Steve Jobs famously once said, `Design is not just what it looks and feels like. Design is how it works.’ The founder of Apple had spent years in ensuring all Apple products excelled not just in the way how they worked, but also how they were designed and looked. However, there was one more aspect that he had focussed-on every project he undertook, the User Experience. Today, the experiential value of a product has become a benchmark for the Technology Industry. So much so that today, it is not about how things work, but Experience is about how it makes you feel.
Welcome to the Experience Economy!
The term “Experience Economy” was first used and coined by a Harvard Business Journal in 1998. The journal discussed how people ultimately spend more money on experiences rather than products or commodities. Over the years, there’s been a movement of sorts where consumers don’t want to just consume, rather experience new emotions, and feelings as they use the products. For examples, vacations are not just about visiting new places, it’s about experiencing the place from a new perspective, something that creates a moment and brings out an emotion.
Experience Economy is defined as an economy in which goods or services are sold by emphasizing the effect they can have on people’s lives. Today, Experiences are their own category, just as in the case of products and services.
This phenomenon has been best explained by the famous Experience Expert – Joseph Pine, in his best-selling book ‘The Experience Economy’. The example he has taken in the book is a simple commodity, coffee.
From simple beans that traders bartered to ground coffee powder that was sold in a grocery store to brewed coffee in the local coffee shop, coffee became a style statement. Today the coffee experiences come with free wifi, great music, chic ambience, great decor, multiple flavours & combinations, beans sourced from exotic locations. You are not just paying for a coffee. You go to a coffee house today for that amazing experience that over time becomes a habit, a need and a craving. Today’s coffee shops are a place where cool people hang out and it’s hip to be seen in one of these places. Anything less in this experience and its a waste even if the coffee is great.
And this new model has done well for companies that have adapted their products & services accordingly. Tesla revolutionized the driving experience through their amazingly well built cars with autopilot feature and the recently launched ‘enhance summon’ feature that allows cars to drive itself to the summoner. The Virgin brand is world famous for its laser focus on great customer experience. Virgin America is the only airline in America that offers economy passengers cushy black leather seats. It is also the only American Airline to ensconce first-class passengers in plush all-white leather recliners that come complete with fully adjustable leg rests, lumbar support, an industry-leading 52-inches of pitch and individually adjustable reading lights and massage functions as well. Similarly, Airbnb is changing the way people travel, Uber is driving millennials away from car ownership, Apple’s new Card will change the way Americans think of credit cards.
It’s all about how you experience those products & services. And it’s not just a coincidence.
Millennial are leading the charge
A lot of companies are catching on to the fact that the more immersive the experiences are, the more it influences their consumers and the people in their network. An entire generation that has been exposed to the latest technology and social media, awareness levels are extremely high. For every transaction and interaction with a brand, this generation demands nothing less than as wow. For every wow experience delivered, the referrals generated from that are much stronger as compared to standard marketing practices. In India, VegNonVeg, an experiential sneaker showroom does just that. The sneaker boutique curates top-of-the-line sneakers from Nike, Adidas Originals, Air Jordan, etc. all under the same roof and also offers a small café, for customers to engage with the labels’ identity, Art Deco architecture, live events, and store parties to strengthen interaction with their consumer community. All this just to create that perfect experience of going to a Sneaker Boutique to fulfil your next sneaker craving.
With the young generation being the core demographic that retail is focussing on, what does it mean for the brands?
Ultimately, for the retail industry, the first step in having a successful retail strategy is to define what the ultimate goal is in terms of their relationship with the audience & the wider context of its brand and business strategy. Is the goal going to be to excite the audience, to inspire, to give them things to talk about or to celebrate their way of life. For instance, to celebrate the new found desire in consumers to live an eco-friendly lifestyle, sustainability needs to be the core messaging of the brand. Franco-Indian luxury fashion brand Lecoanet Hemant’s sustainable fashion line – Ayurganic promotes just that. Created under the supervision of Ayurvedic Scientists in India, Ayurganic represents a new benchmark in consciously curated apparel. Scientific, sustainable and Spiritual elements merge with design to form comfortable, breathable and distinctive clothing. Ayurganic is a stay at home collection produced by Lecoanet Hemant exclusively using GOTS certified cotton and is hand treated following the century old Ayurvedic recipes.
(image courtesy – Lecoanet Hemant, Ayurganic Collection)
The garments or Ayurvastra (Ayur and vastra meaning health and cloth respectively in Sanskrit) have been permeated with special herbs and oils making it free of synthetic chemicals and toxic irritants. Wearing these garments helps restore balance within the body and strengthens the immune system.
The messaging to their consumers, fans and loyalists is loud and clear – Scientific, sustainable and Spiritual fashion line for the international Indian. And customers are loving it.
Why should Brands focus on creating immersive experiences?
Immersive experiences are not new. For years, Luxury retail & high-end fashion industry has created bespoke events as part of their marketing strategies which were reserved for the elite and the affluent – the prime customers of the brands. But as luxury approaches more affordable segments and premium brands expand their product lines to cater to the luxury consumers, such immersive experiences are in huge demand.
Primarily there are two aspects within the experience economy: Customer Participation and Connection
Customer Participation: Bespoke events which customers can be a part of, actively or passively. For example, a fine dining workshop by a high-end kitchenware brand. Customers may choose to take part in the workshop where the brand gets to showcase its products or just passively talk about the invite to the event or share moments on social media. Either way, since the reviews come from a trusted source, the impact is higher than standard social media updates by a brand.
Connection: Building a strong connection with the end-customer is the most important aspect of an immersive experience. For example, by embedding elements of wellness, and sustainability into their offerings, luxury brands from the beauty and fashion industries have been able to deliver a level of experience that goes well beyond their products. Inspiring their consumers to live a healthier life and feel better about themselves. This connection that is built by merging the needs and aspirations of the consumers with luxury goods is a much stronger bond that lasts for a long time. And in the current times where brand loyalty is something is unheard of can actually help build those bridges.
Benefits of Connecting Immersive Experiences With Luxury Products
When done right, immersive experiences drive unparalleled acceptance and growth. When customers love the experience, they promote that experience to friends & family. Such referrals based on positive personal experiences directly relate to stronger positive response towards the brand leading to faster new customer acquisition. In a world of rising customer acquisition costs, your customers become your brand’s mouthpiece activating their network and become your best converting channels.
Pride of Ownership:
Exclusive merchandise, limited edition stocks, limited access, exclusive invite-only clubs. As social media continues to invade further into our personal and professional lives, customers want to be seen as part of a better life that is only available to a select few. The exclusivity and limited accessibility to such immersive experiences in itself are driving forces for viral content. With immersive experiences, this interaction between brands and their customers simply gets amplified due to social media and brands must utilize it to their benefit.
The sole purpose of an immersive experience is to showcase the value of a product and how customers who acquire those products in their lives to make life better. More than a simple consumption, it adds meaning to the product, a sense of purpose. Uber luxe offers on-demand rental luxury cars for consumers, Louis Vuitton Products are collected by consumers world over as collectables, Mercedes Benz offers memberships in their brand clubs to car owners where specially curated events allow owners connect with their local community. The enhanced value the brands offer to consumers beyond the product itself is why these brands are loved because of the value such brands offer to them beyond the product.
The Mission Statement: Communicate your brand values throughout the customer journey
Spread across the entire customer journey, luxury brands need to clearly communicate the core values that define what they are all about it. Going beyond just standard marketing and brand messaging, luxury brands need to showcase what those values are by not just building messages but also by living those values and building their business around it. It’s about the embodiment of the values that the brand associates with. For instance, a brand that has a tradition of traditional artisanal craftsmanship should open its workshops for exclusive tours.
Over the course of the next 10 – 12 years, the experience economy is projected to grow to $8 trillion by 2030. Industries like hospitality, travel, retail, wellness, food and fashion can no longer afford to be one-dimensional. The experience is and has always been part of a luxury purchase. There exists an emotional aspect and an aspiration to buying high-end goods which goes way beyond a simple transactional event. But that experience is now going much further than retail. At a time where affluent consumers are shifting their spending towards personal life experiences, luxury goods brands need to think beyond their product features to inspire shoppers. The winners are going to be those who successfully design their business models and organizations around a holistic, cross-category experience.