What is the experience economy?
Move over goods, experiences are on the rise!
Inspired by the Barclaycard research and Mckinsey & Company report on the experience economy, we decided to compile a fact post around the growing popularity of expenditure on experiences and what you can do to capitalise on it.
Consumers are favouring experience related services 4x faster over purchasing goods.
What is the experience economy?
Let’s answer the first question, what exactly is the experience economy?
The consumer market is changing, however, the term ‘experience economy’ was actually coined over twenty years ago by Pine and Gilmore in their Harvard Business Review article.
They discussed how in the future, goods and services will not be enough to compete for consumers attention. Instead, consumers will be drawn towards companies who provide value through their experiences and branding.
Which would you choose?
Let’s play a quick game.
You are meeting with a friend and trying to decide where to grab a snack. You come across two patisseries.
The first is a standard patisserie, prices are cheap and the pastries and cakes look delicious. Customers are buying what they want and leaving looking satisfied.
The second patisserie has the same quality items with a 20% higher price attached. However, there is a live pianist, smiling staff and the store is decorated in lovely bright colours with inviting outdoor seating in the sunshine under big parasols.
Which would you choose?
Common sense may tell you that you’d select the cheaper store. This makes sense as instinctively, a better value for money typically takes precedence over other factors right?
However, statistics tell us a different story. Reflecting back on the report conducted by Barclaycard and McKinsey above, 81% of consumers are holding good experiences on par with receiving a good value for money. In addition to this, a huge 73%of customers say the experience is an important factor in their purchasing decision. In a survey conducted by PWC, it was found that 42% of consumers would pay more for a friendly, welcoming experience.
In the last twenty years, we have seen companies making the transformation to personalising and transforming their brand value by enabling memorable experiences. So why is this?
The switch to experiences is driven by a number of factors.
1. The pressure on social media and the hunt for ‘Likes’
The quest for ‘showing off’ exciting experiences has grown so wild that even stationary private jet photoshoots are becoming wildly popular, following a trend began in Moscow. People are paying up to £300 for a photoshoot or video to capture the ‘experience’ and share an idea of them living the high life on Instagram.
2. There is a growing fear of missing out- FOMO
This legitimate fear mainly among millennials is so prominent that FOMO was added to the Oxford English Dictionary in 2013.
3. A growing proclivity for minimalism
With the impending realisation that we have ‘too much stuff,’ there is a conscious decision in the minds of many to reduce their materialism and shopping obsessions. For many, the drive is to reduce their personal impact on the environment. For others, it’s a personal cleanse, inspired by the Japanese Marie Kondo tidying up method. With the focus on minimalism, learning to be content and appreciative with what you already own and saying goodbye to things that don’t ‘spark joy’ for you.
4. Quality time with friends and family
With money in the economy becoming tight, people have switched their focus to spending their hard-earned cash on quality time with friends and family over purchasing personal goods. With unique experiences such as ‘Escape Rooms’ shooting up in popularity, it’s no wonder people are gravitating towards experiences to bond over and share memories.
Experiences make us happier
For good reason.
Experiences are unique to purchasing material goods because with a shared experience there’s a lasting memory. We then remember how those experiences made us feel. Enabling us to hold more value over experiences than physical goods.
Science supports this too!
At Cornell University, a psychology professor Dr Thomas Gilovich has found that satisfaction with the experience gifts increases over time. Whereas the overall satisfaction with material goods decreases. When initial happiness with the material and experiential purchases is equal at the time of receipt.
In our own figures, we have found that 36% of consumers will spend more on a gift experience voucher over a traditional gift. The rest spend the same amount.
Experience gifts have a strong impact on consumers
This down to 3 things:
- Experiences are more open to positive reinterpretation
- Experiences foster social relationships
- Experiences can become a meaningful part of one’s identity
With experiences having such a strong influence over people, it has now become one of the major things of importance to a consumer. With 81% saying that a good experience is important in their purchasing decisions. Similarly, 83% said good value for money was important.
So, the million-dollar question…
How can you capitalise on experiences?
As you’re reading through this post you may be thinking how can I make more revenue from my existing experiences?
Simple, sell your experiences as gift vouchers
Gift experience vouchers go hand in hand with the growing experience economy, as a growing source of income. Gift experience vouchers allow experiences to be gifted and used at the leisure of the receiver with a whole load of benefits to you even after a sale.
1. Increased Revenue:
10%-15% of all gift vouchers expire. This is revenue directly to your bottom line without ever having to pay out for the costs of goods sold.
2. Increased Brand Awareness:
60% of consumers say they’ve been introduced to a new brand through a gift voucher and 17.7% have become regular customers as a result.
3. Increased Customer Spending:
72.1% of consumers spend more than the value of the voucher, adding 55% on top of the average value of the card itself.
To thrive with selling gift experience vouchers, you need an easy to set up, easy to manage, gift voucher management system.
With Our Enjovia features, you can create a store in less than a minute, take full control of your store, easily fill your store with your experiences, have an optimised store ready for any device, an automated delivery by email or post, and have a super simple redeem voucher process to keep track of all experiences.
Don’t delay making great money from your experiences any longer. Contact us for more information.
Thanks for reading our post on what is the experience economy?
This blog post was updated 31/12/20