The Experience Economy: Millennials Paving A New Way Forward for Marketing

There is a shift in how consumers are spending their income: experiences are beginning to trump things. This movement is being championed by millennials — but it is exposing a much larger trend with far reaching implications.

The Experience Economy.

Welcome to the experience economy, where customers are prioritizing experiences over ownership. People are no longer shopping to own things in the traditional sense. They are purchasing because of the experience that a product can provide: what can be done with it, what it says about them, and what they can say about it.
As the Harvard Business Review explains, in the Experience Economy ”a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.” Marketers that understand this and are able to leverage to their advantage reap in the rewards.

“a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event.”
-Harvard Business Review

Millennials are leading the way.

This is particularly true of millennials. A Harris study found that 78% of millennials would choose to spend money on a desirable experience or event over a possession. Millennials are not valuing historical measures of success, such as ownership of things like property, but rather they are valuing experiences that they can have and share more broadly.

There are three major factors that have lead to this.

1. The economic laws of scarcity no longer apply: Technology has made it such that ownership is only ever one click away, fundamentally altering the laws of supply and demand.

2. Economic uncertainty: Recent memories of the financial downturn paired with ever increasing costs of living and education has led to “generation rent” increasingly seeking other ways to find value and happiness, challenging more traditional notions of value.

3. Social media and FOMO: Millennials seek experiences that they can share. Facebook, Instagram and Snapchat are all visual mediums designed to showcase what people are doing — collecting experiences, posts, and followers instead of possessions.

All of this has created a reality where a product or a service is valuable because insofar as it connects people to something, or, someone else. It is this connection, or experience, that consumers are looking for.

Beyond Millenials: A Shift in Understanding.

The thing is, it isn’t just millennials. It isn’t even just a trend. The same Harris Study found that the share of consumer spending increased 70% since 1987. Mintel’s 2015 American Lifestyles report projects that over the next five years, total spending will grow by nearly 22%, with the so‐called “non‐essential” categories, including vacations and dining out, expected to see the greatest gains. And with the rise of non-ownership based consumption and the sharing economy — whether its borrowing, lending, renting or swapping, society is moving firmly away from the traditional concept of ownership.

The reason behind this is that consumers are beginning to understanding that they are actually happier when their money is spent on living rather than having. As fast company explains : “Humanity is experiencing an evolution in consciousness. We are starting to think differently about what it means to “own” something. This is why a similar ambivalence towards ownership is emerging in all sorts of areas, from car-buying to music listening to entertainment consumption. Though technology facilitates this evolution and new generations champion it, the big push behind it all is that our thinking is changing.”

What This Means for Marketers

Today your product is viewed as a gateway to an experience. It’s the marketer’s role to understand the experience that your product or service provides and to promote and enhance that experience through a multitude of brand touches or moments. Marketing is a 360° discipline. It looks first at the entire customer experience that you want to provide and executes across all touchpoints — digital, mobile, experiential, social and word of mouth. Marketing channels no longer exist in isolation. The question becomes how does that conversation continue across touchpoints and how does it ladder up to the ultimate brand experience? Understanding the experience that you provide, why people seek it and how you can enhance it are your keys to success.