What's the future of experience? | Pirelli
< Back To Home
PIRELLI.COM / WORLD

What's the future of experience?

In-store sleepovers. Giant piano staircases. Chatbots for insomniacs. Elephant holograms. Supercar-branded submarines. These phenomena – created by IKEA, Volkswagen, Casper, WWF and Aston Martin respectively – are not just one-off marketing stunts. They're part of a trend that has been sweeping the globe for more than two decades – the so-called experience economy, a trend that now extends across every aspect of consumer life.

The trend was first identified by Joseph Pine and James Gilmore in their 1998 paper Welcome to the Experience Economy in the Harvard Business Review. They used the simple birthday cake as an example of something they called the progression of economic value – the inexorable advance from commodities, goods and services towards something with greater perceived consumer benefit. First, people made the cake from scratch using basic ingredients. Then came the ready-made packet mix, followed by specialist birthday-cake shops delivering cakes as a service. Today, the cake can be outsourced as part of a whole party package – often thrown in for free, and just part of a much broader and engaging offering.

Show more images

A growing business

“The next competitive battleground,” wrote Pine and Gilmore, “lies in staging experiences.” And there's no doubt that the world's brands agreed with them. The experience economy is now one of the major driving forces behind global consumer commerce. It's become almost obligatory marketing shorthand in every industry, from retail and leisure to transport and tourism, for good reason; a 2017 McKinsey report, Cashing in on the US experience economy, noted that while growth in sales of American goods between 2014 and 2016 amounted to 1.6 per cent, the growth in experience-related services far outstripped it at 6.3 per cent.

Today, Gilmore – now an academic and author across a range of business disciplines – is no less enthusiastic about the importance of the experience economy he helped to name. But he is nonetheless aware that more than two decades of such relentless exposure to the e-word may be driving us towards a phenomenon he calls “experience fatigue”. “It's very easy for vendors to slap the experience label on more or less anything – ‘the deli sandwich experience!',” he says. “But the more of it we see, the less inspired consumers are. It's a good demonstration of the law of diminishing marginal utility.”

Still, the experience economy shows few signs of slowing down, especially among younger consumers. More than three in four millennials would choose to spend money on a desirable experience or event over material items, according to a survey for the event technology platform Eventbrite, suggesting that this is likely to be a long-term shift. And many organisations are now appointing so-called chief experience officers, or CXOs, charged with ensuring that every interaction with customers is more substantive than another sales pitch.

Something to post

One particularly vivid illustration of this trend is a landmark offering from property rentals business Airbnb, called – somewhat inevitably – Experiences. Airbnb CEO Brian Chesky said in 2018 that Experiences, launched in 2016, was growing 10 times faster than the company's core home rental business, with millennials especially taken with the idea. In 2019, there is certainly no shortage of Airbnb-mediated experiences. You can book anything from running with wolves to yodelling workshops, with every imaginable activity (and some unimaginable ones too – vegan taxidermy classes, anyone?) on offer to complement Airbnb stays around the world.

Gilmore is unsurprised by such developments, noting that the experience economy is deeply embedded at every level of commercial activity. “Look at tourism, for example. It's always been the quintessential experience-based industry, but that's not enough any more. There's been an explosion in different aspects; today we have climate-change tourism, disaster tourism, Lord of the Rings tourism.”

One key driver for this is a focus on authenticity and storytelling rather than celebrity endorsements and ownership of luxury goods. In a world where many people now own a $1,000 smartphone, it's getting harder to appeal to consumers on the basis of luxury and elitism. By offering people experiences in addition to the goods, brands are giving people something to tell a story about. And tell stories they certainly do, across tens of millions of Facebook and Instagram accounts – the platforms by which we now expect ourselves to be evaluated and judged.

Digital experiences

Given the ubiquity of technology in our daily lives, it's tempting to view it as the inevitable future for the experience economy. And indeed, technology is well to the fore in many brands' approach. Supercar manufacturer McLaren recently launched the McLaren Automotive Real-Time Configurator (MARC), for example – a 3D platform that allows customers to configure every feature and detail of their cars in-store, designed to combine the real-life thrill of driving a McLaren with an almost equally thrilling experience of designing and buying it.

As we move relentlessly into an age where AI-driven chatbots and virtual assistants attend every commercial encounter, it's hard to avoid the sense that the experience economy too will be dominated by technological mediation. Not so, thinks Roger Wade, founder of Boxpark – a series of three pop-up malls in London and southern England built from shipping containers, where people flock together in pursuit of reimagined eating, drinking and shopping adventures. “Boxpark is all about community coming together,” he says, “something like the Greeks and Romans created – beautiful piazzas in which people come together to experience the world.”

Only human

Boxpark is an essentially human experience, he says, whereas many of the so-called experiences offered by today's brands are anything but. “Who really wants the Jeff Bezos Experience? Next-day delivery, drone delivery, reviews. They may look innovative, but they're really not special any more. If you're not creating a revolutionary experience for customers, you won't exist in the future.”

Gilmore thinks there's still plenty of room for digital experiences, especially those enabled or enhanced via smartphones. But he accepts that we may be nearing the end of the line when it comes to delivering really new experiences for consumers. “If you customise this kind of transformation still further, the only logical extension of this is perfection – and we don't think you can realistically sell that.”

Instead, he thinks, the future will be about very human phenomena. “We're starting to see that people want to be changed by these experiences. You want to become a better cook or golfer, not just experience the class. That might be the final economic offering. We don't think there's necessarily another step on the path to economic value.”

Experience, then, needs to become something more than time spent for the sake of it. It's the key to transforming ourselves; in that sense, it is a powerful way to take back real control over our lives in a world increasingly obsessed with letting technology do everything for us. The big question is whether companies will transform their business offer accordingly.