The Experience Economy and the Art

Over the past few months, Andrew Recinos, President of non-profit Tessitura Network, and I have been engaging in a series of conversations around what has been frequently referred to as, “The Experience Economy”. We were so excited by the direction the discussions were taking, that we decided to put pen to paper and create a series of blog posts on the topic. These ideas are by no means definitive, but meant to be a starting point for conversations about how patrons interact with arts and culture*.

 Introduction

Where does your experience with an event begin? When the curtain goes up? When you buy a ticket? When you first hear about the show? When you are first introduced to the artform?

Leaders and strategists in arts organization often find themselves asking these questions. In for-profit industries, companies decipher when, where, and how they engage with customers in order to reduce friction, increase efficiencies, and maximize the value-add and willingness-to-pay for the customer. All this in an attempt to maximize profit. In the non-profit space, economic relevance is equally as important, but the ultimate return is advancing the mission of the organization. Revenue is a means to that end. Because of this goal, non-profits are not only interested in how their patrons are experiencing their specific offering, but are tasked with having to influence how their entire community engages with their sector as a whole. No small task.

For example, a performing arts organization may have separate programs that work to expose youth to the art, lobby the public sector to recognize that art, build long-term philanthropic support for the art, and actually create and perform the art. All of these programs create experiences for the patron at different stages along their journey. How non-profits can curate those experiences into a meaningful, continuous engagement that deepens the understanding of the mission in the community is what these blog posts are about.

Background

The term Experience Economy has been around for some time and is typically credited to B. Joseph Pine II and James H. Gilmore. In their 1998 publication in the Harvard Business Review, they described the evolution of economies beautifully through the analogy of a birthday cake:

 "As a vestige of the agrarian economy, mothers made birthday cakes from scratch, mixing farm commodities (flour, sugar, butter, and eggs) that together cost mere dimes. As the goods-based industrial economy advanced, moms paid a dollar or two to Betty Crocker for premixed ingredients. Later, when the service economy took hold, busy parents ordered cakes from the bakery or grocery store, which, at $10 or $15, cost ten times as much as the packaged ingredients. Now, in the time-starved 1990s, parents neither make the birthday cake nor even throw the party. Instead, they spend $100 or more to “outsource” the entire event to Chuck E. Cheese’s, the Discovery Zone, the Mining Company, or some other business that stages a memorable event for the kids—and often throws in the cake for free. Welcome to the emerging experience economy."

Since this article, much has been written about how companies define the product they produce and how customers’ tastes-and-preferences have been increasingly more defined by the set of experiences that surround the physical good (if any) they are purchasing rather than the good itself. It is the entire experience that adds value for customers, not just the item being purchased. From pioneers like Walt Disney, to more recent examples in healthcare, businesses have seen benefits in paying more attention to the entire set of interactions that they have with customers.  

Professors Nicolaj Siggelkow and Christian Terwiesch, of The Wharton School, in their book, Connected Strategy, look at how a continuous relationship between firms and customers increase customers’ willingness-to-pay, and push out the entire efficiency frontier. I have had the privilege of studying under both of these business academics and their management strategies are applicable to a wide range of industries.The strategies they detail are, in effect, managing the total experience the customer has with the firm. They define the purpose of a connected strategy as a strategy that,

 “… transforms traditional, episodic interactions with customers into connected customer relationships that are characterized by continuous, low-friction, and personalized interactions.”

This type of work is showing that creating a more constant and personal relationship with your customers or patrons enhances their experience and leads to more satisfying outcomes for all. Research like this is at the core of cutting-edge business strategy today and takes examples from Disney and other experience-based product providers. 

Next

There is plenty of literature out there regarding the specifics of the experience economy. What we wanted to focus on is how this idea can be adapted to a framework that fits with our experiences in arts and culture. In Andrew's post, he talks about how this concept is, and will continue to be, incredibly important for arts and culture organization as they continue to struggle with audience retention, increasing costs, and of course, relevance. He also details how experience is driving the entertainment needs of younger generations and how important those younger generations will be to the future economic health of the arts and culture sector. I recommend you head over to his blog and see what he has to say as well.

 As these posts progress we hope to look closer at the experiential journey patrons take as they learn about and eventually engage with art and culture.

 * For clarification, in these posts, we use arts and culture, and culture interchangeably. We acknowledge the differences in these terms, but for the simplicity of writing, we will use them interchangeably to describe arts and culture as an industry.

The Cultural Experience Framework is a series of blog posts written by Michael Greer, Executive Director at Oregon Ballet Theatre and Andrew Recinos, President of Tessitura Network. Each topic contains a post from each of us and approaches the material from our different perspectives. We hope you will read both posts to get the full perspective on the material. We have really enjoyed sharing our thoughts and experiences with each other and hope that they encourage your own thoughts, feedback and ideas. Most of all, we hope that something in these posts can inspire others to continue their work in arts and culture, better engage with their communities, and progress their mission.