What a simple cup of coffee can teach us...

The story of a lowly cup of coffee and what it teaches us.

(and what I learned from reading The Experience Economy by Joseph Pine and James H. Gilmore)

There are 4 realms that make up every business-Commodity-Transaction-Service-Experience. 

As an illustration of all 4 realms, let’s look at the life of a simple coffee bean.

Commodity: The coffee bean is grown and then sold to a middleman. This is the lowest price it will be.

Transaction:The middleman roasts and packages the beans and the consumer can now buy it at their local grocery store. The price is a bit higher as money is exchanged for product. 

Both the Commodity and Transaction Realms have the similarities listed below (and they are  NOT where we want to be in our businesses)

• Performs a function for a price.
• Does not create loyalty.
• Based heavily on market price.
• Based on supply and demand.
• No relationships are formed.

Service: The coffee is now served at a diner, street cart or corner restaurant. The server takes your order and fulfills it. Now the price may be $1.00-$2.00 per cup.

The Service Realm steps it up a bit, but still falls short of where we want our businesses to be.

• Good manners and etiquette are used.
• May create a low level of loyalty if there is no competition.
• Gets the basics of the job done.
• Always looking for the easiest or cheapest way of doing things.
• Little vision is seen in this level.
• Clients are thought of as clients.
• Has employees who are happy with status-quo.

*The above characteristics actually remind me of nearly every employee in our local mall:-)

Experience: Now, take that same cup of coffee and put it in a Starbucks, expresso bar or high-end restaurant, and that same cup of coffee gains value due to the “experience” environment. It is now priced at $3.00-$5.00 or more per cup.

YES!!!! The Experience Realm is the place to be in order to be successful with today’s many competing businesses! Selling goods and services alone is no longer good enough! Creating experiences for our clients provide long-lasting memories and it results in clients coming back again and again for years.

Be creative in finding ways to add unique experiences and it will pay off. Think of your clients as relationships and not simply transactions. They are family to us.

When Tim and I were in Florence, Italy, we were taken with how awesome the cappuccinos were. In our hotel, there was a breakfast room where we could dine privately every morning. Now, here in America, we would expect to pay $5.00-$8.00 for a light, continental breakfast, which is what they served in our hotel. 

No waffles, omelets made by a chef, or any hot items for that matter were served. In this hotel, it was a flat rate of $15.00 per person every morning and most of the time, all we wanted were the cappuccinos! 

Did we complain? No! That's how much we loved them; that's how much we valued them and the fact that we were in Florence, Italy, was a huge factor as it provided an amazing backdrop of experiences and memories for which we were willing to pay the higher price.

“The businesses that relegate themselves to the diminishing world of goods and services will be rendered irrelevant. To avoid this fate, you must learn to stage a rich, compelling experience.”     -The Experience Economy