Back to the Future Shock: Design for the Brand Experience Economy
We’ve been talking about the experience economy for a long time, but we’ve taken the premise for granted.
In 1970, futurists Alvin and Heidi Toffler published Future Shock, positing that an economy is being created geared to the provision of psychic gratification, that a process of “psychologization” finds place and humans will strive for a better “quality of life”.
Manufacturers of goods will add a “psychic load” to basic products, and this psychic component of services will expand and we will witness the raise of experience industries whose sole output consists of pre-programmed experiences, including simulated environments that offer customers a taste of adventure, danger, or other pleasure.
In 1996, Rolf Jensen of the Copenhagen Institute for Futures Studies wrote, “In 25 years, what people buy will be mostly stories, legends, emotion, and lifestyle.” He called it the ‘commercialization of emotions.’
Although the experience industries have indeed appeared, the essential premise these futurists imagined is best described by Joseph Pine and James Gilmore. They offered readers a new way to think about connecting with customers and securing their loyalty in 1999, when The Experience Economy was first published. In it, they make the creation of experiences a more practical matter for companies, explaining the progression of offerings as well as the value to the business.
The experience is the brand, design is the tool
After commodities, goods, and services, products evolve towards experience. The price is equal to the value of the feeling someone enjoys by engaging. This value represents the maturity of a product and service into an experience. Pine and Gilmore referred to it as the progression of economic value. In that context, ‘leading-edge companies’ are upgrading their offerings. From a customer’s perspective — consumer or business — the experience is the brand, and vice-versa. The tool for the progression of economic value is design.
From a customer’s perspective — consumer or business — the experience is the brand, and vice-versa. The tool for the progression of economic value is design.
In her book Design is Storytelling, Ellen Lupton brilliantly illustrates the journey from commodity to experience, demonstrating the impact design has on the progress. She adapts Pine and Gilmore’s chart, and shares one of the best possible examples: a cup of Starbucks coffee.
In the illustration, we see the correlation between design investment in, and price going up in the progression of economic value. Beans graduate from the simple supply and demand commodity into the product, packaged beans ready for home use. It becomes a service when someone else makes the coffee for you. The experience arrives when a no-frills styrofoam cup evolves into the crisp white Starbucks cup, bought in an environment that has been intentionally designed to invite and embrace the customer, right down to the friendly smile and personalization of your name on each cup. Additional features and flavors make this cup of coffee one-of-a-kind, a special treat worth a higher price.
For Starbucks, the investment in design is a no-brainer, since even the no-frills cup of joe you grab at 7–11 has an average profit margin of about 91%.
Psychic loading friction reducing
It’s important to note that experiences aren’t always physical manifestations of a brand. The Apple Store, Starbucks, and Disneyland are great examples of advanced experience, but those brands exist in meticulously curated systems where the physical component is just one part of a bigger commitment and continuous world.
For Apple, the beauty and heft of their packaging is also significant, as is the personal satisfaction for customers that are part of the club. Nike employs a similar power, keeping customers for life in a fiercely competitive market thanks to a world-class brand reputation and purpose. The strongest brands are those that design profound experiences at every touch point in their system.
In Toffler’s Future Shock, the concept of psychic load is introduced — a psychological benefit to the product that drives preference, loyalty, and confidence. On the flip side, he explains the importance of reducing friction wherever possible on the path to gratification. Sometimes, gratification means something strange — consumers don’t always act rationally — but we discover these motivations in testing and honor the customer’s access.
Netflix is a great example of psychological principles used in the design of products and services to enable the progression of value. Jennifer Clinehens wrote a great piece last year in which she outlines the most influential methodologies they use.
“If the Starbucks secret is a smile when you get your latte, [Netflix’s secret] is that the Web site adapts to the individual’s taste.” — Reed Hastings
The Cocktail Party Effect, Reciprocity Principle, and Idleness Aversion principles are all used throughout the Netflix experience. As Clinehens explains, the secret is personalization, but that’s a deceptively simple characterization of their approach. The autoplay feature between episodes removes all friction for users deciding whether or not to continue watching a show, feeding the human need to stay busy. The Cocktail Party Effect adds satisfaction and psychic load for Netflix by learning user preferences and making relevant, reliable suggestions. This principle is particularly important for Netflix, because it builds trust with the brand over time, thus increasing the likelihood of extended customer value and loyalty.
Ugh, this seems hard (it’s not)
Ultimately we’re learning just three things.
- The future is now, and participating in the experience economy should be a when not if for your brand.
- The price customers are willing to pay for an experience is directly related to how much design is put in.
- Designing experiences sometimes means adding something, and sometimes it means taking something away.
Where is your brand on the chart above? How close are you to a Starbucks cup? How are you adding a psychic load to the products and services you deliver? Where is the friction in your customer’s journey with you? Have you been thinking about your brand experience as a continuous system that must reinforce itself at different touch points?
Let’s talk about it. We can help you discover where you’re at in your progression, what’s holding you back, and how you can evolve for your customers, and your revenue.