It’s very clear to me that consumer’s habits have changed, and will stay changed long after the economy recovers. A March article in the NYT announced that conspicuous consumption was one of the recession’s casualties. The ethos of showing off material wealth is dying faster than gas guzzlers, diamond crusted watches and McMansions. It’s just not cool anymore, let alone financially prudent. In my career as a speaker, I’ve seen this mentality hit corporate meetings too. Those that exist are scaled down, un-rewarding and often bare bones to avoid any scrutiny (even non TARP companies).
The New Luxury: Experience
Posted on August 28, 2009
How, then, do we reward ourselves? What will replace retail shopping therapy and corporate extravagance? In my view, the replacement will be a private experience. A nice dinner with impeccable service. A spa day. Paying a little more for better/faster/nicer service. Investing in home repairs that bring in sunlight, music and beauty. A return to Starbucks for a carmel-mach-whatever (small please). Having a company offsite in a rustic but tucked away location — with a full day devoted to community service. I’m seeing this already, it’s a very natural response to the times.
In their landmark book, The Experience Economy, authors Pine and Gilmore argue that people will pay more for an experience that engages them. Our job as providers (b2b to b2c) is to stage an experience using our products as platforms and services as a stage. Same goes with meetings: experiences don’t have to cost money, involve $$$$ celebrities or require high-end swag. They need to be emotionally engaging and memorable.
Yes, last fall we sacrificed the experience for simple-services in an effort to survive the storm. But as the clouds part, and the world still consider conspicuous consumption as the root of the problem, I’m seeing the consumer start to spend against experiences. One note: making a difference is an engaging experience. When you spend $ with a green, community focused or cause connected company, you have an emotional experience that fills you with purchase.
The new luxuries will be emotional, not physical. This means that all companies must segment the customer experience and find little ways to elevate it, even if there’s a marginal price increase to follow. Remember: margins lie at the heart of profits and experential products/services command higher margins during average to great economic times.