Photo by Vincentiu Solomon on Unsplash
To understand the experience economy, it is important to first understand how it relates to previous economies.
This can perhaps be exemplified by the evolution of birthday cake. In an agrarian economy, birthday cakes were made from scratch using individual and locally-sourced ingredients. In this economy, ingredients cost mere pennies, with a completed cake costing perhaps a dollar or less. It was the ultimate DIY economy.
The next evolution was the industrial economy which saw parents purchasing pre-made mixes at a few times of what it would cost them to bake the cake from scratch.
The last evolution of economy was a service economy that saw busy parents buying a cake from a local store or bakery at a markup of $10 – $15. They didn’t just buy the ingredients to make it themselves or shortcut the process by making it from a ready-made mix, they actually paid someone to make it for them. Hence, the service economy.
Now, parents don’t simply make a cake or pay someone else to make it, they actually take their children to a local theme restaurant or amusement park and pay for an entire experience – generally with a cake thrown in for “free.”
Today’s consumers don’t just want to eat out, they want a dining experience, they don’t just want to shop, they want a shopping experience and they don’t just want to travel, they want a traveling experience.
Smart businesses and savvy marketers are taking advantage of this, but are still not quite making the shift fully from a service economy to a truly experiential one. In other words, they are taking goods and packaging an experience around them to sell a product, but not making the shift to making the experience itself the product.
In the latest keynote, Apple CEO Tim Cook introduced Apple’s latest vision for its retail stores, which they are redefining as “town squares.” No longer existing solely for the purposes of selling goods, Apple’s new town squares will combine a retail shop with an education center all neatly wrapped in a plaza-like package that reflects Apple’s latest corporate masterpiece, Apple Park.
While Apple clearly shows its understanding of the experience economy, they are still using experience to sell a product rather than making the experience itself the product. While people are always going to need certain goods and services, the generation of the future will almost certainly spend less on goods and services and more on experiences. Rather than shelling out over $1,000 on the latest and greatest smart phone, they are more likely to spend that same amount of money on a once-in-a-lifetime experience.
Perhaps no other organization has fully realized the power of the once-in-a-lifetime experience like crowdfunding platform Omaze. Omaze has teamed up with mega-celebrities ranging from Robert Downey Jr. to Matt Damon and Jimmy Kimmel to auction off unforgettable experiences to raise money for charity. Experiences range from attending a Star Trek convention with 70’s legend William Shatner to joining Seth Meyers’ writing team for a day to taking a trip to Hawaii to meet the cast of Hawaii 5-0.
While wrapping the selling of items in an experiential environment may be a first step for today’s retailers, the next major shift in business is going to most likely be away from selling products in general to selling experiences. Singular experiences. Unlike an amusement park that offers thousands of visitors a day the same experience again and again, tomorrow’s consumers are going to want experiences that cannot be repeated and will not be duplicated.
They will want something that is all theirs and no one else’s – and for that, they will pay a high premium indeed.