Experience Economy II

Earlier this week, I talked about the book The Experience Economy.

A Penny For… reader Mike DeWitt comments:

You should add the final evolutionary step, transformation. As the speed of creative destruction of jobs accelerates, people will be looking (and willing to pay) for acquiring new capabilities.

I was remiss, so let’s talk about transformations. The example Pine and Gilmore use is fitness clubs. Currently, clubs charge clients through membership fees or time spent in the facility. The authors suggest a different approach:

Think about what such a business would do differently were it truly a transformation elicitor. First, it would spend much more time up-front, before it agreed to accept an individual as a member – on the understanding the individual’s true aspirations and, more important, his or her current capabilities, both physical and mental. Many people do not have the temperament to stick to a physical regimen and cannot sustain progress toward a defined goal. Indeed, we suspect that many fitness centers dervive much of their revenue from people who pay their money but rarely encounter pain on the machines. Signing up such people may be profitable for one period, but surely it leads to the costly churn of constantly replacing expiring memberships…

Once the fitness center determines that an individual can both physically and mentally achieve a specific aspiration, then and only then would it lay out the charge for a specific achievement, including interim goals along the way. And the amount would be two or three or perhaps even ten times what such places charge today for mere machine usage. Who wouldn’t pay more for a guarantee that he would lose those 30 pounds, gain those 5 extra inches of pure muscle around the chest, [or] bench press 250 lbs…And once it made such a commitment, the fitness center would be sure to deliver the right set of experiences to make sure the aspirant achieved his goals- and therefore paid in full. Personal trainers earn so much more that fitness center instructors precisely because they ensure their patrons follow the proper regimen. [pg.192-193]

To Mike’s point, I think this is the tactic of the return-to-school education market. Schools are targeting people who never completed their degree or are pursuing a master’s degree and they promise new careers with greater income.