How relevant is Experience Economy?
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For a very long long time, traditional ‘product centric’ marketing was taking over the business market, but that was until 1998 when Harvard Business School opened the “Experience economy door”, a more ‘customer oriented’ business model.
That’s where Economist Joseph Pine II popularised the term “the experience economy” and argued that businesses should focus on creating unique experiences for their customers to differentiate themselves from their competitors.
In fact, it was observed that people were no longer content with simply buying products; they wanted to buy an experience. And let me say that in today’s world, this is more true than ever, Starbucks coffee shops are full all around the world when the coffee is too watered down and sweet, it tastes nothing like real coffee. People go there just for the aesthetic rather than quality coffee. This proves that consumers are looking for companies that can provide them with an enjoyable and memorable experience. Focusing on providing an excellent customer experience contributes so much to the growth of a business now.
WHY ON EART SHOULD I, AS AN ENTREPRENEUR, CARE SO MUCH ABOUT BUSINESS EXPERIENCE?
Earth is too crowded, businesses here and there, wherever you go, so this means lots of choices and alternative ways for a consumer. Your Business Needs To Stand Out. The experience economy is one way to do just that.
By creating unique and memorable experiences, businesses can tap into the emotional needs of their customers. We as humans crave connections and meaning. And you need to be able to provide these kinds of experiences. However, since the market is highly competitive, the experience economy is not just about attracting new customers, it has also become about keeping the ones you already have.
- MODERN CONSUMERS WOULD RATHER BUY EXPERIENCES THAN MATERIAL THINGS
According to Momentum Worldwide’s 2019 research, a significant 76% of consumers worldwide are now inclined to spend their hard-earned cash on experiences rather than material possessions. Among the millennial demographic, this preference slightly increases to 78%, with an impressive 72% expressing their intention to ramp up such spending in the coming year. Since 1987, there has been a remarkable 70% surge in global consumer spending on live experiences and events.
However, before we jump to conclusions about the imminent demise of product brands, it’s essential to consider the broader economic context. Over the past two centuries or so, our economic landscape has undergone several transformative shifts—from agrarian to industrial, then to service-oriented, and now to the experiential. This latest evolution in consumer behavior reflects a changing set of expectations, to which brands must adapt in order to thrive.
- EXPERIENCES MAKE PEOPLE HAPPIER THAN MATERIAL THINGS
But what’s actually driving this change? Psychologists have found that experiential purchases bring about longer-lasting happiness compared to material purchases. One explanation is that we tend to adapt to material possessions in a rather different way than from experiences. Our satisfaction with material purchases tends to diminish over time, our satisfaction with experiential purchases tends to grow.
- GREAT SERVICE ISN’T ENOUGH TO GIVE YOUR BRAND THE EDGE
Perhaps thanks to marketers’ strong focus on ‘customer experience’, you might misconstrue excellent service as sufficient to position your brand in the experience economy. But experiences are a distinct offering from services, requiring brands to use “services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.”
- CONSUMERS WANT BRANDS TO OFFER INSPIRATION AND MEANING
“Utility is no longer the most important brand trait!” : The message to product brands is clear: Your product needs to do more than just work well. It should inspire people to live a certain way or help them find meaning in their lives. By creating experiences where your product is part of the story, marketers can show how it helps create a fulfilling life.
- FRAMING YOUR PRODUCT EXPERIENTIALLY MAKES YOUR VALUE PROPOSITION CLEARER
In 1996, Intel chairman said “We need to look at our business as more than simply the building and selling of personal computers. Our business is the delivery of information and lifelike interactive experiences.”
Taking the time to consider what inspiration and meaning your customers seek, as well as turning their experiences into a concept that weaves your product into that narrative, forces product marketers to be crystal clear on your value proposition. What do you really sell? A product… Or the lifestyle and opportunities it offers?
- EXPERIENCES INCREASE ANTICIPATION AND OFFER AN ADDED REASON TO BUY
Experiences do indeed bring more happiness than material possessions. However, researches show that experiential purchases can generate happiness even before they’re actually acquired or enjoyed, anticipating a trip you booked to the Seychelles during depressing Finnish winter, for instance, triggers more serotonin than anticipating buying a new mobile phone. Which proves that incorporating experiences with your product could evoke anticipatory joy, serving as a compelling reason to make a purchase.
- EXPERIENCES TRIGGER WORD-OF MOUTH MARKETING
Psychologists have discovered part of the enjoyment of experiences is rooted in our ability to share stories we have of them with others. Let’s also not forget that experiences form a more meaningful part of our identity than material things, they make a more natural topic for social bonding. I mean I would rather talk about my life experiences than how many pairs of sunglasses I own. It follows that creating experiences around your product leads to free word-of-mouth marketing you won’t necessarily get from products alone.
REFERNCES:
https://rixrewards.com/8-reasons-why-the-experience-economy-is-an-opportunity-for-brands/
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