NEW YORK (TheStreet) — What do Starbucks (Stock Quote: SBUX), Disney (Stock Quote: DIS) and Apple (Stock Quote: AAPL) have in common?
They're successful businesses. They're in commoditized and highly competitive markets. Yet each commands a premium for its products and services. What makes them so much more successful than their competitors?
The answer is experience. I'm not talking about how long they've been in business. I mean the experience they create for their customers. We have become a society of consumers and businesses that value — and will pay extra — for experiences. Experience is a differentiating factor to companies in competitive and commoditized markets.
When you customize a product or build a custom product, you're providing a service. When you customize a service, you're providing an experience. In case you haven't realized it, you're in the service business. The business of providing manufacturing services has become a commodity service. Moving from providing services for your customers to providing experiences may be just what separates your shop from the rest.
Experience matters. Coffee beans are a commodity. Enough beans to make a cup of coffee cost about 3 cents. Maxwell House converts those commodity beans into a product and charges 20 cents for enough grounds to make a cup of coffee. Your local cafe or convenience store provides the service of brewing the coffee, and it gets $1 for a cup. Starbucks provides an experience (and a little warm milk) and gets $4 and up for a cup of coffee. There are several places to buy a good cup of coffee for less than $1 within a few hundred feet of my local Starbucks, yet there is always a line to pay $4.