Experience Economy
Experience Economy
I have three T-shirts from my business school which I keep. Two of them I have very fond memories off. They were given to me when my classmates came back to school for a 20-year reunion. The other one was far better but I ordered it online. Obviously I am more connected to the first two!
Experiences are more memorable than our possessions and play a significant role in how we perceive ourselves in comparison to the world.
What is the experience economy?
In 1998, Joseph Pine and James Gilmour in the HBR coined the term “Experience Economy”. They suggested that people are spending their money more on experiences rather than commodities/ products and thereby enthralling people to get their loyalty. They argued that buying goods and services will not be sufficient for consumers — instead, their decision to purchase will be influenced by the experiences provided by the brand, not just the product itself.
All around us we see experiences or occasions where the delight only comes in when we just own a product but the sheer joy of what we do and how we do it. They predicted then that businesses would be forced to come up with new ways to transform their brand’s value proposition by creating memorable experiences.
All around us we see experiences or occasions where the delight only comes in when we just own a product but the sheer joy of what we do and how we do it. They predicted then that businesses would be forced to come up with new ways to transform their brand’s value proposition by creating memorable experiences.
I personally feel that given the present circumstances, experiences will be even more important in fact it will accelerate. It is predicted that in the years to come customer experience will overtake price and product as the key competitive differentiator.
And according to 
by 2030, projected spending on the experience economy is set to reach $8 trillion..
While experience has always been at the core of such businesses like sport & entertainment and sports, the experience is working its way into such business like retail (offline and online)
conducted a survey and they found a shift to experience spans all groups of consumers. Customers no longer just shop and move on, they are now expecting good experiences whether the business provides it or not.
Imagine you have to choose between two coffee shops in your area. You’re in the mood for a caffeine rush to get you through the rest of the day.
The café on your left has a no-frills decor, wherein you walk in order your coffee and then stand in a corner with your drink.
The café on your right offers practically the same coffee but are priced 20% more. The store in rich coffee colors , there is some great music playing and there is a heady coffee aroma pervading. There are small tables and chairs set all around, for you to sit.
The café on your right offers practically the same coffee but are priced 20% more. The store in rich coffee colors , there is some great music playing and there is a heady coffee aroma pervading. There are small tables and chairs set all around, for you to sit.
Which cafe would you prefer?
Instinct says the left one. But research shows that more people will actually choose the one on the right. Barclays found, through a survey that
of shoppers believed that receiving value for money was important, but the experience a brand provides is equally or more important.
of customers would gladly pay more for a pleasant experience as found by PwC study.
would walk away from a brand after just one bad experience.
This shift as seen many global brands like Apple change the way they engage with customers. If you are to visit a Apple store, you will have smartly dressed, well trained individuals who will take you through the whole process patiently. Each product is displayed like a work of art and occupies a pride of place on the display counter. Not surprisingly Apple stores sales throughput per square foot is amongst the best in business
Memories don’t go away, and the better it is, the more it will be impactful. And I cling onto my B school tees!
This is 1/4 of a four part blog series from Vejay.
Go to 2/4 : Illustration of the Experience Economy
This is 1/4 of a four part blog series from Vejay.
Go to 2/4 : Illustration of the Experience Economy
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Author: S Vejay Anand
Vejay Anand is an independent consultant with expertise in strategy, marketing, sales and operations. He has over two decades of experience across industries including retail and technology. Leading new business initiatives as the President at Coffee Day and founding two startups have given Vejay key insights that benefit the organisations he consults at.
