Selling Outcomes Instead of Services

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0:56Most businesses today are still trying to sell better features or even better experiences. Joe Pine says the real premium, maybe the only premium left, is helping customers become someone new. Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Jansen. My guest today is Joe Pine. He's a bestselling author, keynote speaker, and management advisor who co-founded Strategic Horizons. He's best known for coining the term, the experience economy. Wrote a book by that name, was on this show as well. We're going to talk today about his new book, The Transformation Economy, Guiding Customers to Achieve Their Aspiration.

1:35So, Joe, welcome back to the show. Thanks, John. It's a pleasure to be with you again. So, let's just get the terminology out of the way. you've developed, you've defined, I should say, helped to find some economic arrows before. If somebody said, Joe, what's this transformation economy? You got 60 seconds. What would you say? Well, I would say that it's the transformations are the next level of value that beyond experiences, we've gone from a grand economy based off commodities to industrial economy based off goods to a service economy. Then we shifted into an experience economy. And now we're in a transformation economy where companies can use experiences as the raw material to guide people to change, to help them achieve their aspirations, to become who they want to become.

2:20So this is more than just new marketing language. Like this is not like messaging. I mean, you actually have to have something to transform somebody, right? Yes. It's not marketing language at all. If it is, then you're overhyping what you have. No, it's about your economic offerings. It's about what what you offer, what you sell, and then what you do for your customers. So what would be a simple way for a company to test the difference between a memorable experience, which you talked about earlier, and real transformation? Well, the basic issue is does it last, right? Does it last? With an experience, what you're providing is time well spent, and people value the time they spend with you, and it ends up in a memory.

3:02And that memory needs to last over time, but of course, it tends to dissipate. over time. With transformations, what you're providing is time well invested, that people are investing their time with you in a way that's going to yield compound dividends in the future by becoming a better person in some way. So that's the lasting part, that it's about the outcome, the aspiration that you do achieve through generally not one life-changing experience, generally a series of experiences. Yeah, yeah, stages almost. So So while we kind of kidded that this is not just marketing speak, I mean, there probably is some new language, a company, especially if they realize, hey, we do cause transformations.

3:45I mean, do we need to describe our company in different terms? Well, yes, but some of the terms are big and scary. You know, transformation is a big and scary term. I talk about four different types of transformation. One of them is metamorphosis because there's no other word for it. And it's a big and scary term. But there are a lot of other kinds of aspirations that on a smaller scale than just changing core levels of identity. So you do need to figure out what are the best ways to talk about it for you. And one is on like aspiration is this big scary term. I like to talk about DNA, desires, needs and aspirations.

4:22And then people say, oh, OK, I get that as sort of a progression of bigger and bigger that you're doing. You can talk about about change, obviously, and and outcomes. I think that's a big thing. It's like, what are your aspirations? What's the outcome you want out of us working together? And how can we help you achieve that outcome? Another word is guide. The economic function, you extract commodities, you make goods, you deliver services, you stage experiences, but you guide transformation. You're their guide, their coach, their expert, their counselor, their navigator, their advocate, whatever the right term is for you, I've figured that out.

4:58What is our function? What are we doing for you that guides them? So this doesn't really discriminate between B2B and B2C, right? I mean, somebody could easily say, well, I'm a weight loss coach. You know, it's clear the transformation I cause, right? But what about a B2B company? Are there B2B companies that can kind of stake that claim as well? And in many ways, it's sort of easier to think about with B2B because recognize that if you sell to another business, that business doesn't really want your offering. Sorry to tell you. It's a means to an end, right? And what's the end to what you're offering as a means?

5:33And you may have to ask, why do you want this? You have to ask five whys, as the old manufacturing slogan was, until you get down to some core aspiration. And then now, how can we help you achieve that aspiration and ideally subsume our current offerings into that? All right. But Joe, we're a commodity business. I mean, nobody wants what we sell. We sell insurance. How are we causing transformation? Oh, it's easy. So people do, in fact, want insurance. I mean, if they're smart, right? It's like, I'm a full believer in catastrophic insurance, right? You shouldn't need to do it for every visit to the doctors.

6:11Although my wife says, man, I had to pay a copay. I'm like, it's okay. It's okay. We got the money for that. But if something catastrophically happens, we're in trouble. So an easy way to think about it, services, experiences, transformation. Insure, usher, ensure. All right. So insure basically means something bad happens, we pay you money. And that's how most insurance companies view it, right? As a mere service. Assure means something bad happens, we make you feel better about it. We treat your emotions as well as your actual needs. We think of you at least as a whole person as opposed to a mere claimant.

6:47And then insure is, well, how about we make the bad things not happen? How about we work with you to make you a better driver, particularly your kids a better driver as they are learning? People are very interested in that. Or how about we bring you back to whole so that we can't prevent all catastrophes. We can help you in driving. We can help you in looking at your home and finding all the fire hazards and things like that and so forth. But you can't prevent everything. But what we do is that we will ensure you get back to whole. We will ensure that this is not a long-lasting, devastating trauma in your life.

7:23and many insurance companies are for real you know i got cancer i don't need insurance i gave a car accident i you know i'm totaled i'm that i'm it's a trauma and one of the things i discovered in my research is that a lot of aspirations actually come from trauma and trauma tends to be that metamorphosis where you're you're immediately transformed right you're you're in your doctor's office they say i've got bad news you've got cancer and you don't hear anything you don't hear any of the words for the next five ten minutes of them talking because you now identify as a person with cancer, right?

7:53And that's traumatic. So what the doctor needs to do, but not doctors alone, it's not just about medicine, is to bring you back, is to heal you from the cancer, but also to change that identity as someone who has recovered from cancer or is a person who had cancer in the past. Yeah, it's interesting. I think I've seen a movie one time, you know, where they did that exact scene, right? The doctor's telling him that and then goes on and they kind of everything becomes muffled after that. Right, right. Wow, wow, wow, wow. Exactly, yeah. So I think that's a well-known example. So why is this showing up now in your view?

8:28Well, so all of the economic offerings have always been around, right? They're not a new offering. It's just newly identified and where they become a predominant part of the economy. And so there's a number of reasons why transformations now, One of my fundamental reasons is surprisingly, it's because we make so much money now. We have so much abundance now that we want goods and services to be commoditized, to be bought at the lowest possible price and the greatest possible convenience in order to spend our hard-earned money and our hard-earned time on the experiences and the transformations that we value.

9:04And it's the time, because we make so money, our time actually has so much more worth, if you think about it, right? When you're a high school student and you're making$12 an hour at a part-time job, skipping that to go hang out with the friends or go to a football game or whatever is not that big a deal. But you're making hundreds of thousands of dollars and now you want to have to go to the grocery store. Well, you could measure that as a measure of hundreds of dollars just to go to the grocery store at some level of income. So our time is much more precious than it was in the past. And so we want those experiences to fill that time with time well spent.

9:39And then we increasingly recognize that, hey, experiences change us. I mean, they're the only things that ever change us. We're all the product of our experiences. And so recognizing what are these experiences doing to me and how might I even become better at the things that I want to spend my time at, whether that's family relationships, whether that's golfing, whether at work as well, a lot of those coaches we hire for work and so forth, right? All of that matters much more than it did in the past. so talk to me a little bit about customers who are experiencing this do you see a people actually seeking companies that that are going to be more transformative or do you actually see some resistance as well because it's like wait a minute it's not my lawn mode i don't want to metamorphosis right right there is some resistance um but and there's all you know if you know the hero's journey.

10:32You heard of that, right? There's the refusal of the call, right? And it may be, well, I don't have enough time to do it. And like you said, it may be, I don't, this isn't the right company for it, right? They may be offering it, but it's not the right company for me. And so you need to find out who that is. You need to be present when they're ready to go on that adventure and be with them to be their guide. If you're a consultant, agency owner, or a fractional CMO who feels kind of exhausted from starting from scratch with every new client, well, this is for you. The Fractional CMO Plus Certification is a three-day live experience built to help you stop being the bottleneck and start leading with clarity.

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11:48But do you see people, I mean, this feels like transformation feels like you, especially in a service, means that you have this totally bespoke white glove approach that is different for everyone. But I want to productize transformation. Is that possible? Yes, it is possible. And I'll tell you what's going to make it possible, and that's AI. I was going to, that's on the list. Well, I'm going to take it back. Well, yes, use the word productize. I said you can't commoditize transformations, but you can productize them. So I'm doing that myself, Right. So I just came out with the Transformation Economy, Guiding Customers to Achieve Their Aspirations book.

12:26Right. You can hire me to speak. You can hire me to do a workshop. You actually hire me to work with you to create, to transform your business, to help you transform your customers. But I productized it into a book for$32. Right. Why? Because I want to reach a lot of people and have them do things even without my involvement. But then also we just came out with the Transformation Toolkit. to be able to take the ideas and frameworks in there and be able to work on them even without my help. It's a$495 offering, but it's a lot cheaper than hiring me personally to be there. And so that's productization.

12:58And then again, AI will. Particularly, I think of transformations as three stages. Diagnosis, who is this customer, what do they want to become? Then you design the set of experiences that monetarily increase. There's always regress as well as progress. You have to sense and respond to what's going on. And then you achieve your aspiration. You have to have follow through, which is ensure again, ensure that the transformation takes hold, that it's sustained through time. What a lot of companies do is say, OK, you got it. You lost your 30 pounds. Bye. You don't know. Right. Because then they go back.

13:28Right. So that follow through is most important. That's where AI can help it a lot. Because one of the things it turns out that AI is really good at is counseling, is coaching. Right. And it's just really good at that. I mean, yes, there's a lot of reasons to have a human connection and everything. And I'm a big believer in human connection. But in between, you can have AI providing tips and inspiration and counseling as you go in between your human visits or virtual calls with a coach, a counselor, a guide again. Right. I think it's going to be very good at that, at customizing to your needs at the moment.

14:00What happens to stuff like pricing models, guarantees, risk sharing, if we're, you know, if we're promising something that's an outcome for somebody that's unique to them, what does that do to all the normal kind of models of business? Yeah, well, it does change things. If you promise an outcome, you need to charge for the outcome, right? So that is what you charge, you know, with the services you charge for activities, with experiences, for time, with transformations you charge for outcomes. And the paradox, of course, is that while you want to charge an outcome, and the most prevalent way I've seen is with a transformation guarantee, that you get some or all of your fees back if you don't achieve your aspiration.

14:41But the paradox is that you can't actually guarantee it because customers change themselves, right? You can't change customers. As the old saying goes, you can lead a horse to water, but you can't make a drink. But what a guarantee is, one, it knows that your customer, what I like to say is your aspirant, you know, services have clients, experiences, guests, transformations have aspirants, that they know you're in it, right? that they know you're putting your money where your mouth is. They know you've got risk in it. And it's not just a high profit margin thing that you're doing, but it's also then a catalytic mechanism that says that, hey, I have to do everything it takes to transform that customer or I'm not going to make money, right?

15:22Even if you're only charging it for a portion, that's all profit that you're charging for. And so you then start to do things differently. You approach things differently. You have different processes and so forth to help ensure that transformation occurs and then ideally that it sustains through time. So you answered half of what I was going to ask now is what should leaders measure to know? I mean, first off, you have to know, you have to have the signs, right? Yes, transformation is happening to this person or this business. But then you also probably have to have some way to collect data on that, right?

15:57I mean, I know it sounds really simple, but a lot of people don't have that loop. Right. Some guarantees are purely qualitative, right? It's like, did we do what we said we do? Did you do it? Did you get out of it? You want, right? Others are quantitative. Some of them are, but are sort of very easy to measure. For example, I know, you know, Texas State Technical College and Waco, Texas offers a tuition guarantee. If you graduate and don't get a job within four months or six months, you're, you get your tuition back. Very easy. One thing we got to measure. Others, it's like, well, to what extent did I lower my costs or did I increase my market cap if you're a B2B?

16:36To what extent if I improve my handicap? Well, that's easy to measure. But my tennis game, there's no measurement for tennis, how much you've improved. So it can be very difficult in those situations. All right. So I'm going to come back to marketing. I know you're trying to lead me away from it, but I'm coming back to messaging. messaging so if before i've been saying here's what you're buying and now i'm going to say here's what you're going to become don't i need another message yes i mean yes you do need another message you need to make sure this is true in all cases but especially too in transformations you need to make sure that your marketing doesn't get ahead of the actuality right something we talked about in our book on authenticity because because what we say basically not basically we say advertising is a phoniness generating machine because you can't help but exaggerate what you're what you're offering really is when you advertise but in terms of the promotion of it uh you need to make it sort of clear what they are getting out of it and they say you know all branding is a promise right so so it's a promise of an outcome so yes make that promise be sure you can first operationally do it but make that promise the guarantee makes it then easy to be able to sell that profits.

17:47Another marketing thing I'll give you, John, is I got a little box in there on what I'm now calling, after Bob Rogers, a friend that gave the term to me, invitational transformation. That what you can do with marketing is to create an invitational transformation. So the biggest way to see it is what I call marketing experiences. Think about things like the Guinness Storehouse in Dublin, the Heideken Experience in Amsterdam, the Johnny Walker Princess Street Experience in and Edinburgh. And each of those are marketing. Seems to be a theme there. There is, actually. You're talking about the world of Coca-Cola to get into non-alcoholic drinks.

18:21But yeah, no, there's Ferrari World, you know, Volkswagen, Autostadt. There's all tons of these. There's the Tomahawk Experience Center for Case Construction Company in Wisconsin. And on the consumer side, all those ones I mentioned are admission fees, experiences. They're actually, they turn marketing from a cost center into a profit center because they get customers to pay them, to sell to them, to get them to drink more Guinness or Heineken or whiskey or whatever it might be. Buy the hat, yeah. Right. But also with Bob Rogers, who designed Guinness Storehouse, Heineken Experience, and Johnny Walker's Princess Street, and Wolder Coca-Cola, I think, at BRC Imagination Arts, he told me he likes to think of them as invitational transformations.

19:01I'm inviting you to come in and immerse yourselves in my brand. Well, first, my category, whether it's whiskey or beer or what. I've immersed yourself in my category and then in my brand. And I'm going to show you what a wonderful category is. I'm going to show you how wonderful we are as a brand. I'm going to let you experience my products, right? With tasting and so forth, or at case it's driving all the earth moving equipment. And knowing that the more, if you get customers to experience your product, the chances they buy it go up. But if they buy it, then they may begin to identify, you know, I didn't like whiskey before, but I like whiskey.

19:37I am a whiskey drinker, right? That's a transformation. When you say I am X, I am a whiskey drinker, right? That's a transformation. They may go further and say, I'm a Johnny Walker whiskey drinker, right? Now you identify with the brand and that's big. That's where you can become what my friend Eddie, you can call super consumers that don't just buy more from you. They tell everybody about it and they convert other people into consumers. And if you create a great experience, All of that is possible. Yeah, they get the tattoo, right? Right, exactly. So that's what marketing should be thinking about.

20:10Not a cost center, a profit center by creating experiences where people can identify with your brand. All right, so if you're a small business and you want to take the first step this week, where do you get started? What's a simple, I know you have an audit process, I think. I think it's three questions. What's something that they could run on? I wonder what those three questions are. Something about like, what's the aspiration or what's the transformation? I thought I read that somewhere, but at any rate, how would somebody look into their business and say, how can we think about our current offering?

20:42Right. So one, think of your current offering as a means to an end and figure out what that end is. So it can be a very generic. I like to think of as from two statements. From what to what, B2B, from who to who, B2C. Who are your customers and what do they aspire to become? You get a very generic statement. You need to recognize when you get down to the individual aspirant that there may be differences that you have to take into account. But, you know, a fitness center, generically, we transform people from flabby to fit, right? Now, think about what you do today. How fit does it actually make them?

21:18And how do you ensure that they meet their fitness goal? What are their fitness aspirations on an individual basis and so forth? With healthcare, it might be from sick to well, right? Okay. Well, that can differ for everybody and what they want. But generally, you know, it's not about treating the sickness. It's about becoming, having well-being, right? And how do you create that well-being beyond, again, the medical things that you do? If it's a financial, you're a financial advisor or an accountant, right? Recognize that they're not buying your services because they want your services. It's because they want to have a better business and accounting helps them have a better business.

21:55or if you're a B2C financial advisor, it's not about the money, it's a means to an end. It's about they want to retire well, they want to create a college fund, they want to build a second home in Florida or Arizona or whatever. And so the only example in the book that I talk about like five times is a company based here in Minnesota, there where I live, called Simplany that provides a transformation platform to wealth advisors. so the fake and it's focused on the life and legacy i love that term the life and legacy of what the end client wants as opposed to just the money and provides a wonderful system for them to be able to do that they call it what do they call it it's advice at the speed of conversation because you say well i'm thinking about this and instantly your plan changes and say well this is what it would be if you wanted to do that right this increases your chances of having the money you want in retirement and leaving the legacy that you want when you die or it decreases it by this month.

22:52Can I live with that much? Yeah, I can live with that chance. So let's go. One of the things that I think is going to be a side effect from people reading your book is if somebody's already decided, yes, I want to do this from two. I think we do this from two. They're probably going to also then start saying, what's going to have to happen to make sure that we're doing that, right? We need a better onboarding. We need a better check-in system. We need better follow-through, right? I mean, so we start improving every bit of the business, don't we? Yes. And that's where that charging for outcomes becomes that catalytic mechanism.

23:25And now how do we go about doing this and ensuring that they get the aspirations achieved that they want? You need to think also about the customizing aspect of that. All of this relates to my first book on mass customization, about efficiently serving customers uniquely. So you can think about, are there transformation platforms out there that I can use? And there are many, I know many in education, for example, Echo 360. These are all mentioned in the book. In coaching, there's BetterUp, which is a great transformation platform and others that you can use. And how do I modularize my offering so that I can do different things at different times based on how I'm sensing and responding to what my client is feeling right now, what they're going through right now, where they are on that transformation journey.

24:08And so design that journey. I have one in the book, Modeled After the Hero's Journey, that takes you through all the steps that you need to do. And in particular, have the diagnosis, have the set of experiences, have the follow through. Don't think you're done once they say I've changed, right? You know, how they got to sustain that change. Yeah, yeah, yeah. Awesome. Well, Joe, it was great having you back. Spend a few minutes with you. Where do you want to invite people to connect with you or find out more about the transformation economy and ways that they can apply it? You can always connect with me on LinkedIn at Joe Pine.

24:41And then our website is strategic horizons with an S strategic horizons.com. We actually have a page dedicated called slash integration about how you can take these ideas and integrate them into your business and includes all the different offerings we have, including the toolkit and one-on-one coaching and then speeches and workshops and whatnot. Awesome. Again, great visiting with you. Another amazing work. and hopefully we'll run into you one of these days out there on the road. I appreciate that. I'd love to.