business advisor
The Fourth Sector
Learn about the experience stage of the economy -- and how to use it to maximize your practice and profits.
By Jerry Hayes, O.D.

Government analysts traditionally categorize the U.S. economy into three sectors:

1. Raw materials, known as commodities

2. Manufactured products, known as goods

3. General services.

Economists are now acknowledging the emergence of a fourth, harder to quantify sector, known as experiences.

Like coffee, four sectors

In their book The Experience Economy, B. Joseph Pine II and James H. Gilmore use coffee to illustrate the sectors:

Commodity stage. When purchased in commodity form, the average cost of the raw beans needed to make one cup of coffee is about two cents.

Goods stage. Manufacturers sort, roast and package raw beans into a finished product. At this point, the cost of beans in a cup of coffee rises to about 25 cents.

Service stage. Because nobody wants to drink beans, the manufacturer has to ground, brew and serve them in liquid form. Prices for a basic cup of coffee vary widely -- anywhere from 50 cents to $2.

Experience stage. High-end shops such as Starbucks not only provide coffee as a finished product, but they also deliver a unique experience. As a result, customers stand in long lines to pay $3 to $5 for exotic-sounding drinks with the same basic ingredients that they can purchase for far less in numerous competing coffee shops nearby.

A willingness to pay

While even the most expensive cup of Starbucks is something anyone can afford, we see examples of consumer willingness to pay high prices for "unique experiences" at all levels of the economy. The idea of spending $60,000 on a car, $300 on a luxury hotel room, $200 on a concert ticket and $100 on a gourmet meal isn't only acceptable, these products are in demand by people looking for an upscale experience.

The question then becomes, "Does this proven willingness on the part of consumers to pay top dollar for an experience in any way translate to the services and products we provide to our patients?" It can, depending on how you choose to compete.

Deliver a unique experience

Consumers aren't going to pay you $30 for a box of disposable contact lenses they can buy on the Internet for $20. But they will pay you $100 -- and more -- for an exam if you can somehow make the leap from providing a commodity service to delivering a unique experience.

The only way to provide a unique experience is to make a commitment to be noticeably different (in terms of having a professional environment, a truly friendly and people-oriented staff and a doctor who's not only clinically competent, but is focused on patient satisfaction).

The design, d�cor and location of your office speaks volumes. But a stunning facility doesn't matter if the personal service you and your staff deliver is lacking. It's anything but a unique experience to deal with rude receptionists, unreturned phone calls and long waits in a doctor's waiting room.

Make your practice stand out

Standing out from the crowd takes creativity, which we didn't learn in optometry school. But if Starbucks can do it with an everyday commodity, then surely O.D.s can do it at some level with a complex service such as eye care.

A frequent writer and speaker on practice management issues, Dr. Hayes is the founder and director of Hayes Consulting.  You can reach him at (800) 588-9636 or JHAYES@HAYESCONSULTING.NET.

Optometric Management, Issue: July 2004