By Caroline Clancy and Virginia Alvarez
Most of us realise that the world of marketing is constantly changing. Unless we understand our customers’ shifting desires, our attempts to reach them will inevitably fall flat. Many times these changes are temporary, caused by short-term trends. However, over the last few years a fundamental, long-term shift has arisen in consumer behaviour that has wide-ranging implications.
Due to recessions and economic uncertainty, people are reassessing their priorities and asking themselves what they truly value. As a result, we are moving towards a new economy that values experience over possessions. In recent research: [ctt template=”1″ link=”Tv647″ via=”yes” ]3 in 4 millennial’s chose to spend money on an experience or event, rather than purchasing a desired object @HarrisCorp @OMD_EMEA[/ctt] [ctt template=”1″ link=”jzCVA” via=”yes” ]Consumer spending on recreational & cultural services has risen 85% in Western & Eastern Europe over the last 5 years @Euromonitor @OMD_EMEA[/ctt]
This shift is impacting a multitude of industries and has the power to transform even the most established markets.
In fact, Airbnb’s co-founder, Brian Chesky, has observed:
“No longer do consumers want to show off, on Instagram or Snapchat, the wheels of their car or the clothes they wear. But they want to show off the experiences that they’re having. I think, more and more, we’re living in an experience-based economy”.
Material possessions are no longer enough
As a society, we are spending more money to do things, rather than to have things. We then share these lived experiences via social media, in effect, elevating them to the position of status symbols. Whereas once the designer handbag was a sign of success, now a memory from a faraway land is the marker of a good life. We aspire to turn our leisure time into social capital spent on moments that are unique, fleeting and personal.
At Live Nation, the world’s largest event company, two in five (40%) attendees share content on social media directly from their venues and three in five (59%) upload pictures afterwards (Source: WARC Consumers value brand experiences – 13 May 2013).
Plenty of research has shown that experiences bring more happiness than possessions. In fact, even the moments preceding and following an experience are more positively charged than those surrounding the purchase of a product. Experiments have shown that participants elicit more happiness and excitement when anticipating experiences. Whereas, waiting times for possessions are often fraught with impatience. Further research indicates that people also tend to talk more about experiences than they do products and derive more value from doing so.
This has led renowned psychologist Thomas Gilovich to conclude that “spending money on experiences provides more enduring happiness.”
Using this insight, OMD created an immersive theatre experience to launch HTC VIVE. We partnered with Noma Labs to host a once in a lifetime apocalypse event, HTC Virtually Dead, targeted to Millennials in both London and Paris. Tickets sold out in just over a week after showing the first teaser video in London. To meet demand, we extended the time period and put on more shows. Overall there were 900 shows over three weeks bringing in £300,000 worth of tickets, which is equivalent to a popular West End show running for over two years.
How can classic brands survive?
We need to refocus our strategies away from short-term demand and towards long-term desire. Brand experiences can help us drive this change, with luxury labels leading the way.
According to PWC, the annual sales growth of luxury experiences grew by 14% compared with 11% for luxury goods. Moreover, in 2014 The Boston Consulting Group found that experiences which include travel, gourmet dining and art auctions accounted for 55% of the global luxury spending. By creating enhanced sensory experiences for shoppers, luxury retailers have evolved a simple transaction into something more.
A great example of this is The Bentley Inspirator. The experience starts on an iPad in dealerships. You watch a beautiful video full of lifestyle images, off-piste skiing, yachts sailing through the ocean. Meanwhile, in real-time, facial recognition software is measuring your preferences. By the end of the video, a personalised Bentley configuration is created based on your preferences. A playful piece of technology which creates a magical experience by unlocking new information about the customer.
Is technology killing anticipation?
Technology has allowed us to engage with customers in ways we never thought possible. But, it has also fuelled new expectations, resulting in less patience and a rising demand for frictionless experiences. Amazon has calculated that even a one-second delay in page downloads could cost them $1.6 billion each year in lost revenue.
Modern technologies (e.g. Uber and drone delivery systems) are built on our desire for instant gratification. These technologies cure pain points in our lives. However, science has shown that anticipation can be far more gratifying than the reward itself. Bizarre as it may sound, there is an argument for designing in a little friction into the service process. Designed friction allows experiences to be anticipated, valued and remembered.
Create your experience and people will follow
We have the ability to design amazing experiences, but we need to be mindful about why and how we design them. From our research, we have seen how it is possible to design experiences that create emotional connections, drive memory creation and kindle the desire to share those experiences with others. Our deepest desires as human beings are to learn and grow. Brands have the opportunity to design in these experiences across their consumer touchpoints.
We must embrace this opportunity to move beyond simply creating consumer interactions which are frictionless, invisible and instead craft experiences with enough tension that they are shareable, memorable and teach us something about ourselves that we didn’t know before.
Interested in more information, contact us at [email protected].