Imagine this: I’m looking to buy a cupcake for dessert and I find myself standing in front of two bakeries both of which sell quality products.
The first bakery is a plain store with cupcakes lined up behind a small shelf. Its prices are the cheapest on the street. Customers line up, pay for their cupcake and leave.
The second bakery is much more expensive. It’s decorated in colorful colors. Music is playing and small tables are set up around the room in case you want to enjoy the cupcake right there. There’s even a hashtag on the wall, in case you want to share a photo of your sweet purchase with the world.
Which would you pick?
You might immediately say, “the first one, of course!” After all, it tastes as good as the cupcakes in the second store and it’s cheaper. But research shows that more people will, in fact, pick the second store.
This is the experience economy.
Whose Fault Is This Anyway?
The term has been around for a while. Since 1998, in fact, when it was coined by B. Joseph Pine II and James H. Gilmore in their book on the same topic. It basically highlights the fact that consumer purchasing is nowadays more influenced by the experiences provided by the brand, not just the product itself.
The experience economy came about through a perfect storm. Today, millennials form the largest purchasing group, and are consequently targeted by nearly every business. But millennials are also plagued with job insecurity and soaring housing prices around the world, which means most of them have no hope of ever owning their own place.
Instead, more and more young adults are spending their hard earned money on experiences rather than putting it away towards houses they likely cannot afford.
Social media has been a big help too. With watching so many people, and being watched in return, there’s a fear of missing out (helpfully called FOMO), which encourages people to show that they are having the same unique experiences as their friends.
Resurrecting Businesses With Experiences
Nowadays, businesses are investing in experiences’ as much as possible. And, for some, it seems to be working. Bookstores have been hard hit by the spread of technology and resulting spread of distractions. It’s forced some of them to use innovative experiences to draw customers in and keep them around.
One of these is The Last Bookstore in Los Angeles, which has turned book shopping into an experience. The entire store is a bibliophile’s fantasy, with book tunnels and book displays suspended from the ceilings.
The store also has spaces for book or theatre events and even a gallery for an arts collective. Not surprisingly, the store is incredibly popular, and despite the dozens of independent bookstore closures in the US, it’s had to expand its space since opening.
Image credit: The Last Bookstore
Japanese maid cafes are another example of adapting the experience economy to your advantage. These cafes first opened in 2001, and have grown in popularity since. Food served in the cafes isn’t particularly special, but the experience is aimed at anime-lovers, with servers dressed in frilly maid outfits and acting like the bubbly anime characters that have become so popular with fans.
Image credit: Maid Cafe Mia Cafe Tokyo
Larger brands have also started investing more in the experience economy. McDonalds has a number of restaurants around the world featuring unique designs like beautiful architecture, expensive-looking interiors and exclusive food offerings at some sites, like its three course Valentine’s Day meal in Newcastle, England.
Samsung has also opened several experience stores in North America, including a huge flagship location in Toronto, Canada. These stores aren’t so much for you to purchase Samsung products, but more for the consumer to appreciate them.
Image credit: Samsung
Big Changes For Your Small Business
If you’re a small business owner, your first instinct might be to despair. Large brands have more capital to spend on experiences, which is true. But large brands also have a harder time making meaningful connections with their customers, which is where you have the advantage. Turning your interactions with customers into meaningful experiences isn’t at all difficult.
Your business shouldn’t just sell products but also emotions. You can do this through sensory and experiential cues.
What’s the first thing you want your customers to see when they enter?
What sort of personality should your staff have to set the mood of the store?
Helpful and polite? Or exuberant and friendly?
If none of your products were in the store, what could you do to keep your customers coming back? These questions apply regardless of whether you have a tradition brick-and-mortar store or an e-commerce business.
Asking these questions will likely make you realize that you could be doing a lot more to give your customers the experience they deserve. And there’s no excuse for ignoring this fact. The 2010s are an age of curated memories. So if your business isn’t providing experiences, then really, what are you doing?
Business is swiftly changing and depending on how you see it, it might be a good thing.
Nowadays, everyone’s an actor. And your business is a stage. So you’d better put on a good show.