The trend of valuing experiences over things is here to stay. If you empower your users, exploit positive network effects and lower the bar to doing business with your company, consumers will choose your business over the competition.
The status symbols of yesteryear are under attack. For many people, a Rolex watch is now less desirable than a bucket-list climb of Mount Kilimanjaro, a new handbag is taking a back seat to front-row tickets to the Taylor Swift concert, and a new pair of shoes is not as enticing as cooking classes. Experiences are replacing material possessions as the status symbols of our time, which is a cultural shift driven primarily by social media and technology.
Social media has given unique experiences a social currency that's more authentic and natural than material possessions. For example, sharing a picture of your new $900 Manolo Blahnik shoes on Facebook could be seen as pretentious and materialistic. Photos of yourself skydiving during your vacation to New Zealand, on the other hand, could draw hundreds of likes from friends who are impressed by your daredevil nature.
Technology has enabled new business models to accelerate the shift toward experiences from possessions. The concept of the sharing economy and fractional ownership has allowed everyday people to experience things once reserved for only the most affluent in society.
The launch of Airbnb's Experiences platform, for example, has helped everyday consumers discover new things in cities around the globe. One of the top trending Airbnb experiences is currently food tasting in Lisbon. Other popular experiences include walking to the top of the Hollywood sign in Los Angeles and hanging out with cats in Madrid.
Even businesses that already focus on experiences are doing more to enhance them. The addition of restaurants to theaters is a great example. Instead of patrons only staying two hours to watch a show, they can now relax and enjoy a meal beforehand. At the Chichester Festival Theatre, the restaurant is thriving and ticket sales have increased 12 percent in just one year. These theaters are now seen as destinations, creating memorable experiences for customers that last longer than just a two-hour film.
Technology, specifically how it has enabled the growth of platform businesses, is driving the trend of fractional ownership. For businesses to take full advantage of this shift, though, they'll need to know how to add the right value through experiences.
A recipe for success
Any business that can scale while reliably solving a specific customer need is poised to do well in the current business climate. Today, consumers place a premium on experiences, and platform businesses are particularly suited to facilitate experiential interactions at scale.
It's no coincidence, then, that many of the world's largest companies by market cap operate platform business models. Take Apple, for example. Its business model relies not only on selling great hardware, but also on creating a sticky platform (e.g., iTunes and the App Store) that personalizes your device and creates high switching costs. What can you learn from a business as large as Apple? Platforms create an ecosystem where others can thrive – over 99 percent of the apps in the App Store are created by third-party developers.
Your business can also benefit from the cultural and economic shift we're seeing. To begin, focus on the following strategies.
1. Empower your users.
A company's decision-making traditionally comes from within, falling on the shoulders of managers and supervisors. However, it's even more powerful when you can put your customers and partners in the driver's seat. Around 80 percent of business leaders say they're delivering superior customer experiences, while only 8 percent of customers say those companies really are. Listening to your community of users and gaining as much feedback as possible will help you bridge that gap and make decisions that actually benefit your customers.
2. Exploit positive network effects.
Platform businesses become more valuable to the participants as more people use them. According to the book "Platform Revolution," this is called the network effect, and it's easily visible in areas such as services-for-hire apps that help connect people with everyone from dog walkers to contractors – the more dog walkers or contractors available in your area, the more likely you are to use the service.
E-commerce sites such as eBay and Etsy also rely on a community of participants. After all, what value would these platforms hold without any users (both buyers and sellers)? Focus on building your user base, and you'll be able to reap the benefits of a positive network effect.
3. Lower the bar to do business with your company.
Can prospective customers easily find your product with a Google search? Once they're on your website, is it easy to buy your product or service? Whether you're selling goat yoga or luxury Super Bowl suites, put yourself in the shoes of customers to consider what key information they need to make a decision, and then establish a clear path to purchase your product.
The trend of valuing experiences over things is here to stay. By heeding the advice above, you'll be positioned for consumers to choose your business over the competition.