The Challenge of Selling Experiences

There’s a famous story about the Pepsi Challenge campaign back in the 1980s and Coca-Cola’s related (and misguided) decision to launch New Coke in 1985. The story – as told by Malcolm Gladwell in his book Blink – is that the Pepsi Challenge appeared to show people liked Pepsi better than Coke in blind taste tests, which panicked executives at Coke into rethinking their formula for the drink. Subsequently, it emerged people actually preferred Coke to Pepsi when drinking a whole glass or can, but preferred the sweeter Pepsi under the specific conditions of the Challenge, which only had them sip each drink.

A few years back, I was meeting with a senior US executive at Nokia and mentioned this story in the context of the company’s efforts to sell Windows Phones. Whatever other challenges Windows Phone had, one of the biggest in the early days was it looked radically different from every other smartphone operating system out there – instead of a grid of app icons, Windows Phone featured a mosaic of colorful squares of different sizes, many of which moved around and changed as the user watched them. There was actually a lot of value behind that approach, with the richer information presented on the Live Tiles. But, at first glance, the OS just seemed unfamiliar and strange and many users rejected it out of hand. In that sense, Windows Phone was like Coke in the Pepsi Challenge – given only a very brief exposure, people preferred the alternative but, given a deeper experience with the product, people might come to like it better. My conclusion was that one of the things Nokia (as by far the largest seller of Windows Phone devices) had to do was to find ways to get people to spend some time with a Windows Phone device and really see its merits. (I was somewhat amused later to hear that the same executive had been using this analogy with colleagues since our meeting, though the fortunes of Windows Phone never really improved much)

I mention this now because this same challenge confronts a number of other technology product categories today and that’s the difficulty of selling what is ultimately an experience rather than a product. There are at least three categories that come immediately to mind but there are doubtless others too. What they have in common is the value proposition isn’t obvious just by seeing a box on a shelf in a consumer electronics retailer or even having someone explain it to you. You have to experience it to really understand the value proposition and, in some cases, simply experiencing it can be enough to sell you on the idea, whereas nothing else will get you over the finish line. The three categories I have in mind are the smart home, home speaker devices like Amazon’s Echo, and virtual reality.

As I’ve written here previously, the smart home market suffers from a number of different challenges. One of the biggest is it’s really hard to convey the value of smart home technology in words alone – you kind of have to see it working in a real home or at least a decent mockup home to really get it. Simply seeing a connected lock, doorbell camera, or smart thermostat in a box on a shelf at your local Best Buy likely won’t do it, no matter how attractive the packaging. You really have to see it in action in a somewhat realistic setting to understand the potential. Arguably, the ideal sales setting is your own home, with someone to walk you through the possibilities, show you where devices could be installed and how they would work in the very setting where you’ll be using them.

From a home speaker perspective, it’s similarly difficult. I finally had to break down and buy an Amazon Echo to try for myself because I had heard and seen so many people talk it up in ways I just didn’t find compelling. It’s hard to imagine what you might use something like that for unless you have it around for a while and spend some time understanding what it can do and the scenarios in which it’s helpful. For example, the idea of setting a timer on Echo wasn’t that compelling to me in theory because I regularly use my watch and phone to do that. But the first time you have your hands full in the kitchen and need to do it, the value proposition of something like the Echo becomes a little clearer. And there’s no way I would have predicted how much entertainment value my kids would have got out of simply asking Alexa to tell them jokes. At the end of the day, I returned the Echo to the store because I wasn’t convinced it was worthwhile to me but I never would have understood the value proposition as well as I do now if I hadn’t had one in my home for a few weeks.

Lastly, virtual reality. This is perhaps the only category I can think of where you could probably divide the population very neatly into those who have tried it and are sold on the idea and those who haven’t tried it. Virtual reality just doesn’t sound all that compelling when you explain it to someone. But once you’ve experienced it there’s a definite “Aha!” moment. As John Carmack likes to say, virtual reality makes converts on contact. As with the Echo, that doesn’t mean we’re all going to be buyers just because we spend some time with it, but it’s infinitely easier to sell if someone has a proper experience with it.

For each of these three categories, that creates significant challenges in actually selling the products. Giving people real experiences with the smart home, home speakers, or virtual reality takes time and, in some cases, a significant amount of space. For retailers accustomed to devoting shelf rather than floor space to consumer electronics, this may well require a change in mindset. It also likely means store associates spending considerably more time with potential customers than they might have done traditionally because doing a full-on demo takes more time than just directing someone to the right part of the store. Perhaps the most powerful ways of selling experiences have nothing to do with retail at all and are instead based on word of mouth marketing, in which trusted people who have already had those experiences share them with their friends. The key thing here, though, is marketing some of these experiential products requires some radically different approaches from those traditionally used for consumer electronics.

Published by

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw Research, a technology research and consulting firm focused on consumer technology. During his sixteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.

21 thoughts on “The Challenge of Selling Experiences”

  1. Another fine bit of boosterism disguised as an article

    “into those who have tried it and are sold on the idea and those who haven’t tried it”

    Whoa. Way to forget a major segment, those who have tried it and gotten nauseous and know that it will never be for them.

    Actually there are third groups for the other two categories as well — those who have tried smart home gadgets in their home and found the flakiness of the integration hard/software delivered negative value at this time (as has been the case for, how long have we been promised smart homes were just around the corner? right, 20 years and counting), those who have tried the echo in a friend’s home and know that they are not interested (because believe it or not, not everyone thinks the Amazon kool aid is for them, and not everyone thinks that it would be a great idea to have that kool aid put on a drip directly into their veins).

    1. It might be generational. My 10yo nephew took to Cardboard like a fish to water, and I was specifically forbidden from gifting Gear VRs by evil parents.
      My iBrother and I got mildly amused, and in my case rather nauseated (I nauseate after 5 mins in any car, so I’m atypical). I’m starting to think I’m my dad, failing to grasp the usefulness and importance of PCs 40yrs ago.
      Also, you and most commenters here are heavily Apple-biased. I’d bet lots of attitudes/perceptions will magically change when Apple release something, same as for pens, phablets, multitasking, smarwatches…

    2. The nausea thing is generally caused by the immaturity of the technology, and will likely be ironed out over time. So I don’t see this as indicative of a segment as much as indicative of the current state of maturity of the technology, and something which will vanish over time.

      1. I recently read a fairly long explanation about nausea. Basically it’s a biological safety mechanism: sensory inputs are incoherent between themselves and w/ what the brain expects -> I’m hallucinating -> I ate something toxic -> expel it. Issues worsen over time, most everyone will be OK for 5 minutes (coincidentally, that’s about the duration of a trade show floor demo). Plus headaches due to the eyes working in a slightly unexpected way.
        That’s not trivial to handle because a) it’s built into humans at a low level and b) as anything biological, it varies which each individual, both in severity and in triggers.
        I’m sure things are getting better. Not sure if/when they’ll reach Good Enough for most people, and not sure how the more difficult users and the time limit will impact overall usage.

  2. re: Live Tiles, I think breeding familiarity was a main reason why MS put them in Windows/desktop too. Alas, they were surrounded by so much flakiness and approximations and so few apps that MS mostly bred contempt.

    re: VR. Is there any data to compare early interest in VR and in 3D screens ? I’m sure VR won’t fail as hard as 3D especially if you count AR with it, and Pro alongside Consumer, but I’m still not imagining a huge and quick consumer ramp-up outside of hardcore gaming. Also, I’m actually surprised nVidia and ATI aren’t making their own glasses, the VR ->vidcard attach rate is axiomatically 100%. Is HTC too expensive a buy ?

  3. Totally agree that experiences are hard to sell.

    In my opinion, the book that best discusses how to overcome the difficulties is Geoffrey Moore’s “Crossing the Chasm”. It describes how important word of mouth is, but importantly identifies a chasm across which word of mouth is no longer effective. It also provides a “D-Day” strategy to get you across the chasm.

    Applying this to smart homes, home speakers and virtual reality, the prescription would be to focus on a limited set of really worthwhile applications and to sell the “whole product”. My understanding is that this would require integration across the value chain, which kind of dooms many of the current approaches by consumer-oriented tech companies.

    I suspect that a company like Nintendo could actually do quite well.

    1. Plus I think experiences are even more dependent on expectations than bare products. I know I don’t expect much from service at a McD so 30s of chitchat or even a smile is a pleasant quasi-surprise, but I do expect that at anything above $50/meal (which I’m planning to enjoy tonight, football nights are an excellent time to enjoy a quiet meal in a deserted restaurant, planning on lots of wine to dull the expected results,too ^^).
      On top of that, I think experiences are more subjective. I used to ride horses in a small town (as in do your own grooming, hang out before and after or when cutting class – who needs Latin ?-, dress in old jeans, mess with the goat the donkey and the dog…) and could never enjoy any of Paris’ riding clubs (horse handed ready-to-ride and whisked away afterwards, nice riding clothes/gear every day, crowded everything and anonymous people rushing in & out, rather dull horses too…). Paris killed horse riding for me, and reciprocally I’m sure most Parisian riders wouldn’t like small-town mucking about.

      1. A company has, I think, two parts they need to sell with regard to experiences. 1) This is an experience you want (for any reason or reasons—you grew up with it, it benefits your view of humanity, you will be more secure, have more time for your family, you’ll enjoy it more, etc). 2) Either you can’t get this experience anywhere else or we do it best (Disney, for instance, or the musical _Hamilton_).

        This is a difficult thing for typical PC makers to grasp because the PC is at its perceived best the more it can do. In reality, it is software (the specific “experience” or need) that sells PCs.

        This is difficult for the tech industry in general because the typical tech company is usually trying to solve a specific, utilitarian task. Rarely are they called on to serve up an enjoyable experience.


      2. “On top of that, I think experiences are more subjective.” Experiences have this “apple moment” that taunts into your previous knowledge base. That what makes them worth experiencing (oops, a tautology).

  4. The challenge is always centered around the story. When the focus is a piece of hardware, that becomes even more difficult. Obviously less singular products have been selling experiences quite successfully for some time—amusement parks, movie theaters, as well as live performances of many kinds.

    Then there are your examples of Pepsi and Coke, while your examples are them focusing on their reactions to taste tests, both brands do everything in their power to focus their marketing, quite successfully I might add, on the experience of their product—the joy or peace for the world they can associate with their products. Even Google and Apple do that in different ways.

    It will almost always come down to who can tell the most compelling story either for their product or how their products fit within the story of our lives. ‘Cotton’, anybody?


    1. Sadly, you’re right, but Coke never brought peace to the world and the marketing is thus a delusion setting instrument. The trouble is that we’re so accustomed to this bombardment that a lie becomes the “perceived truth”.

      Myself I am not immune to this either, I’m human after all (just barely), but I do actively attempt to reject all “aspirational” crap thrown my way.

      1. It’s not entirely perception. We do want world peace and the joy of family and friends. We did grow up with cotton material or drinking milk. It’s more relational and associative than aspirational. That’s what makes it so powerful. Aspirational can still be a fantasy. Relational is, perception or not, still influenced by a realistic foundation.


        1. The reason I said perception is not because of our desires, rather the mentally real, pragmatically false association that somehow, by a miracle, Coke brings unity and peace. It assigns a non-existant attribute to the product. Then there’s the bigger miracle which, if true, that Coke never won the Nobel Peace Prize.

          All this is just a lot of words for marketing which sets off my bullshit detector… 😉

          1. There is a delta between “mentally real” and “pragmatically false”. It takes some struggle to overcome, but it is not something that can’t be done.

          2. “it’s not something that can’t be done”

            Sure! If you’re truly commited. If you’re going to live the brand. Kool Aid helps…

          3. You don’t have to succeed you know. You can discover something pleasantly new along the way.

  5. One of the ways VR games at the old Dave and Buster’s tried to solve the social dilemma back in the day was by having monitors to show other people what the user was seeing.

    That this was necessary, even in an environment where VR shines, shows a very difficult shortcoming for VR to overcome—user AND experience isolation. This makes VR difficult to be anything more than at best niche, at worst a novelty. Of course, niche always has the potential to be very profitable.


    1. “having monitors to show other people what the user was seeing”. You mean a reality TV? There is no plan or scenario.

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