Experience Economy Jackpot

As casino operators, I think we know more than any other industry what it means to battle for customer loyalty. We know that even the most loyal of our guests still spend a somewhat large portion of their time and money with our competitors. Why is that?

It would be effortless to blame it on the other guys spending more on reinvestment, free play, and offers. Having shared more than one darkened room behind a two-way mirror with several operators in numerous outposts, I can agree that yes, the offers are influential in making visit plans but dig deeper, and you will find WHY guests are, as someone once said, “promiscuous.”

We all can agree that it gets harder and harder to create and maintain the elusive loyalty. Some may say the “experience economy” is creating erosion in that loyalty. I think that concept is exactly what we should consider because not only can we earn loyalty, but we can also create brand evangelists.

What is Loyalty?

First, let’s talk about loyalty – what I think it is and what it is not. Loyalty is not a card program with a series of do this, get that triggers. Collecting points and comps is not loyalty. It is a great plus to the guest, and it certainly provides some indicators for us as marketers. 

But, consider this. When you collect points and premiums from a business, does that cause you to love that brand enough to shout about it? Think about the number of times you show a card or divulge your phone number or email address to get something. More than likely, you do it as a matter of course or because you are trying to achieve something. You will probably return for another visit if you are close to getting to your goal, but you may not go out of your way.

Author Jackie Huba refers to customer loyalty as jumping in to help when the ship goes down. Now that is loyalty! Her Loyalty Ladder model progresses from satisfaction up to retention, then to referrals, and finally to evangelism. Beyond that, a customer feels a sense of ownership – the holy grail of loyalty.

But getting to that point does not happen through points and products. It is about creating an emotional connection that only comes from experience. Thus, the “experience economy.”

So, what exactly is the experience economy? 

The concept was originally coined in 1998 by authors B. Joseph Pine II and James H Gilmore in their seminal business book, The Experience Economy. It described a progression in the economy, which started with undifferentiated commodities to highly differentiated experiences. The authors likened the progression as the difference between mothers making birthday cakes from scratch (the so-called goods economy) to paying a few hundred dollars for an event at Chuck E Cheese (i.e., the experience). In the goods economy, the cake cost mere dimes. In the experience economy, that birthday costs significantly more as consumers, we unquestionably desire experiences over goods, and as goods have become increasingly commoditized. It is the experience that provides value to the consumer.

How did the experience economy explode and grow?

Though coined years before the widespread adoption of social media, the concept became part of the mainstream vernacular with the rise of social media. With a camera in every pocket or handbag and the widespread availability of apps to enhance any image almost instantly, the phenomenon perpetuates as we live vicariously through Instagram posts. We feel the need to keep up and to have brands available to help us do so or risk a serious case of FOMO.

Theme restaurants such as the House of Blues, Hard Rock Cafe, and Planet Hollywood use food as a prop for entertainment. Newer concepts such as Twin Peaks approach their offering in much the same way. Additionally, given a choice between a traditional sporting goods store and a store such as Cabella’s, most shoppers will opt for the fun activities available if the products are equal.

What is the experience economy in hospitality?

Gone are the days when we booked a vacation, checked into our hotel or casino, played a little, ate a lot, and then returned home to tell everyone our tales of adventure. Now we take everyone along with us. So while the guest experience has always been an important part of our operations, we must find new ways to differentiate ourselves and create memorable experiences worthy of sharing instantly. It is why the rise of the casino social influencer has become a part of our marketing programs. Look closely, and you will see they are not sharing our amenities but rather the experiences they are having.

We must find new ways to differentiate ourselves and create memorable experiences worthy of sharing instantly.

Why is experience economy important to casino operations?

While McKinsey & Company’s research indicates that Millennials lead the pack in spending on experiences ($4.10 for every $1 they spend on goods) at an average of $164 per month, our core customer Boomers are no slouches in their spend. Their average $134 per month spend represents a spend of $8.93 for every dollar spent on goods and services.

A Cornell University study found that shared experiences (the hallmark of a casino visit) may have deeper links to long-term happiness. The study found that consumers’ “evaluations of their material goods went down from the time of the initial purchase to the present, but their evaluations of their experiences tended to go up, indicative of hedonic adaptation to the possessions but something quite different for their experiences.” The research suggests that experiences “are more open to positive reinterpretation, they tend to become more meaningful parts of one’s identity, and they do more to foster social relationships.”

We create experiences every time a guest clicks on our websites or steps foot into our properties. How we create the experience must be unique to our brands. Consider the relative commodity of air travel. To get from Point A to point B, most will shop by fare and travel time, but when two or more operators offer relatively similar options, it is the experience that puts one carrier over the other. Carriers understand that once they have you on board, they must create an experience that continues to give them an edge. We see this before takeoff in the battle for the most creative ways to deliver safety information. And the carrier war rages on.

Experiences in the time of COVID

No doubt, creating our branded experiences has been curtailed over the last 12 months. Additionally, the floundering economy has lead to a reduction in the number of experiences consumers can enjoy. However, as our revenue starts its climb upward, we will absolutely find ourselves battling it out for our fair share of wallet.

Leveraging the experience economy at your property.

There are several ways we can create the experiences our guests are looking for today. These also help us create experiences that guests will desire well into the future, creating loyal evangelists.

• Recognize that visitors will spend more time in public spaces rather than their rooms. Keep the wifi strong (and frictionless) and the experience unique.
• Focus on personal interactions to create unforgettable experiences.
• Create a love at first sight experience for your rooms to instantly transport your guests into a unique experience.
• Shift your marketing point of view. Consider the success of Airbnb in marketing themselves as experiences rather than following the lead of hotels that typically have relied on thread-count and comfortable mattresses to sell.
• Leverage social media. Potential visitation is often driven by social proof.
• Focus on the brand promise. World-class companies always find a way to bring their values to life.

What is your role in the experience economy? How will you choose to engage guests in memorable ways?