Excerpt from the Preview to 2020 New Hardcover Edition of The Experience Economy: Competing for Customer Time, Attention, and Money

Time is the currency of experiences. If you get customers to spend more time with your business then they will spend more money on your offerings. To do so, however, requires gaining customer attention amidst an increasingly wide array of options available for spending that time.

Indeed, every business now competes not only with players in its own industry, nor only with those in its immediate geographic area, but with every other company in the world for the time, attention, and money of individual customers.

Obviously, time is limited. We all have only twenty-four hours a day in which to experience. So, if another company gets a customer to spend time with it, what results? Less time spent with your business.

Similarly, attention is scarce. Today’s media-fragmented and technology-saturated world makes it difficult to capture customers’ attention with normal advertising or other marketing campaigns. But when another company creates an engaging experience that does garner attention – whether online or off – what else happens? Less attention directed toward your business.

And finally, money is consumable, meaning if a customer spends a dollar on another economic offering from some other company, then what can’t that customer do with that dollar? Spend it on your business.

Three questions therefore loom large in today’s Experience Economy:

1. Are your customers increasing or decreasing the amount of time spent with you?
2. Do you have to exert ever more marketing and sales efforts to gain the attention of customers, or do the experiences you offer create robust demand in and of themselves?
3. Is the money customers pay you derived entirely from the sale of commodities, goods, and services, or have you found ways to explicitly charge fees for various experiences?

Charging for Time
You would never go to a movie or a play, a concert or a sporting event, a museum or a theme park, or any number of other such experiences and not expect to pay admission. Why? Because you view each of these as worthwhile experiences! Why should the experiences your company offers be any different?

When faced with today’s shift from the Service Economy to the Experience Economy, too many companies give away any experiences they add in order to better sell their goods and services. “Theme” restaurants create elaborately immersive environments, but only charge for meals. Many retailers let you try out, play with, and sample products in their stores, but only charge to purchase the merchandise. Even Starbucks still only charges for the coffee it prepares, not the time people spend in its places. But eventually, companies must align what they charge for with what customers value, and with experiences that means explicitly charging for the time customers spend with them.

One cafe chain that understands this: Ziferblat in Russia and the United Kingdom. At such venues, customers pay eight pence per minute or so (depending on location) for the time spent there – and the coffee is free! Sure, guests can’t order anything like a tall, half-sweet caramel macchiato and must serve themselves, but they get an experience to call their own for however long they want to stay to take a break, work, read, play games, or just socialize.

In Chapter 3’s section “You Are What You Charge For” you will find a key question for readers to ask themselves: What would we do differently if we charged admission? When Ami Arad, co-founder of Wingtip, a men’s store in San Francisco, read this question, he was taken aback. He wondered how he could possibly charge admission for a clothing store, even one as well-appointed as Wingtip, with its theme of “Solutions for the Modern Gentleman”. Taking the question seriously, Arad finally hit on exactly the right approach: start a club worthy of a membership fee. After prototyping an incredibly small space – no bigger than a conference room – he discovered that some people were indeed willing to become members to experience a respite from their hectic days. He then found expanded space in the old Bank of Italy across from the Transamerica building, placing the Wingtip Store on the first level and basement, while fashioning the Wingtip Club on the top two floors.

Open to both men and women, the 13,000-square-foot Club has a common bar and eating area, private dining rooms, wine lockers, a golf simulator, billiards room, boardroom, and roof deck. While the Wingtip Store remains open to anyone, the Wingtip Club (with over 1,000 paying members) has three levels of membership: visiting, social, and the highest level, regular, which requires a $3,000 initiation fee plus $200 per month for unlimited access. All members receive a 10 percent discount on merchandise and other perks, as the store and club feed off one another: the store creating demand for the club and the club creating demand for the store.

Wingtip is not alone, with scores of companies now charging admission for places or for experiences within their places that seemed crazy when we first published The Experience Economy. Retailers such as American Girl, Eataly, and REI charge admission, as do restaurants such as Next in Chicago, The Clove Club in London, and Noma in Copenhagen, and manufacturers such as LEGO, Heineken, Guinness, Coca-Cola, Land Rover, Volkswagen, Swarovski, and so very many others. Most every startup in new-to-the-world experience genres charge admission, such as the Museum of Ice Cream, the Rosé Mansion, Circus Trix, Sleep No More, the College of Extraordinary Experiences, axe-throwing venues galore, and Topgolf (with its 60 and counting locations). Even some tourist destinations charge admission, such as 17-Mile Drive in Pebble Beach, California; the city of Wuzhen, China; and now in 2019, Venice, Italy.

Not only does charging for time align what you charge for with what your customers value, while ensuring that your experience is worthy of customers’ time and attention, but charging admission further signals that this is a place worth experiencing. Simply put, revenues directly derived from charging for experiences provide the most straightforward means to measure the economic value you’ve created.

Joseph Pine II and James H. Gilmore are cofounders of Strategic Horizons LLP, a thinking studio dedicated to helping enterprises conceive and design innovative ways of adding value to their economic offerings. They are coauthors of The Experience Economy: Competing for Customer Time, Attention, and Money; Authenticity: What Consumers Really Want; and Markets of One.