Goods are tangible, services are intangible, but experiences are memorable. The last decade has seen a massive shift in consumer spending from possessions to experiences, from materialism to meaningfulness. As something once purely attributed to millennials, the growing importance of experiences is true across the board — irrespective of age.

The concept of the “experience economy” first surfaced in 1998 in the Harvard Business Review. At this point, simpler experiences were the norm. Rather than throwing their kids’ birthday parties in the backyard, parents began doling out $100 for parties at Chuck E. Cheese’s or the Discovery Zone. Families traded their go-to restaurants for themed ones, such as the Hard Rock Cafe, Planet Hollywood, or the House of Blues.

But 20 or so years down the road, experiences have risen to a whole new level. Fueled by shifts in technology and culture, the rise of the experience economy has made it critical for businesses to integrate more experiential elements — whether that’s physically, digitally, or virtually. From escape rooms to scream rooms, from Apple Stores to Airbnb’s, countless genres of experience now fill the consumer landscape.

Millennials especially are placing more value on personal experiences than possessions. An astounding 72% of them, according to a study by Harris Group, prefer to spend money on experiences over material things. This young generation is showing they don’t want to be marketed to — they want to actually be a part of an experience.

The experience economy — which is expected to be worth $12 billion by 2023 — gives consumers the control that they’ve never had before. It has ultimately helped fuel growth for billion-dollar-plus start-ups like Uber, WeWork and Airbnb, and it is forcing established companies, especially retailers, to adapt to these rising consumer expectations.

In this article, we’ll dive into the basics of brand experiences, why this shift is happening, and some common brand experience trends that are contributing to customer loyalty.

Covering the basics

Many people equate brand “experiences” with physical events. However, experiential marketing extends far beyond live events, pop-up shops, and sponsorship activation. It’s a tangible manifestation of a brand that involves and engages the consumer at every touchpoint.

Below, we will define some of the common buzzwords surrounding the brand experience.

The experience economy is an economic framework asserting that consumers desire more than just products and services — they want to immerse themselves in experiences. The economy of the 21st century has been dubbed “the experience economy.”

The virtual experience economy is a new economic era and an iteration of the experience economy that will accelerate the merger of digital and live events. More and more people are craving brand experiences without having to leave the couch. With stay at home orders, COVID-19 has fueled the growth of immersive digital content and virtual experiences that will help set a foundation for the post-coronavirus economy.

Experiential marketing is the idea of using an actual experience to create a memorable impact on the consumer. It is a marketing strategy that initiates active participation and engagement from the audience.

Brand experience encompasses a wide range of activities that take place in the physical and digital worlds, including experiential stunts, corporate events, and interactions with a brand app or site. It is a holistic, immersive way for brands to spread their message.

The Appeal of Experiences

Brand experience is often overlooked — you can’t always directly measure its ROI and success. But experiences are incredibly valuable in their power to influence purchasing decisions.

The experience economy puts consumers in the driver’s seat, allowing them to personalize each and every interaction they have with a brand. With a focus on experiences, branding is shifting from passive observance to increased participation and co-creation by consumers.

These are some primary criteria that give experiences so much added value:

Community-building: We’ve seen a wave of interest in community marketing over the past few years, which is largely related to experiential marketing. Consumers truly become brand loyalists when they feel a sense of community from their interactions with a brand. The reason for this is simple — unlike tangible products or features, an engaged community is one of the few aspects of a business that cannot be replicated. From online community forums to special events, brand experiences help unite fans as one community and foster a feeling of belonging.

Escapism: Millennials grew up in the age of memes, online forums, and interactive technology. Coming to terms with the heightened anxiety and stress that technology brings, the generation has started embracing the trend of digital detoxing, or unplugging from social media for a period of time to seek experiences.

The happiness factor: Experiences have been coined “the happiness you can buy.” Purchasing a product provides a fleeting sense of satisfaction, but being part of a meaningful experience can result in longer-lasting happiness. A Cornell studyfound that the enjoyment we derive from experiential purchases is based on more than one thing: the anticipation of the experience and the memory of it.

Online-offline convergence: The first wave of the experience economy was about leaving home and sharing those experiences on social media. However, many more experiences are based in the home and are focused on connecting the digital and physical worlds.

Trends of the Experience Economy

Today, successful brands are leveraging experiences, both offline and off, to engage consumers in interesting ways. Here are five trends we’ve seen dominate brand experiences in the 21st century.

Companies convert products to experiences

Even shiny, new gadgets need to be backed by an exceptional customer experience. By gamifying the act of exercising, home fitness startup, Peloton, has done exactly that.

Its debut product, a $2,000, internet-connected spin bicycle with a 22-inch touch screen, has taken the world by storm. The underlying secret of their success? While its competitors like FlyWheel and SoulCycle were busy luring customers into $34 classes at location-specific studios, Peloton saw into an untapped niche — experiencing a boutique fitness class in your own home.

It’s evident that the fitness brand delivers both ease and convenience. But Peloton also provides an extremely high level of personalization — it even analyzes its huge consumer base to determine the length of new videos to create.

The additional online service is optional, but the extra $39 a month is well worth it to many customers. With access to live fitness classes inspired by their level of ability, Peloton’s on-demand programming creates a communal and interactive experience that no other fitness company has done before it.

Takeaway for brands: People are willing to pay a premium for a value-added experience. A product could be the best on the market, but innovations like Peloton that introduce a shared community and unique experiences will ultimately win consumers over.

Companies deliver experiences at every touchpoint

Few brands are as good at audience engagement and amplifying their core messaging than Nike.

Nike, for instance, invites customers to join NikePlus through its mobile apps: Nike+ Run Club, Nike+ Training Club, and Nike+ SNKRS. The NikePlus loyalty program not only ties multiple physical and digital touchpoints together, it also offers member-exclusive products, more than 100 workouts, and priority access to sporting and special events.

Takeaway for brands: A strong loyalty program and mobile applications like those of Nike help brands bridge the physical and digital worlds.

Existing businesses look for ways to adapt

Retailers and brick-and-mortar stores are realizing they need to fight for every shopper — and offering experiences will give them the competitive edge they need. Many retailers are taking advantage of a hot new trend: experiential retail.

Looking to leverage a holistic shopping experience, REI opened four new stores incorporating experiential elements. Placed in strategic locations nationwide — Alabama, Oklahoma, Utah, and Vermont — REI’s new stores are designated launching pads for outdoor activities. They not only sell standard REI merchandise, but they also offer guided outdoor experiences and a variety of equipment for rent.

Not to mention, the new stores are incredibly personalized; each one offers equipment and programs tailored to the geographical location. REI’s store in Farmington, Utah, offers programs for avalanche safety and wilderness first aid, while the one in Huntsville, Alabama offers workshops on backcountry tents, and bicycle chains and derailleurs.

Other retailers, including Nike, Macy’s, and IKEA, have introduced experiential elements into their retail strategies. From loyalty programs to virtual reality applications to in-store cafes, there are various opportunities for retailers to optimize the shopping experience.

Takeaway for brands: No matter how established your business is, you can always find ways to evolve your offerings into more immersive experiences.

Companies Offer Digital Personalization

Beauty retailer Sephora has long been a pioneer in integrating its digital marketing strategy with its retail strategy. Its secret? A brilliant application of shopper data and market research.

Unlike other cosmetics retailers that rely heavily on department store sales, Sephora has introduced many digital touchpoints to personalize the customer journey — including trying on makeup virtually and sampling fragrances through a touchscreen and scented air.

Through its partnership with Pantone Color Institute, Sephora launched a facial scanning technology known as Color IQ. With Pantone’s color capture and measuring technology, the app scans the surface of the skin to match a scientifically precise foundation shade from Sephora’s 1,000 foundations, brands, and formulas.

Takeaway for brands: Brands need to do more market research than just developing consumer personas. By utilizing technology and big data, they can gain a clearer, data-driven, and more robust picture of their audiences.

An expansive view of partnerships

Brands team up for a variety of reasons — from driving revenue, acquiring new customers, and expanding their offerings. Brand partnerships can also create differentiated brand experiences.

United by their passions to deliver an exceptional customer experience, Amazon and Kohl’s formed a partnership to solve the customer pain point of easily returning unwanted items. Through their joint venture, Kohl’s accepts Amazon returns, unpackaged and free of charge, at all 1,150 locations in 48 states.

On top of benefiting consumers by easing the return process, the partnership is mutually beneficial to both the companies. Amazon gains access to Kohl’s strong nationwide store footprint and extra physical space, while Kohl’s gains access to Amazon’s loyal customer base.

Takeaway for brands: Successful brand collaboration can benefit both businesses involved. Forging strategic partnerships is a great way to add experiential components to your marketing strategy as well.

Conclusion

Experiences are key for marketing to today’s consumers: they solve their common pain points, give them a lasting feeling of happiness, and unite them by some common denominator. Integrating experiences into marketing — whether they be live events, digital experiences, or interactive communities — will help you create a more holistic customer marketing strategy.

The Future of Marketing: Experience Over Products