top of page

Enhancing Customer Experience: Why Experiential Purchases Trump Material Goods

You must have heard people say, “What you need is some retail therapy.” There is a common belief that if we are feeling a bit down, we will feel better after a shopping expedition. But does this really work? Does spending money make us happy, and if so, do we get the same level of happiness from spending money on goods rather than experiences?


A paper titled "Spending on Doing Promotes More Moment-to-Moment Happiness than Spending on Having," published in the May 2020 issue of the Journal of Experimental Social Psychology, provides some clues. The paper is based on research by Amit Kumar at the McCombs School of Business at The University of Texas at Austin and Matthew Killingsworth from the University of Pennsylvania and Thomas Gilovich from Cornell University. Their research revealed that certain purchases can significantly enhance in-the-moment happiness.


The academics researched the purchase behaviour of 2,635 adults who were randomly assigned to two groups. One group reported on their feelings after making a material purchase, while the other reported on their feelings after making an experiential purchase. Material purchases included items such as jewellery, clothing, or furniture, while experiential purchases encompassed activities like attending sporting events, dining at restaurants, or engaging in various experiences.


The results consistently showed that participants who made experiential purchases reported higher levels of happiness compared to those who made material purchases, regardless of the cost. "It would be unfair to compare a shirt to a trip, but when we account for price, we still see this result where experiences are associated with more happiness," Kumar explained.


The researchers didn't stop there. They conducted a second study with over 5,000 participants. In this study, people were asked to rate their happiness and then report if they had recently used, enjoyed, or consumed either a material or experiential purchase. Those who had made any such purchase were asked for more details about what they had bought.


The results confirmed the findings of the first study. When people consumed an experiential purchase, they were happier, even though buying material possessions often took longer.


This finding isn’t new. A few years earlier, Ryan Howell, an assistant professor of psychology at San Francisco State University, and San Fran State graduate Graham Hill carried out a similar study. People were quizzed on how they felt after buying a meal or going to the theatre compared to how they felt after buying “stuff.” Howell concluded, "These findings support an extension of basic need theory, where purchases that increase psychological need satisfaction will produce the greatest well-being. Purchased experiences provide memory capital. We don't tend to get bored of happy memories like we do with a material object. People still believe that more money will make them happy, even though 35 years of research has suggested the opposite."


Memory capital—that is what we are looking for when delivering a great customer experience, and we get that from people doing things rather than simply adding to their stock of goods. The impact of experiences stays in people's memories while the perceived value of material goods diminishes over time.


The lessons for us in the customer experience business should be clear: give people a pleasurable experience of some sort whenever they buy something. A smile, a kind word, an unexpected treat— anything that will feed that warm memory of their purchase. We need to shift some of the consumption away from material goods and make it an event. That's the way to improve customer experience.

bottom of page