Why the World’s Biggest Brands Sell Experiences and Why You Should Too

Michael Folling|March 13, 2014

Running a business in the travel activity industry is not an easy task. Besides all of the day to day operations you still need to make time for marketing and customer acquisition. This is a problem that nearly every business struggles with.

Fortunately, I’m going to show you some simple tricks that will make struggling to find customers a thing of the past.

Armed with the knowledge you will gain from this post you can build a business that is a customer acquisition machine allowing you to turn new customers into repeat customers and generate more referrals than ever before.

Don’t worry I’m not going to give you one more thing to add to your daily to do list. I’m going to do something better and show you how you can sell more activities with a simple change of perspective. Let me explain.

As humans we place more value on experiences than goods and services. So why sell a service when more people are willing to pay more money for an experience?

Tours and activities are services and customers can choose between many businesses selling the same service. If you want to stand out from your competitors, sell experiences, or the benefit that your customers will get from buying your service.

Fortunately a lot of studies have been done on the subject of selling experiences and I’ve gathered some of the best to give you an idea of how you can apply this concept to your business. In this blog post I’ll show you:

  • Big brands that have used this strategy successfully
  • Where the demand for experiences came from
  • Scientific data that proves why selling experiences works
  • How you can use it to grow your activity business

Let’s start by taking a look at some pioneers who sold experiences to build some of the most well known brands in the world. These CEO’s and founders had the vision to create lasting experiences for their customers and they were rewarded handsomely for it.

Who else is doing it?

Walt Disney took a huge risk when he built Disneyland which, as we know today, is a risk that paid off. One reason for Disneyland’s tremendous success was the fact that he retained control over his guest’s entire experience. He even went so far as to build Disneyland in such a way that made it impossible for a guest inside of the park to see anything outside of Disneyland.

The one thing I learned from Disneyland is to control the environment.

Walt Disney

Though Disney might be the most famous example of a business that sells experiences rather than goods and services there are plenty of other examples of businesses built with very little money that succeeded because they provided a unique experience for their customers.

While Disney managed to build one of the most valuable brands in history by creating memorable experiences for his customers he had the benefit of creating a new market rather than standing out in an existing one.

Standing out in a crowded marketplace can be hard, though not impossible. Take Coldstone Creamery for example. Coldstone Creamery’s former CEO, Doug Ducey, built a global brand by selling experiences in a very crowded marketplace.

By creating “the ultimate ice cream experience” with singing employees and desserts that are made right before your eyes Ducey managed to grow the brand from 74 to 1,000 stores. While their company’s growth is impressive by any measure what’s more impressive was their ability to sell a product (that hasn’t changed much over the years) far better than their competition could.

Legendary entrepreneur, Richard Branson, is no stranger to success either. With over 360 companies under the Virgin umbrella, a company he founded, he must be doing something right.

So what’s the secret to his success? According to him, all you have to do is build a company that stands for fun. Branson realized early on that customers were willing to pay more for experiences, which allowed him to take advantage of new opportunities, like starting an airline.

The greatest entrepreneurs don’t sell products; they sell an experience like fun, happiness, or a comfortable, inviting place to enjoy a cappuccino. What experience does your product offer?

How did we get here?

So how did we get to a point where goods and services just don’t cut it anymore? According to B. Joseph Pine II and James H. Gilmore, authors of “The Experience Economy”, services have become increasingly commoditized much like goods have.

This commoditization of services have compelled businesses to find new ways to create value for their customers. Pine and Gilmore consider this the next step in what they’ve termed the “Progression of Economic Value.”

progression-of-economic-value-296x300

As you can see from the illustration above staging experiences for your customers is the next step in the progression of economic value. Essentially, it’s a natural response in the marketplace to customers who are demanding new offerings.

Goods and services are everywhere becoming commoditized; what consumers want today are experiences — memorable events that engage them in an inherently personal way. That’s good news, of course, for the tourism and activities industry, for such companies have always been in the experience business!

The great thing about giving customers what they want is they are willing to pay a premium for it. Not only are customers willing to pay more for what they want but they are also willing to spend a larger portion of their income as well. In fact 55% of total luxury spending is on experiences, and this trend is growing year over year.

Experiences aren’t just luxury purchases reserved for the rich and famous either. Something as simple as eating at a food truck could be considered a new and exciting experience.

Apparently there are a lot of people who would agree because food trucks are on pace to generate 2.7 billion dollars in revenue by 2017. This is equal to between 3 and 4 percent of total U.S. restaurant sales! Not too shabby.

So why are food trucks so popular? A survey by Emergent Research found that more than 80% of survey respondents used words like “fun, exciting, and unique” when asked why they chose to dine at a food truck over a restaurant.

So now that we understand where the demand for experiences came from let’s take a look at the psychology behind why experiences sell so much better than products and services.

Why does it work?

Have you ever felt that the anticipation leading up to a vacation is just as exciting as the vacation itself? Well you’re not alone. A Dutch study found that the simple act of planning a vacation boosted happiness for eight weeks!

Not only does vacation planning make us happy but so does the vacation itself. According to a recent study conducted by Expedia, 80% of Americans said that vacations make them happier than weddings, birthdays, and even cats. I know, the last one is hard to believe.

Unless you’re a workaholic I would be surprised if a vacation didn’t make you happy but can you believe that 9 out of 10 Americans said that their happiest memories are formed while on vacation? That’s a powerful statement considering that Americans only use an average of 10 vacation days per year.

So why do vacations (and other experiences) make us so happy? To understand this it helps to compare experiences to other things that we spend our money on, like material possessions.

1. Experiences get better with age

Over time we tend to only remember the highlights of our experiences and not the boring moments. This creates a fond memory of the experience which we hold dear to us. That doesn’t happen with material possessions however. You don’t usually say “I love those shoes because I wore them on my river rafting trip.”

2. It’s harder to compare our experiences with other people’s experiences

Social comparisons can shape our view of positive events in our lives. This can be either good or bad depending on what they’re being compared to. For example the excitement of buying a new iPhone can wear off quickly once you see someone with an even newer model.

Unlike material possessions, no two experiences are alike. This means they are more resistant to social comparisons and the positive memory associated with your experience is less likely to fade if your friend comes along with a story of a great experience that he had.

3. Experiences carry more social value

Have you ever noticed that it’s not acceptable to talk about big purchases in a social setting? No one likes a bragger but everyone loves to hear about the adventure you had climbing an active volcano in Hawaii.

Shared experiences, or even great stories of our experiences, increase our social value which helps build social relationships and in turn makes us happier.

How can this help me?

Now that we understand how important experiences are to us and why they’re so important let’s apply that to your business.

First, ask yourself, is your service a commodity? What makes your hiking tour any different than what your competitors offer?

Think about what sets your service apart from what your competitors offer and play that up. If there’s nothing that sets you apart then it’s time to brainstorm!

Consumption today is not rooted in things, it is rooted in experience. Those merchants who understand this mindset will be the ones racking up sales.

Since we’ve already established that people want to spend their money on experiences how can you use that knowledge to your advantage? With psychology of course!

You can start by making small changes to the language that you use when you’re on the phone with a potential customer or when they walk into your shop.

One way of doing this is to make a connection in the customer’s mind with your services and their desire for new and exciting experiences. You can do this by using language like “Would you like to add another experience to your itinerary?” or by answering the phone with “Thank you for calling XYZ Company. Would you like to hear our featured experience this month?”

There’s also lots of subtle wording that you can use on your website to persuade customers to make a booking. For example, how much thought did you put into the names of your tours and activities?

Does your list of activities read like a product catalog? If so you could be missing out on some easy wins with your customers. Put yourself in your customer’s shoes. Would you rather pay for a “4 Hour Kayak Tour” or a “Half Day Kayaking Experience”?

A great example of this type of language in action can be found in this marketing campaign by Denmark’s tourism website which reminds you to use all of your senses to “experience the atmosphere of a country.”

Instead of selling you on a destination that you may never have heard of they remind you of how good it feels to visit a new place (recalling an experience.) The narrator paints a picture so clear that it makes you long for that feeling again.

This is just the tip of the iceberg too. There’s lots of other ways you can stand out from your competition and develop customers for life by creating an exceptional experience for them. All it takes is a little extra time with your marketing hat on and the results can pay dividends!

What do you think?

Should this shift in mindset come naturally to the travel activity industry? What are some ways activity suppliers and travel agencies can use the experiential nature of the industry to increase sales?

I would love to hear your thoughts!


Michael is part of the marketing team at ActivityRez. He enjoys coming up with creative ways to help travel companies grow their business.

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