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.
“Location-based experiences are projected to become a $12 billion dollar industry by 2023.”
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.
The 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. The way that we live our life has become digital.
Economic uncertainty: The 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.
Social media and social sharing: 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 Millennials: A Shift in Understanding.
However — it isn’t just millennials. It isn’t even a trend. The experience economy is projected to be worth $12 Billion by 2023. Over the past few years in the US, consumer spending has shifted dramatically with 4x more spending dedicated to experiences rather than physical goods. 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 understand 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.” Shared experiences are proven to have a deeper psychological link to long-term happiness. Research from Cornell shows that while our evaluations of a purchase decline over time, our evaluations of experiences actually increase. While technology facilitates this evolution and millennials champion it, the big push behind it all is that our thinking and values are 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 World Economic Forum has gone as far as to say that the only companies that will exist in 10 years’ time are those that create and nurture human experiences. 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.