What is the “experience economy”: a bit of history

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“There is nothing more valuable than a personal experience!” Once upon a time, in pre-war and pre-war times, one travel company motivated its clients, regular and potential, with this slogan, to travel more and more often, visit different countries and practice different formats of recreation. We would be glad even now, but only, probably, we will have to wait a little while for the general uncertainty, and only then – on the road!

But the global economic processes will not wait, and the general trend can be seen very clearly. The economy of goods and services is being replaced by the economy of experiences. Our Best Communication Techniques program will teach you how to make a good impression and achieve your goals in any economic scenario . And today we will talk about what the experience economy is, what it consists of and how to succeed in it.

What is the “experience economy”: a bit of history

The experience economy is a model of economic development, where the central link is to take into account the desire of the client to receive emotions from the purchase of a product or service. The term appeared in 1999 after the publication of the book “The Experience Economy: How to turn a purchase into an exciting” action.

This book was written by Strategic Horizons LLP co-founders Joseph Pine and James Gilmour. The Experience Economy quickly became a bestseller and then reprinted many times [ D. Pine, D. Gilmore, 1999 ].

The publication of the book was preceded by a voluminous article Welcome to the Experience Economy (“Welcome to the Experience Economy”) in the Harvard Business Review, which formed the basis of the future book [ J. Pine, J. Gilmore, 1998 ].

By and large, this book is a reference to the well-known saying “All life is a theater, and the people in it are actors.” Only here this thesis is formulated a little differently: “In the experience economy, business is a stage, and work is a theater.”

Thus, employees of companies in the experience economy become actors, and their task is to play a performance for the buyer, client, visitor. And it’s not just the entertainment industry.

The viewer (buyer, visitor, client) expects a variety of experiences: from buying a new phone and a new TV, from going to a restaurant and even just to the store, from a test drive of a car and a trip to a resort. Why is tourism called the experience economy? We will definitely talk about this a little later, but for now we need to understand how the experience economy differs from all previous economic models.

The Experience Economy: Key Differences

How is the experience economy different from previous economic models? First, recall that there are four types of economic proposals:

  • Raw material.
  • Products.
  • Services.
  • Impression.

Secondly, let’s remember that, in addition to raw materials, commodity and other economic models, there is also an economy of attention. This is the concept that the main resource is human attention. In the conditions of a glut of the market with the same type of goods and services, for sales success, you need to win the fight for the attention of a potential buyer.

It’s not easy to win: while brands are spending crazy money on advertising, people are avoiding the glut of promotional offerings and are even willing to pay for a service like “a month without ads” if any online service offers it.

How is the experience economy different from the attention economy? First of all, the fact that it was considered sufficient for the attention economy to simply capture the attention of a potential client and make him a passive consumer of content.

In the experience economy, it’s not enough just to grab attention , it still needs to be retained. And you can keep it only when something made an impression, and a person is ready to relive the experience of communicating with the brand again and again.

By the way, the original title of the book “Experience Economy” by Joseph Pine and James Gilmore in English sounds like Economy Experience, which in literal translation should be understood as “experience economy” [ J. Pine, J. Gilmore, 1999 ].

For those interested: “The Economy of Experience” (book) – you can download the English version in full and for free at the link .

But back to the economic differences in different economic models. The essence of the differences is the economic offer inherent in one or another type of economy:


So, if for the agrarian economy the main economic offer is raw materials, and for the industrial economy – goods, then at higher levels of economic development we see services and experiences. This is the essence of progress. An increase in the standard of living inevitably leads to an increase in demand, when there are simply not enough goods, and people are ready to pay for what others are ready to do in their place and for them.

Pine and Gilmore in “The Experience Economy” demonstrate this scheme using the example of a cup of coffee [ D. Pine, D. Gilmore, 1999 ]. Coffee beans are just raw materials, and their price is minimal. Ground and packaged coffee is already a commodity, and it costs more.

If you order a product for home delivery, this is a service that you will have to pay in addition to the cost of the actual ground and packaged coffee. And if coffee is prepared for you in a restaurant and served to you by a waiter, this is already an impression, and a complex one at that: from the interior, furnishings, service, background music, etc.

By the way, very often “going out for coffee” is just an excuse for a business or friendly meeting, and coffee itself is of secondary importance. People go “for a cup of coffee”, first of all, for impressions. And these impressions are also very diverse: from a meeting, communication , heard news about mutual acquaintances.

However, the cafe or restaurant that provides such an opportunity to meet for a cup of coffee and “talk about this and that” gets paid for the experience. And we can clearly see the increase in the cost of coffee on the way from raw material to impression:


In general, many examples can be illustrated in this way, ranging from food to the organization of holidays. Once upon a time it was customary to prepare a festive table on your own and invite guests to your home. Later, there was a trend to take friends to a restaurant for their birthday.

And now it is considered the norm to delegate the organization of a birthday, as they say, from “A” to “Z”, to a special event agency, which will select a restaurant that is suitable for its capacity, and agree on the menu, and prepare a festive program with contests and quizzes, and invite a musical group for guests to dance to live music.

There are many such examples in the economy of impressions. And even in the banking sector, there is a place for the experience economy, ready-made cases of introducing elements of the experience economy, and recommendations have already been developed on how to “not overdo it with Customer Experience and not lose margins” [ FutureBanking, 2020 ].

However, with all the variety of spheres of the economy of impressions, it is possible to single out the main features of the impression as an economic proposal [ A. Solntseva, 2022 ].

Top 6 Distinctive Characteristics of an Experience:

  • Impressions cannot be made “in reserve” – ​​they are created (or not created) “here and now”. Empty seats in the auditorium will never bring profit.
  • Impressions are always individual – the same event, performance, concert will make different impressions on different people.
  • Impressions are intangible – they cannot be seen or touched, and it is almost impossible to predict their strength and quality in advance.
  • The impression does not bring material benefits – it cannot be consumed as food, or put on like clothing.
  • The impression is less “complete” than any other economic proposal: raw materials, goods, services. It is created with the direct participation of the consumer, and it is almost impossible to represent it in certain countable units.
  • Impressions have no “expiration date” restrictions – you can remember for years an exciting trip, a cool concert, a meeting of classmates, your favorite dress, your first car.

Of course, over time, many impressions lose their former brightness. Moreover, some believe that impressions are “a very capricious product, and what impressed you yesterday already looks dull and gray today” [ A. Mukhametkalieva, 2018 ].

Therefore, the challenge for anyone who wants to succeed in the experience economy is to learn how to create new experiences for their customers , tailored to their needs.

How does the experience economy work?

The concept of the experience economy suggests that the decision to purchase a product or use a service is largely determined by the experience that a person expects to receive. And, if his expectations are not met, shops and brands lose customers, clubs and restaurants lose visitors, hotels lose tourists.

Why is tourism called the experience economy? How is the experience economy developing in tourism? To begin with, let’s say that a tourist goes on a trip, first of all, for impressions.

Someone may object that he personally likes to visit museums in different countries. However, this is what impressions are all about. Actually, information about works of art of any era can be found on the Internet, and most excursions for the mass tourist rarely go beyond the information from Wikipedia.

With the advent of 3D tours of various museums around the world, acquaintance with the exposition has been simplified to the availability of Internet access and time to calmly examine the exhibits from all sides. However, a personal impression can only be obtained in the process of a personal visit to the museum, so such a “museum” tourism is still “about impressions”.

The same is true with hotels. Having once received a good impression from staying in a hotel, many people book a room there on their next visit, without even studying any other offers in the region. And this applies to both hotels in the resort area, and hotels in megacities, which are the centers of business life.

The hotel business has long understood that its success and competitiveness are based on impressions. The article “Experience Economy: How Hotels Hook Tourists” details the main ways hotels attract tourists by promising them unforgettable experiences [ Tourism Subtleties, 2021 ].

Among the popular tricks are fashion hotels, room decoration based on a movie or series, the opportunity to “talk” with exotic animals. A win-win option is to offer the guest to settle in the same room where a celebrity stayed. For example, a singer or actor who came on tour.

This is how mass personalization works , when the offer itself is massive (hotel, resort, restaurant, etc.), however, a person gets the opportunity to feel a special attitude towards himself, to feel his belonging to the elite, at least for a short while.

We can say that mass personalization is the cornerstone of the experience economy. Contextual advertising, e-mail newsletters, news feed in social networks, “sharpened” for your interests and requests – these are all elements of mass personalization, and it all works for the experience economy.

When we try to figure out how the experience economy functions, we should understand that there are different types of experiences [ A. Solntseva, 2022 ].

Main types of impressions:

  • Entertainment (“feel”) is an option when a person does not need much effort in order to get sensations and impressions. This is reading books, listening to music, watching movies, attending performances, concerts, festive events.
  • Learning (“learning”) is an option that requires involvement in the process and efforts to assimilate new knowledge and skills. These are master classes in cooking and needlework, open training in yoga and dance, learning a foreign language and learning to play a musical instrument .
  • Escape from reality (“act”) – these are all kinds of quest rooms, computer games, VR (virtual reality – virtual reality) and AR (augmented reality – augmented reality) services.
  • Aesthetics (“to be” and “perceive”) are impressions focused on the spiritual world and the spiritual essence of a person, his desire for beauty. This is a visit to exhibitions, museums, art galleries, where active action or intense intellectual effort is not required, but a higher level of involvement and comprehension is needed than for ordinary entertainment.

Examples and boundaries of the main varieties of impressions are somewhat arbitrary, because people are different, and perceptions, accordingly, may differ. For some, going to a concert is just entertainment, and someone can seriously think about the lyrics of the songs they heard and the meaning that is laid there. For some, a designer dress is a thing for one season and a momentary joy from the purchase, and someone is able to see the artistic value of the author’s product.

However, a true entrepreneur is able to create such value as impressions, even where nothing seems to be conducive to this. And thanks to a creative approach, you can get a charge of positive emotions and unusual impressions even in the parking lot.

The book The Experience Economy gives an example of a multi-storey car park at O’Hare Airport in Chicago [ D. Pine, D. Gilmore, 1999 ]. There, each level has its own melody, and the emblems of sports teams flaunt on the walls. As a result, as one Chicago resident aptly remarked, “you never forget where you left your car.” Why not an impression?

A usually tedious grocery shopping trip to the supermarket can also become unforgettable and filled with positive impressions. The same book mentions the Bristol Farms Gourmet Specialty Foods Market in southern California, which features music, celebrity entertainment, free refreshments, and more.

Recall that the book was published in 1999, when this approach was a curiosity. Nowadays, something similar can be seen in many shopping centers, at least on weekends, when clowns meet parents with children right in the lobby, and brands organize prize draws in which any visitor to the shopping center can take part. At what point did it all appear and why did it become in demand? Experts have their own opinion on this matter.

Origins of the Experience Economy

When we dealt with the main differences between the experience economy and other types of economic models, we came to the conclusion that progress is largely “to blame”, which “brought” economic proposals to a qualitatively new level. However, the question arises: why the experience economy, and not something else?

Researchers identify three main reasons for the demand for impressions [ A. Solntseva, 2022 ]. Firstly, these are objective economic difficulties that “fell” on the head of the millennial generation, which became the first active consumer of impressions. The generation of people born in the 80-90s of the 20th century, perhaps, had the largest number of crises than any of the previous generations.

There is an opinion that millennials are the first generation in history that is poorer than their parents. Older people are accustomed to assessing the standard of living exclusively in material categories: a house, an apartment, a car, fashionable things, “fancy” household appliances. Many representatives of the millennial generation are forced to come to terms with the fact that with the current inflation and endless cataclysms, they can only get all of the above as an inheritance.

Therefore, millennials have adapted to the current realities and judge the quality of life by the number and strength of impressions. Instead of mortgage slavery, the “rent, not buy” approach is gaining momentum, and the popularity of various minimalist movements like Zero Waste and others is growing every day.

Secondly, social networks are an important factor in the popularity and demand for impressions. As the unforgettable Alfred Hitchcock (1899-1980) said: “Cinema is life, from which everything boring has been cut out.” Today, the same can be said about social networks.

The news feed of any social network is literally full of vivid photos and events from the life of users, and everyone willy-nilly is forced to compare themselves with those who live such a bright and eventful life. If you compare your everyday reality with the most colorful episodes of the lives of those who wanted to share them on the social network, the comparison will not be in your favor.

The balance may change if comparable categories are compared. For example, your daily life and the daily life of active newsmakers. It is possible that you will have more truly significant events. Or maybe you should learn to see the good in the little things around you, like a strong coffee with a French croissant in the morning that looks just as appetizing as you recently saw on someone’s Instagram account.

And finally, lack of time. It also affects the demand for impressions. Think back to your school days. What did you prefer to spend your time after school: playing with friends or sitting over textbooks? The A students managed to do both, and the rest made a choice in favor of positive impressions from communicating with friends, until the threat of bad grades for the quarter loomed.

Today, we all live at a faster pace than all previous generations, and growing like mushrooms after rain, to- do lists still do not decrease, although we are spinning like proteins in a wheel. Of course, under these conditions, measures are needed to adapt to the surrounding reality, and for many, impressions become such an “adaptogen”.

Let’s summarize the factors that affect the demand for impressions:

  • Difficult economic situation.
  • Social networks.
  • Time deficit.

As long as these factors are in place, the experience economy will continue to grow. This is a long-term trend, and the country’s leading universities are preparing personnel to work in the experience economy: the HSE, for example, presented the master’s program “The Experience Economy: Management in the Hospitality and Tourism Industry” [ HSE, 2021 ]. In addition, the academic discipline “Experience Economy: Cultural Design” is presented at the HSE [ HSE, 2020 ].

There are similar programs in other universities. For example, in the Master’s program at the University of Tourism and Service, the specialty “Experience Economy in the excursion industry” is offered [ RGUTIS, 2021 ]. And now that we know enough about the experience economy, there is one more question left to answer.

The Experience Economy: What’s Next?

So, we figured out what the experience economy is, how it differs from previous economic models, why it has received such a powerful development and why it is so important to take into account its laws in everyday activities.

However, another very important question remains: what next? Is the experience economy some kind of “the pinnacle of economic evolution” or will we soon see some other “economy of something”?

There is an opinion that the next step will be the economy of transformations, and such an assumption was made quite a long time ago [ V. Pekar, 2008 ]. What does the economy of transformation mean? This is when the consumer of a product or service becomes better after using the product or service.

It is assumed that over time, the leading role in the economy will be played by those areas that contribute to the transformation of people and to the fact that people become “the best version of themselves”. These are services in the field of education and healthcare, fitness and coaching, psychology and biotechnology, the beauty industry and everything that allows a person to become better, smarter, more beautiful, physically healthier.

So, if in the experience economy the supplier of goods and services must be a bit of a director, in the transformation economy he becomes the curator of change. And aerobatics will be considered payment solely for the result achieved, and not just for a product, service or time spent on getting impressions.

In principle, we can already observe elements of the economy of transformation. First, the market segments focused on “improving the human material” are growing rapidly. Secondly, offers like “you pay only for the result” are becoming more common.

Does this mean that the transformation economy is about to replace the experience economy? Most likely, elements of both will coexist for quite a long time, because the change in the economic paradigm never happens all at once.

One way or another, even in the economy of transformations, even in the economy of impressions, communications will occupy a significant place. Therefore, we invite you to our program “ The Best Communication Techniques ”, which will be useful in any scenario. And we also wish you prosperity in any economic circumstances and offer to answer a question on the topic of the article:


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