Theater when he noticed such a character behind the refreshment counter.

“He finished serving one customer, turned around and said, ‘Who’s next to be refreshed?’” recalls Gilmore, who still gets a kick out of the line. “He doesn’t say it to another person until a sufficient number of people go through the line. Then, he uses it again. He had this portfolio of routines he would spin to make it more memorable so you don’t mind waiting.

“People are willing to spend more time in an experience versus an ordinary service, which is get it to me fast and get me out of here. Experience is getting people to spend more time with you when they are in an otherwise time-starved environment.”

An employee’s dialogue with a customer can also be used as cues to the customer that something important is about to happen, or to build excitement. Take, for example, the experiential Rainforest Cafe chain of restaurants, where guests eat underneath a canopy of jungle foliage surrounded by chattering robotic animals. The host doesn’t say, ‘Your table is ready.’ He says, ‘Your adventure is about to begin.’”

The main idea behind all of it, Gilmore says, is taking the bored rigidity out of how companies treat their customers.

“There is an opportunity for this in any enterprise,” he says. “Take receptionists, for example. Most of us are greeted pathetically. Same with the service across the counter in most service establishments.”

Some may call Gilmore’s ideas just an extension of the service economy. Actually it’s show business and must be kept entertaining and fresh for customers to continue handing over their money. That means constantly changing the experience to bring customers back.

But, Gilmore says, once a company creates an attractive, escapist environment, customers will be more than willing to pay simply to experience it again. If you think shopping malls that charge admission are a little farfetched, think again. They already exist.

Universal City Walk, a California shopping mall, charges a $6 parking fee to visitors. It is refundable if you eat dinner or see a movie at the mall, but not if you purchase goods. Meanwhile, there is American Girl Place in Chicago. The upscale doll store charges admission to simply get in the door, then offers lunch for a flat fee of $16 a person, dinner for $18 and the American Girl revue for $25 a head.

“You can spend hundreds of dollars and never buy a physical good,” says Gilmore.

Gilmore’s point is that American Girl Place is creating “places within places” where it can generate additional revenue, a trend he sees more and more. And that is the real boon for those companies that buy into the experience economy, he says, a chance for new revenue streams that were previously unimagined.

“The bottom line here is if you see experiences as a distinct economic offering, it opens up possibilities for what business you are really in,” he says. “It’s all top-line revenue stuff. It gets you out of this world of constantly having to do the cost-saving thing and squeeze out the next nickel, which is ultimately, at some point, going to detract from how valuable the offering is to your clientele.”

How to reach: James Gilmore, Strategic Horizons, (330) 995-4686; “The Experience Economy” is available at www.amazon.com.

Experience report card

By Jim Vickers

Jim Gilmore makes his living helping companies integrate customer experiences into their everyday businesses. He offers his take on some of Cleveland’s experiential companies.

The Cleveland Indians/Jacobs Field

“(General Manger) John Hart was quoted in U.S. Today saying they can’t get any more revenue out of the stadium. He’s wrong. They already get added revenue from fancast, where you can go call an inning of baseball for $30 and receive a broadcast quality recording.

“Thirty-two people so far this year have spent $300 to propose to their girlfriends with Slider showing up with roses. There are all kinds of other added revenue possibilities. Once people are there, it’s a captive audience for which you can stage even more experiences.”

Progressive Insurance

“You have an accident and a Progressive vehicle shows up driven by your ‘host’ for the accident. They take you inside the vehicle, give you a cup of coffee and a phone for you to call family and friends to tell them what happened. Meanwhile, they are outside dealing with the other driver and the authorities.

“They isolate you from all that. You escape from all that. In as high as 90 percent of the cases, they will write a check on the spot and point you in the direction of a specific repair shop.

“The experience is the marketing. The word of mouth on this is powerful. It is a wonderful example of how any business, particularly any service business, can harmonize a set of cues that creates that impression of, ‘Hey, we care.’ It’s not about financial quotes, it’s very much about the social experience that happens.”

The Rock and Roll Hall of Fame and Museum

“A museum may be the wrong model. Let the facility itself be established and let the people break the rules inside — let the rebellion happen. One of the greatest spaces in the whole place is where they show, by year, the Grammy awards. But they have people go in there and sit and watch video images.

“It ought to be every night a rock concert, and at the end, the visitors ought to pull out their lighters, even if they have to hire paid employees to model that behavior.

“They have to let rock and roll behavior happen there at all times. I’ve been there (when) they are redoing something. They have a tarp over it, and I pull down the tarp to look. They say, ‘Don’t look at that.’ How rock and roll is that? It’s sterile. It’s too museum. It’s not rock and roll.”

The future of experience

What happens, you may ask, once the experience economy is maxed out? Gilmore says consumers will pay companies for guaranteed transformation. The idea may sound more like science fiction than the future of business, but he argues it is not as outlandish as many first think.

“We came to this idea through customization,” Gilmore explains. “If you customize a good, you automatically turn it into a service. If you customize a service, you automatically turn it into an experience. We asked, ‘If you customize an experience what do you turn it into?’ The answer is a transformation.”

That means businesses offering golf lessons today may eventually charge for the instruction by how many points you want to knock off your handicap. First, you would go through a diagnostic test to determine whether you have the potential for improvement, says Gilmore. However, don’t expect transformation to come without a hefty price tag.

“ The key to transformation is to charge for demonstrated outcomes,” says Gilmore. “In the case of golf, charge explicitly for the lower handicap. Some guy may pay $720 for lessons some summer. I believe some people would pay $7,200 for a guaranteed or demonstrated outcome.”

Especially, if that outcome means the difference between success and failure.

Jim Vickers (jvickers@sbnnet.com) is associate editor at SBN.