The next time you walk into a coffee shop (my wife, our family’s coffee lover, prefers Peet’s; she also really likes Philz), ask yourself what it is that you’re actually buying. The obvious answer is that you’re likely buying some sort of coffee drink. But that is not necessarily entirely or completely accurate.
Alfred Peet, who became known as the “grandfather of specialty coffee,” started Peet’s Coffee & Tea as a single store in 1966 in Berkeley, California. I visited it many times when our youngest was a student there. His style of coffee was a radical departure from what was then available, emphasizing smaller batches, freshness, superior quality beans, and a darker roasting style that produced coffee with richness and complexity. Peet’s was the original inspiration for now-rival Starbucks. Indeed, Starbucks originally bought its coffee beans from Peet’s upon opening for business in 1971. Peet’s has been much slower to expand than Starbucks, as a consequence of its focus of retailing rather than upon coffee bars, but it still has about 200 retail stores, primarily in California and the West. Of course, Peet’s has a large presence in grocery stores nationwide.
Peet’s is responsible for the premium coffee business. Obviously, most premium consumers are paying more to buy quality. Not just any cup of coffee will do. Some consumers, by buying a cup of premium coffee, are buying a financial advantage in one form or another — they could make a great cup of coffee at home but don’t because they don’t want to invest in or can’t afford the necessary equipment. Most likely, consumers, even when buying quality, are also buying time and simplicity. Most of us don’t want to take the time or just can’t be bothered to make a great cup of coffee at home. Perhaps they are buying status — only a connoisseur would pay premium prices and expect a “simple” cup of coffee to have so many permutations.
We in the financial services industry offer our clients (particularly “retail” — as opposed to institutional — clients) similar things. Most fundamentally, if we don’t offer quality products and services, provided with real expertise, we deserve to fail. We also offer financial advantage. Our objective is to make our clients’ financially better off for having done business with us. We also want to make our clients’ lives simpler and to reduce stress. We want to save them time, bother and worry. Interestingly, despite our intuitive expectation that performance is the key element in achieving client satisfaction, research (for example, here) suggests that other factors are as or are even more important — most prominently communication.
So the next time you buy a cup of coffee, ask yourself what you’re really buying. Moreover, whatever your business, you might ask yourself both what you are selling and what it is your customers are buying and want to buy. The answers may be more complex than you think