20 years of experience economy: why it is still relevant
We are still not done experiencing. Experience has become the new currency of wealth. It’s no longer about what you own but about what you have experienced. Globalisation has made it much easier to go beyond our boundaries, literally and figuratively. But why is it that we still want more experiences?
Money well spend
People often think that money makes you happier. However, it’s not money per se that makes you happier, it’s what you do with your money. As for the experience economy, we already know that people like to pay for a special, unique experience. Gilovich and Kumar show in their research that 78% likes to spend money on an experience. This is great opportunity for organisations to go beyond their product or service. It’s then to no surprise that people prefer spending their money on experiences rather than things. 72% of the participants of Gilovich and Kumar’s research state that their rather spend their money on experience rather than products. There are a few explanations why we like to consume experiences over products.
Hedonic return on money
When you buy a product the satisfaction of a product decreases rapidly from the point of purchase. Consumers start at being ecstatic over their latest purchase but after a while the excitement wears off. Why? We quickly adapt to things, we get used to the use of it. This is referred to as habituation. However, with experiences it is different. Positive thoughts and feelings already start at the point of purchase, which is often done a significant time in advance. After that comes the experience itself, of course. After the experience is consumed the process continues with post-experience satisfaction. In this stage even negative experiences can be reinterpreted and transformed into positive experiences. As for products, when you are not satisfied with a product it’s very unlikely you become satisfied over time. Therefore, experience give us more (hedonic) return on money.
Staying connected in the offline world
We humans are social creatures. We feed ourselves on interpersonal connections. It is simply a need to feel connectedness and belonging. Remember Maslow’s pyramid?! Through experiences we foster those needs. "69% of millennials believe attending events makes them feel more connected to other people, the community, and the world”. Surprising to other generations, this is what Millennials are craving too, specially since they are hyper-connected digitally but lacking social engagements in the offline world.
So even though we are becoming increasingly digital, we are not done experiencing. People enjoy spending time and money on experience. It contributes to hedonism and social needs. It is inherent to human nature. Specially, Millennials like to share their experience, particularly on social media. It is therefore not too late to offer experiences on products and services as a company. They just have to be really smart about it to offer a unique one.