Teaching and Implementing the New Interaction Economy, Part I
17 June 2014
Americans are said to live and operate in an “experience” economy. But a new way of creating value via loyalty rather than premium price is beginning to emerge. What does this mean to our students and their future careers in foodservice? Part one of a two-part focus.
By Renee Zonka, RD, CEC, CHE, MBA
For decades through the 1990s, the U.S. economy was chiefly described as a “service” economy. An argument can be made that ours is still a service economy because more than 50% of the labor force in the United States is in the service sector as opposed to agriculture or manufacturing. How often have you called a company for service and spoken to someone with a foreign accent? Of course, I’m speaking of customer service. We’ve exported the delivery of so many services that many developing nations are considered service economies today.
Of course, a service economy can also refer to the relative importance of service in a product offering. Products today have a higher service component than in previous decades, and, virtually every product today has a service component to it. So there’s a strong case to be made that we’re still living and operating within a service economy.
The “Experience” Economy
But identifying our economy began to change in 1999 with the publication of a book by B. Joseph Pine, II, and James H. Gilmore, The Experience Economy: Work Is Theatre & Every Business a Stage. Everyone can identify with the basic premise of an experience economy, in which companies state an “experience” when they engage customers in a memorable way.
Here’s an example: Kendall College operates a white-tablecloth restaurant open to the public that doubles as a real-life classroom for culinary-arts students, called, simply, The Dining Room. Peggy Ryan, a culinary instructor and daytime executive chef of The Dining Room, once menued a lentil soup with peppered crème fraîche and fried celery leaves. The student server placed a bowl in front of the guest that contained only the crème fraîche with the fried celery leaves. So it wasn’t soup when it arrived at the table. It became soup in front of the guest’s eyes when the student poured it into the bowl. For the guest, the act was lagniappe—a little something extra, as they say in New Orleans—that heightened the dining experience.
Meanwhile, across from the full-service public restaurant at Kendall is the Café, which is partially subsidized and primarily serves faculty and students, many of whom are culinary students, but also business, hospitality and early-childhood-education students. Action stations, both on the line and stand-alone, are a big part of the show in Kendall’s Café, because they heighten the dining experience for guests who receive a little theater with their all-you-care-to-eat meal that includes a lot of choices and costs only $5. So these are just two very basic examples of the experience economy at work.
But here’s a question for you. Is it time to say goodbye to the experience economy? Because, let’s face it: Everyone wants a terrific experience, but implementation is a different matter.
If we’re not convinced that the experience economy is not delivering on the experience for everyone, consider the experience economy’s basic premise: that, by increasing the quality of my experience at your operation, I’m willing to pay more for that experience. So for that lentil soup in The Dining Room at Kendall College, although the guest anticipated what his experience would be when he ordered the soup, that expectation was exceeded when it became soup before his eyes. A guest won’t mind so much that extra dollar it might have cost him over, say, a bowl of soup merely placed in front of him.
In foodservice, we talk about the experience justifying a higher menu price all the time, as something to which to aspire to yield a higher ticket price and, therefore, a higher profit margin.
The problem with the experience economy, which always sounds good when executives in the board room are discussing the experience that they want customers at the unit level to have, is that there are three main reasons the customer experience is apt to fail:
1. Vague Plans. Mission statements with broad concepts like “caring,” “helpful” and “professional” are great for ad copy, but lousy for creating great customer experiences. Customers have specific time frames, information needs and communications requirements. Companies that subscribe to the customer experience without attending to the details will deliver a compelling customer experience only in intention—but not in reality.
2. Inconsistent Execution.Many executives mistakenly believe that the service concepts hammered out in the boardroom are taken straight to the frontlines and put into practice 100% of the time. But when people are involved, a high rate of variability is inevitable unless a solid, quality program is in place. Unfortunately, many—if not most—companies forgo this step, or assume that management has execution covered.
3. The Wrong Metrics. Often companies rely exclusively on metrics that gage the operational, and not the actual, perceived qualities of the customer experience. As business guru Peter Drucker so famously quipped, “That which cannot be measured cannot be managed.”
Introducing the “Interaction” Economy
Here’s a solution: Even as the philosophy behind the “experience economy” has taken root with marketing strategists, a new way of creating value via loyalty rather than premium price is beginning to emerge. The concept was introduced by InterAction Metrics, an Oregon-based company specializing in customer-experience optimization and customer-interaction management, in 2008.
The premise behind the Interaction economy is that customer interactions offer a distinct kind of value that can work for or against a company’s bottom line. The interaction economy is based on the idea that well-designed, consistent and regularly audited interactions lead to increased productivity. The interaction economy extends into all customer interfaces, the bulk of which are likely to include staff—and, in the case of culinary-arts programs, students.
In the July-August edition of “The Gold Medal Classroom,” I will talk about how to implement the basic tenets and benefits of the interaction economy within your program’s foodservice operations and why it will help increase sales. I’ll also discuss how to teach customer interaction to students as a means of helping them become valued employees in their first jobs following graduation and more successful in their own rights.
Rene Zonka, RD, CEC, CHE, MBA, is the dean of the Kendall College School of Culinary Arts in Chicago.