Shifting from Experience to Transformation

In this exclusive excerpt from Deepend Group's new online book, Indepth: Experience Economy, Matt Whale, managing director of the innovation consultancy, How To Impact, explores the Experience Economy and how innovation platforms can help deliver ‘change’ for transformation-driven consumers.

“Customers are no longer buying products and services – they are buying experiences delivered via the products and services.”

– Gregory Yankelovich, CEO of Customer Experience IQ

If all the articles on the Experience Economy have shown us anything, it is that our interactions with brands are no longer about just using a certain product or service; they span a far greater breadth of engagement.

And while some industries are only now getting to grips with the challenges thrown up by the Experience Economy, others are already thinking ahead to the next stage.

Pine & Gilmore, the academics who defined the Experience Economy, said that the next phase of consumer engagement with brands will be the Transformation Economy:

“With transformations, the economic offering of a company is the individual person or company changed as the result of what the company does. With transformations, the customer is the product! The individual buyer of the transformation essentially says, ‘Change me’.”

Change here can take different forms – a better sense of identity or purpose, or a physical or mental transformation. Brands take on the role of a coach, enabler or advisor, helping consumers to change themselves in a meaningful, long-term way – beyond the short-term interactions of the Experience Economy, towards self-actualisation – the highest part of Maslow’s hierarchy of needs.

One industry struggling to keep up with the changes digital is creating for traditional product cycles is home entertainment. Interestingly, as DVD sales drop and cinema revenues follow suit, the core offer actually remains strong – consumers are consuming more home entertainment than ever, they are just not paying for it in its old format.

Recently, How To Impact conducted the largest insight and user journey innovation research project in Australia in this sector, interacting with people as they acquired, watched, logged and shared entertainment. One of the key traits revealed showcased the move from experiences to transformations: The TV series binge.

In one extreme example, one consumer took a week off work to watch all five (pirated) seasons of Breaking Bad in 7 days. He commented afterwards: “It was a trip - as mind-altering as the ice Walter White was making in the show.” He clearly wanted to put himself at the centre of his own transformation.

Generally, it takes a more complex and layered experience to create a transformation. And one of the main reasons to run away from the old way of thinking about the economy is the appalling success rate of old school product or service innovation thinking: The Experience and Transformation Economies require brands to think in terms of multi-element ‘innovation platforms’.

An innovation platform is a new solution that brings together five or more types of innovation – not just new product performance or service design, but a connected raft of supporting innovations that make one ‘whole’ innovation idea with a proven higher success rate.*

Doblin’s 10 types of innovation

Today, buying an experience requires an inter-connected family of product, service, process and network innovations.

One of the industries most suited to the Transformation Economy is the weight loss or ‘shape management’ category. Looking at the history of that sector, there’s been a clear progression through the different types of economies to a new status quo that takes a platform approach with the user at the centre.

Product Economy: the first offers were diet products – portion-controlled, low-fat or low-sugar foods, drinks and meal replacements that you bought from a store.In 1963 WeightWatchers was launched, bringing us diet foods.

Service Economy: Jenny Craig brought service into the picture in 1985 by offering a full programme of meals – and formalised a mainstream weight management service – but still based around core product offers. And although WeightWatchers introduced a simple points system so that their products worked in harmony in 1997, the writing was starting to appear on the wall for a product-centric approach.

Experience Economy: Options for losing weight and managing your shape got easier with the arrival of delivery services like Lite’n’Easy and the arrival of the weight/shape management app. Today more than half of all Australians looking to lose weight use two or more weight loss apps. The experience became personal.

Transformation Economy: Michelle Bridges’ 12 Week Body Transformation offering and clothing range has evolved shape/weight management beyond its product and service origins. Her brand offers transformation experiences: a greater focus on education, coaching, support and empowerment. This year, Michelle Bridges made the BRW Rich Women list for the first time with a net worth of $53 million.

Bridges isn’t alone; she’s part of an industry-wide trend, which now extends to the travel space with places like the Golden Door health retreat in the Hunter Valley. The emphasis there is on ‘balancing mind, body and spirit to achieve life-long wellness’ and providing tools to change. Indeed, according to one recent guest, “Ten years ago this was a fat camp – now it’s a change centre”.

We’ve long talked about customer-centric design, so the concept of a Transformation Economy that revolves around the transformation of the customer as a ‘product’ shouldn’t be too alien in principle. The future is open to organisations that have the practical capability and structures to deliver customer-centric transformation platforms. We all need to be agents of change.

*When Doblin undertook its major innovation research exercise and examined nearly 10,000 projects, it found innovation ideas that just focused on just one type of innovation had a success rate of less than 5 per cent. But when innovations were built around a platform of five or more types of innovation they had a 35-70 per cent success rate. The wider the innovation platform, the more of an experience you can build and the better your chances of success.

• This exclusive extract is from the newly launched online publication, Indepth: Experience Economy from Deepend Group. The independent, digital communications and innovation consultancy group comprises specialist agencies Deepend (digital), How To Impact (innovation), Nomad (mobile) and History Will Be Kind (PR/social media).