It’s been said that this era’s luxury goods aren’t goods—it’s experience. So what does that mean for marketing in an experience economy? And what comes next?
From how pancakes are consumed to the way we travel, the world we live in today is all about experiences.
And that’s not about to change anytime soon with research body Euromonitor estimating that spending on experiences will reach $8 trillion by 2030.
Clearly the Experience Economy isn’t going anywhere and that fact has altered the business landscape. It’s forcing businesses to re-evaluate their marketing efforts and adapt to cater to this preference.
Millennials are driving the Experience Economy
An ‘experience’, as the Harvard Business Review put it, is what happens when “a company intentionally uses services as the stage, and goods as the props, to engage individual customers in a way that creates a memorable event.”
In a world where there are seemingly infinite alternatives on the market, and where everything is relatively easily accessible, what really differentiates between products or services is the experience associated with it.
It is unsurprising then, that consumers these days – primarily driven by Millennials – are spending more on experiences than on material possessions.
They’re spending on spectator sports, amusement parks, membership clubs, foreign travel and food services to name a few.
What are the underlying factors behind this shift in consumer spending?
There seem to be three key factors that have steered consumer spending in this direction. More specifically:
The prevalence of social media has amplified consumers’ search for what will bring them more ‘likes’. That has undoubtedly influenced the demand for experiences and consequently the increase in spending on it.
FOMO – The Fear of Missing Out
Building on the quest for ‘likes’ is how Millennials view the world through social media. With one’s every move – from what he eats for breakfast to the hike he enjoyed over the weekend – broadcast far and wide, it’s no wonder that the fear of missing out on what others are enjoying is driving Millennials’ thirst for experiences.
Most importantly, consumers’ perspectives on what it means to live a meaningful and happy life has evolved.
These days, there’s greater value found in the experiences shared with family and friends. Perhaps because, compared to acquiring things, experiences lead to longer lasting happiness. The memories created are deemed irreplaceable with any other alternative on the market.
We also value experiences for their impact on our social relationships – allowing us to connect with our community and with the world. That forms a large part of our identity.
What does this mean for consumer-facing businesses?
All this to say that whether you’re in the travel and hospitality sector, retail, or even FMCG, your marketing will have to adapt for the experience economy – if it hasn’t already.
Not sure where to start?
Below are 5 elements to integrate into your marketing efforts.
Authenticity is a prerequisite for trust.
Now more than ever, consumers are placing a premium on being genuine; they value transparency and that which is original, natural, and local – including experiences.
When it comes to authenticity, brands like LEGO and TOMS normally come to mind but Airbnb also does a stellar job. From ‘living like a local’ to experiences curated by a local, Airbnb has aligned itself with authenticity in travel. Part of what makes these brands authentic in the eyes of consumers is that they are consistent and live up to what they promise.
Don’t underestimate the importance of community
People like being a part of something, which is why successful brands know how to build and foster a sense of community. The community acts as an extension of their brand. Not only is it a great way to engage customers but it helps build loyalty. Think of Mastercard’s ‘Priceless’, where unique experiences are available exclusively to the community of Mastercard cardholders.
Make use of technology
Consumers are increasingly dependent on technology, which means that technology’s presence in consumers’ interactions with brands will continue to grow.
Businesses today are finding different ways to leverage technology – whether pre-purchase, during, or post-purchase – for an improved, more memorable experience.
Cosmetic store company Sephora’s use of augmented reality (AR) and artificial intelligence (AI) comes to mind.
Customise where possible
Brands that can customise an offer specific to the consumer have an advantage.
Customisation creates deeper engagement (it’s more meaningful) and can inspire loyalty.
Take a look at German brand My Müsli. They go beyond a selection of standard muesli blends to choose from at local supermarkets. Customers can instead visit a My Müsli store (or head online) to create their perfect blend of muesli with the help of their staff. They can customize down to the nuts, fruits, seeds, grains and even other add-ons like chocolates.
Keep in mind though that customization shouldn’t come at the expense of consumers’ privacy.
Cultivate brand love
With brand love there is loyalty and word-of-mouth promotion. You want customers to be invested in – committed – to your brand. Think of the immensely long queues whenever Apple launches a new product. That’s brand love.
What comes next?
But if every business is marketing an experience then what does it take to be truly different?
How does one actually stand out in an era where everything – from buying ice cream to the airports we transit in – has become an experience?
What comes next?
To be honest, I don’t think we know that yet.
What we do know is that:
- The core of any business – the essentials – has to be in place and in order. Because ‘experience’ simply builds on those fundamentals. It can’t mask, replace, or fix it.
- To be sustainable, a brand must strive for long-term engagement with its target market. It has to prioritize substance over style. Being unoriginal, cliché, or a “one-hit wonder”, so to speak, won’t get you far with consumers.
- The businesses that succeed are the ones that know how to seamlessly incorporate an experience with the purchase.
Starbucks Reserve Dewata in Bali, where the coffee farm experience or a walk through the seedling nursery smoothly transitions to the purchase of their coffee and other products.
Or Magnum’s “Make my Magnum” pop up store experience, where customers develop and then purchase their own unique ice cream creations.
- To be the last one standing, businesses will need to differentiate on service rather than rely solely on pricing – otherwise, you’re a commodity and easily interchangeable with whatever alternatives exist on the market.
- In the realm of travel, they say that the post-experience economy will feature travelers as active co-creators of their travel experiences.
- Regardless of industry and era, it will always be important to effectively communicate what makes your brand special—why it’s worthy of consumers’ time and money.