Welcome to the Experience Economy

Coffee costs less than 5 cents per cup in the commodities market. Yet we pay $5 for a grande latte at a “Starbucks near you” for a slightly burnt, wholly mass produced, cup of java topped with an overdose of 2% milk. The lines today at a Starbucks at any airport rival the TSA security lines. Yet the sight of the green logo with a picture of the stylized two tailed siren mermaid makes us pause. Why? It’s not the price, it’s not the promotion, it’s not the placement, and it’s not the product. The traditional 4 Ps of marketing don’t work here. It’s the Experience, stupid.

Makes sense? No? Well let’s look at a few more examples about the experience economy.

I was in Geneva in March 2008 for a Sage executive conference. Our conference gift was a 2 pen set of Mont Blanc; symbolic because our conference was being held in Evian des bains, in full view of the stately Mount Blanc in the background. So I did what every normal person does when he receives an expensive gift. I googled the pen to check the price!! After multiplying the Euro price several times I arrived at a mind boggling amount of $500 for a ball point pen and a pencil set. That’s more than 100 Grande Lattes! The always-rationalizing-Indian brain that I have been gifted with made the relevant comparison - that’s a lot more money than the Bic pens that I buy at staples which on a good day can cost $4.99 a dozen. Oh my gosh - that’s like buying 100 Bic pens! Plus the Bic pen gives you the joy of chewing on the pointy black cap as you scribble. The Mont Blanc has a inconvenient round metal cap. No chewing and $500? What’s up?? Let’s do some research. The most expensive Mont Blanc costs $4,300. A few years ago on a TV program which showcased the top 10 worst jobs, a woman by the name of Igor who worked at Mont Blanc was interviewed. Her job was testing pens by scribbling curly lines on a page 8 hours a day. She had been doing this for 10 years. When asked how much she hated her job of testing a pen she proudly replied - “I don’t test pens. I guarantee a writing experience using a pen which someday will be used to sign the middle east peace treaty!”. Wow. Igor was guaranteeing a writing experience. So what’s the Mont Blanc pen all about. The Experience!

So you still don’t agree. Well explain this to me.

Why is a family of four willing to stand in endless lines and pay over $300 for just entrace to enter a Disney theme park? The rides are average, the characters dressed in ridiculous costumes, and prices at the concession stands highway robbery. And all this with the aspiration of a mouse sighting. Right - you are getting it. It’s for the Disney Experience. As the story goes, about 10 years ago a family from Australia were exiting a Disney theme park and their daughter was crying as they were leaving. At any other entertainment park in Northen America hardly a soul would have noticed. But this isnt any other place. It’s the Magic of Disney! The guy at the turnstile asked what happened and the mother replied that her 8 year old didnt get to see Minnie. The turnstile operator spoke on his handy walkie-talkie and within 15 minutes Minnie appeared in her regal pink costume. Now - think about the Disney org chart 10 years ago. Micheal Eisner on the top and the turnstile guy almost 30 levels down. And he was able to produce a Disney icon within 15 minutes. Why? Because the Disney experience is more important to that conglomerate than any organization chart ever built. It’s that experience again.

That’s why we shop at Nordstroms, we stay at a Ritz, we eat at a Morton’s and buy Thomas trains for our kids. It’s not the price, not the product - it’s the exxperience!!

So take a look at the products you sell tomorrow morning. And make sure you understand that the you arent selling the customer a product; he can get that anywhere else over the Internet even - you are allowing the customer to participate in a buying experience.

More on this topic later. I need to take my teenage daughter to an Abercrombie store.