Brand Autopsy

Starbucks Slows U.S. Growth

WHAT
Net income for Q2 2008 at Starbucks fell by $42-million compared to the same quarter last year. (Ouch.) Additionally, Starbucks is drastically reducing the number of new store openings in the U.S. Starbucks opened nearly 1,800 locations in 2007. For 2008 the company will open only 1,175 new locations — that’s a 35% reduction in new store openings from the prior year. And, beginning in 2009 through 2011, Starbucks will limit new store openings to only 400 per year.

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SO WHAT
Clearly the company is experiencing growth troubles in the U.S. However, Starbucks is hoping to offset the slower domestic growth with greater international growth. Starbucks is set to open up anywhere from 1,050 to 1,300 new international locations each year through 2011.

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WHAT NOW
Have a listen to this interesting story on Starbucks from NPR’s Morning Edition. (Skip to the 3:10 mark in the story for a surprise.)

Monday Morning Quarterbacking

Nathan Snell runs the social media voodoo down with smart analysis of MyStarbucksIdea.com. And when you read Shel Holtz's take on how Starbucks mirrors Dell, be sure to read the comments where Caroline Dietz from Dell provides clarification.

My Starbucks Idea

In the comments section, a former long-time Starbucks partner questions just how much the MyStarbucksIdea.com website will engage readers and engage Starbucks. ”Pat’s" comments got me thinking more about Starbucks social media strategy. Below is my reply to "Pat" …

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Pat … I’m also not sold on Starbucks jumping into the deep end of the social media waters. The company has no meaningful experience in social media and has always shunned participating in online conversations.

Instead of opening the customer suggestion box floodgate, which is exactly what MyStarbucksIdea is, I would have started by taking a much smaller step and simply layered on a blog-like component to their existing website. On this proposed company blog, Starbucks could ask customers focused questions about their ideas on improving various aspects of the Starbucks business.

For example, a potential Starbucks blog post could read something like…

”As you’ve heard, we are discontinuing our oven-heated breakfast sandwiches. This doesn’t mean we are exiting the breakfast business. It does mean we are looking for morning food ideas that customers will enjoy more. I’m sure you have ideas on what food we should offer in the morning. Please share. We are listening.”

Another potential Starbucks blog post could say …

”When we launched the Starbucks Card in 2001, we had no idea it would be accepted by so many of our customers. 15% of you purchase all your Starbucks stuff on the Card. That’s amazing! Thank you. We want to “thank” Starbucks Card users even more. Please share your ideas on how we can reward you for your continued devotion to Starbucks.”

The company could reply to customer suggestions to these focused questions in the comments section. Starbucks could do a weekly round-up of the most popular ideas and post updates on which ideas are moving forward.

This focused approach to (a) participating in social media and (b) gathering customer suggestions would be easier for a company with no meaningful social media experience to manage. It would also make it easier for Starbucks customers to follow-along. The current MyStarbucksIdea website is already unwieldy — lots of wayward ideas have been suggested and many of the ideas suggested are repeated numerous times in various categories. This website will only get more unwieldy.

A more focused approach to participating in the social media waters would probably have been a better path for Starbucks to undertake.

johnmoore (from Brand Autopsy)

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Clover Brewer video

A friend pointed me to some interesting videos showing the Clover Brewer in action. (Thanks Mr. Garraway.)

Turns out there is a coffee shop in Austin that uses one -- J.P.'s Java. (I feel a field trip coming on.)

If you have no idea why I am blogging this, read this.

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Starbucks Transformational Agenda

Since I have lots of HMOs (hot marketing opinions) about Starbucks, reckon I should share my take on today’s major goings-on with the company. Since there’s lots to talk about, I’ve arranged my thoughts in a “WHAT | SO WHAT | WHAT TO THINK” format.

** WARNING … LONG POST **

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WHAT?
At its 2008 Shareholders Meeting, Starbucks announced six initiatives designed to: (a) improve the current state of its U.S. business, (b) reignite the emotional connection with customers, and (c) invest for long-term success.

The six initiatives are:
1 | New Espresso Machines
2 | Ethically-Sourced Coffees
3 | A Social Media Strategy
4 | A Customer Rewards Program
5 | Improved Brewed Coffee
6 | Acquisition of the Clover Brewing machine

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SO WHAT?
1 | New Espresso Machines
Starbucks will phase out its current automated espresso machine, known as the Verisimo, for a higher-quality automated machine. The new Mastrena machine is also an automated machine, but Starbucks believes the quality of espresso and steamed milk is superior to that of their current machine. Starbucks plans to have the Mastreno in 30% of U.S. locations by the end of 2008 and in 70% of U.S. locations by 2010.

2 | Ethically Sourced Coffees
Starbucks will further its relationship with Conservation International in a variety of ways. Customers will notice this relationship with a certification seal on select coffees judged to have been grown and sourced using stringent standards. By the end of 2009, every Starbucks espresso drink prepared around the world will be used with coffee beans certified by Conservation International as being ethically grown and sourced.

3 | Social Media Strategy
Starbucks is following the lead of companies like Dell by introducing a website where customers can submit their ideas on how Starbucks can improve its business. MyStarbucksIdea.com is the company’s first meaningful foray into social media. Howard Schultz will blog here and 48 Starbucks employees will be assigned to engage in conversations with customers on the website.

4 | Customer Rewards Program
Customers with registered Starbucks Cards will able to receive free syrups and free milk options (soy, half & half) when they order espresso drinks. In other words, customers using their registered Starbucks Card will only have to pay for a Grande Latte when they order a Grande Extra Vanilla Light Hazelnut Soy Latte. (The free modifiers do not include shots of espresso.)

Additionally, Starbucks Card customers will also receive 2-hours of free daily in-store wi-fi, free refills on brewed coffee, and a free 12-oz. beverage (espresso, coffee, or Frappuccino) when they buy a pound of whole bean coffee. These are only the initial rewards Starbucks Card holders are set to receive in April. The company plans to add-on more rewards in the months to come.

5 | Improved Brewed Coffee
Starbucks is changing its policies for brewing coffee in-store. They will be brewing in smaller batches and reducing the hold time for brewed coffee from 60-minutes to 30-minutes. Plus, the company will no longer rely on pre-packaged ground coffee filter packs and instead, grind whole bean coffees in-store to brew as drip coffee. A new blend, Pike Place Roast, will be introduced and brewed as an everyday coffee.

6 | Acquisition of the Clover Brewing machine
Coffee geeks rave about the Clover Brewer and high-end coffee shops have been using the Clover Brewer to brew richer, more flavorful coffee. Starbucks has been selling brewed coffee using the Clover Brewer in selected locations in Seattle and Boston. Results of the test have been promising. So promising, Starbucks is acquiring the Coffee Equipment Company, makers of the Clover Brewer. Starbucks has plans to rollout the Clover Brewer to a limited number of locations.

UPDATE: to watch the Clover Brewer in action, click here.

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WHAT TO THINK?
We were promised to learn of transformational initiatives that would reverse the negatives trends impacting the company. We learned of six initiatives. I'm not sure how transformational these initiatives will be.

Let’s judge these transformational initiatives against the objectives Starbucks outlined at the Shareholders Meetings. Will these six ideas (a) improve the current state of its US business, (b) reignite the emotional connection with customers, and (c) invest for long-term success.

1 | New Espresso Machines
The introduction of the Mastrena espresso machine is clearly an investment for long-term success. Starbucks says they will roll-out this new machine to 30% of its U.S. locations by year’s end. We’re talking over 2,000 locations—that’s highly aggressive. Given all the issues of production, distribution, installation, and employee training, Starbucks will be fortunate to have the Mastrena espresso machine in 1,000 locations by year’s end.

Expect this new espresso machine to have little financial impact on Starbucks business in 2008. As for reigniting the emotional connection with customers … that’s hard to measure. Let’s just say friendlier Starbucks baristas will reignite the emotional connection with customers more than an espresso machine ever could.

2 | Ethically Sourced Coffees
It’ll be 2009, when espresso drinks are made with Conservation International certified coffees, before this initiative can improve Starbucks U.S. business. With customers that value environmental issues and origin country matters, this initiative will help to build a stronger emotional connection with them. I’m not sure how many Starbucks customers are emotionally-tied to such issues. However, any activity designed to be friendlier to the environment and to coffee origin countries will be a good long-term investment.

3 | Social Media Strategy
Hmm … I applaud Starbucks for diving into the social media waters. (Really, I do.) I’m just concerned they haven’t done their homework. Chris Bruzzo, Starbucks chief technology officer, made the following statement when introducing the MyStarbucksIdea.com website, “I am not aware of another organization that is investing in making this kind of a commitment to integrate customers and their ideas and their insights into the products and experiences that they develop.”

So we are to believe Starbucks is unaware of Dell’s social media activities with Direct2Dell and more importantly, IdeaStorm. Starbucks can learn a lot from what Dell has done and is doing with social media to better connect with customers.

This marks a major cultural shift within the company. Starbucks has never participated in the online conversational media. It’s not like they can flip the switch to on. Its not that easy. (Just ask Dell.)

Time will tell if Starbucks customers are engaged by this online activity. Time will also tell if Starbucks corporate culture will adapt to social media and when (or if) Starbucks will implement customer ideas. Right now the most popular customer generated idea is for the company to implement a Buy 9 Drinks Get 1 Free punch card. That’s a marketing activity the company abolished a long time ago. How will Starbucks respond now?

4 | A Customer Rewards Program
Clearly, Starbucks is seeking to drive sales by getting current customers to buy more, more often. Offering Starbucks Card customers free syrups and free refills is just the first step in what looks to be a more involved “loyalty program.” This has the potential to drive sales in 2008 and to reignite the connection with customers. The future is a different story. Once Starbucks heads down the path of offering customers discounts, they will have a hard time ever reversing course.

5 | Improved Brewed Coffee
The vast majority of beverage sales at Starbucks, as measured by total dollars, come from espresso drinks, not brewed coffee. Improving their brewed coffee policies is a positive move that the company should have made years ago. Will these changes, including the introduction of Pike Place Roast as an everyday coffee, move the sales needle? No. Improve the emotional connection with customers? No. Be a sound investment for the future? Yes.

6 | Acquisition of the Clover Brewing machine
These new high-end brewers will only impact a small number of stores. Since these brewers make single cups of coffee on-demand, volume selling of drip coffee will not be possible. The Clover brewer will not have an immediate impact on sales in 2008. It does have the potential to impact the future business of Starbucks. Because this appeals to only coffee connoisseurs, I’m not convinced the typical Starbucks customer will care.

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Where do we stand? Let’s take a look at the Transformational Agenda Scorecard…

It appears these six initiatives will have an impact on the long-term Starbucks business, but the short-term impact is minimal. That’s my take. What’s yours?

And yes, I do need to get a life.

Starbucks should do more of this…

No I’m not talking about the re-training of its front-line employees on how to make the perfect coffee drink. I am talking about a video ditty I spied on YouTube. It’s a two-minute documentary of Young Han, a Starbucks barista, talking about his “Got Milk” photo shoot and his appreciation for the Starbucks Coffee Company.

It works great as a recruitment video. Not slick. Not scripted. Just genuine moments and reflections. Have a look…

RSS readers ... click here to watch the video

As we’ve discussed, Starbucks is doing very little to tap into the Third Space communities people are forming online. (Big miss in my book.)

While Howard Schultz may never blog, Starbucks should STRONGLY CONSIDER encouraging its young and talented workforce to post videos of why they feel a connection to Starbucks. They could turn it into a contest similar to Deloitte & Touche’s brilliant Film Fest idea where Starbucks baristas would submit short videos showcasing “What Starbucks Means to Me.” The best 10 videos would be posted on the barren Starbucks YouTube page for all to see.

Each of these top 10 videos would serve as a great recruitment tool for Starbucks. And the creators of these videos could be rewarded in some way, perhaps stock options. A simple idea to execute with potentially big results of attracting a better front-line employee to deliver better customer experiences.

(This is yet another in a series of free ideas from Brand Autopsy and the readers of this blog that Starbucks would be smart to use.)

Howard Schultz Must Blog

As we know, Howard Schultz has returned as CEO at Starbucks.  He’s committed to fixing the “unintended consequences” caused by growing its store footprint at a rapid pace.  Such unintended consequences have included losing the company’s identity and the dilution of the unique customer experience Starbucks once delivered.  Howard has also pledged to refocus the company on growing its relationships with customers.

Writing in the Huffington Post, Jesse Kornbluth raises a valid point,

“It's interesting that Schultz professes to love Starbucks customers but has no apparent interest in hearing from us. How's that, Howard? You're going to thrill us without getting our input? Do you really think focus groups, consumer research and executive offsites will tell you what you need to know? What, exactly, do you think the Starbucks website is for?”

Jesse is onto something when he writes, “Schultz professes to love Starbucks customers but has no apparent interest in hearing from us.”

As evidence by their lack of participation, we know Starbucks, as a company, has refused to blog and refuses to participate in online conversations.  The Starbucks Gossip blog is all the proof the company needs to know that people want Starbucks to join the online conversation.  Yet, the company refuses to have a conversation with its customers (and employees) online.

Clearly, Starbucks was ahead of the curve with tapping into satisfying the consumer need of a Third Place—a place besides home and work where people could form community.  But consumers have evolved from needing a Third Place to needing a Third Space.  This Third Space includes social media spaces like blogs, vlogs, podcasts, Twitter, and many more. These are spaces where meaningful online communities are forming.

Now that the company recognizes it needs to improve its relationships with customers to improve the health of its business, maybe Starbucks will consider blogging.

Better yet, given Howard Schultz’s pledge to growing the company's relationships with customers, he should blog.  He should give us, the 50+ million Starbucks customers who visit his stores weekly, updates on how his company is making the necessarily changes to follow his vision for reclaiming the Starbucks luster. 

Howard recently told Wall Street analysts that, since returning as CEO, he has received thousands of emails from customers and employees who share his enthusiasm for reigniting the emotional attachment people have with the Starbucks brand.  With a blog, just imagine how many more messages Howard would receive from adoring customers and employees who want to see the company succeed.

Howard has always talked about growing his company to get bigger by acting smaller.  And a blog, or some other social media avenue, is the perfect tool to help big companies get smaller in customer’s eyes.  Other CEO blogs like Jonathan Schwartz’s blog and Bob Lutz’s blog have helped to make Sun Microsystems and General Motors, both goliath companies, get smaller in the eyes of customers.  And thanks to encouraging its employees to blog, companies like Microsoft look less pervasive and less evil in the eyes of customers. 

Can you imagine the conversations that would occur if Howard Schultz used the Starbucks website to regularly share updates on how his company is bringing back the old Starbucks juju?  I’m sure many of the Starbucks faithful would be thrilled to read impassioned updates from Howard.  I'm also sure Howard would receive pointed feedback (and yes, un-pointed feedback too) on activities the company should stop doing, start doing, and/or continue doing.

Unfortunately, the Starbucks corporate culture doesn’t sync with social media.  My experience of working deep inside the company tells me Starbucks is extremely careful in how they are portrayed in the traditional media.  They want to be in control of the conversation in the media as much as possible.  Since Starbucks is cautious about how traditional media portrays the company, then no way will Starbucks be comfortable playing in the non-traditional untamed waters of social media.  Do I think this is right?  Absolutely not!

Starbucks helped to popularize the “New Marketing” ethos of spending marketing dollars on making better customer experiences and not on making extravagant advertising campaigns.  In essence, Starbucks baked marketing inside its business.  It didn’t have to advertise because everything about the in-store Starbucks experience was the advertising.

Starbucks still operates under this “New Marketing” ethos but the game has evolved dramatically.  A “NOW MARKETING” movement has emerged and Starbucks hasn’t kept up.  This “NOW MARKETING” ethos is the realization of the prophetic Cluetrain Manifesto where the Internet has changed how customers expect to interact with businesses.  As the Cluetrain writers explain:

"A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies."

In growing its business, Starbucks has always operated under the guidance of “Be everywhere its customers expect them to be.”  This is the rationale for why the company began serving its coffee on United Airlines, expanding Internationally, operating licensed concept locations in airports, selling cold bottled coffee in convenience stores, selling whole bean coffee in grocery stores, etc.

Customers today have a new expectation. 

Customers now expect Starbucks, and other businesses, to engage in conversations with them wherever and whenever.  Be it in the Third Place or the Third Space, customers want to interact with businesses they love.  By being active in the Third Space online, companies show their love for customers by being open to having a conversation with them. 

If Howard Schultz really loves his 50+million weekly customers, he would show it by evolving his company’s culture to adopt the “NOW MARKETING” movement.  If Howard Schultz really loves Starbucks customers, he must blog.  He must carry on a conversation with us.

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UPDATE:  This blog post has been simmering within me for a few weeks.  After hitting the publish button, I ventured over to the Starbucks.com site and hidden in the bottom right-hand corner is a "Howard Schultz Partner Update" link.  This particular update is titled. "What I Know to Be True."  Interesting.  Seems like Howard is using the company website to share his impassioned updates with customers and employees.

Also posted are are transcripts of voicemails to stores regarding the work ahead of the company. 

Of course, it would be better if Starbucks were to open up the conversation, allow comments from readers, and commit to making this an on-going feature.  That way, Starbucks would be embracing the "NOW MARKETING" movement we have come to expect from businesses we adore.

“Buy Anything” starring Howard Schultz

Check out Chris’ tasty riff in the comments section of my Starbucks One-Dollar Cup o’ Joe post. This reference had me laughing …

“If Howard, like John Cusack holding the tape player outside the window in "Say Anything," is using this a tactic to make me pay attention so that he can look deep in my eyes and tell me he's sorry--I might listen if the words and actions seem sincere and real change follows.” [source]

And that reference inspired “Bobby Breve” to send me this visual. Beautiful. (Thanks Bobby.)

Starbucks One-Dollar Cup o’ Joe

Starbucks CEO Howard Schultz once said, “Our marketing will emphasize quality and service, not price.” He’s now doing something different.

In a bigger shift in marketing strategy than spending millions on national television advertising, Starbucks is now selling short-sized cups of brewed coffee for a $1.00 and offering free refills at Seattle-area locations. (Reuters link | WSJ link)

Oh My! That is a MAJOR shift in strategy for Starbucks. Here’s why…

“Starbucks fiercely protects its pricing power because it knows a low-price strategy is the quickest pathway to commoditizing and marginalizing coffee back to being, well, just coffee. It also knows if it lowers prices, it will have a hard time ever raising them again. Most important of all, Starbucks knows higher prices bring them healthier profit margins, which fuel the cozy experience customers enjoy.

By ever deciding to run itself as a priced-to-sell retailer, Starbucks would be admitting it no longer values a unique product or a unique customer experience. Seth Godin, author of Purple Cow, goes one step further, saying that a low-price strategy is “the last refuge of a…marketer who is out of great ideas.” The folks at Starbucks are too smart, too savvy, and too creative to fall for the low-price trap. And if they ever did, Starbucks as we know it—Starbucks as a forward-thinking company—would cease to exist.” SOURCE

Those words were written in TRIBAL KNOWLEDGE, my love story to a company that shaped how I approach marketing. In my eight-years there, we, Starbucks marketers, would have never considered promoting a $1 Cup o’Joe to increase sales. Instead, we would have used of a combination of these ideas to solve for Starbucks problems.

A "cheap coffee strategy" ... Oh My! is right; because, a low-price strategy is indeed the quickest pathway to commoditizing and marginalizing coffee back to being, well, just coffee.

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UPDATE: For an editorial-like cartoon on this "One Buck" Buck strategy, peep this.

Howard Schultz mirrors Michael Dell

Last year about this time Micheal Dell returned to his CEO post at the company he founded. Under Kevin Rollins’s CEO leadership, Dell’s market share hit a four-year low and growth prospects were grim. Rollins resigned and Dell reclaimed his CEO role.

Last year about this time Howard Schultz sent a memo to his Starbucks executive team challenging them to get smarter about how they are running the company and to get back to the company's core business. Starbucks CEO Jim Donald was charged with driving sales and driving innovation at the company. In 2007, Starbucks stock value fell 48% and the company reported its first every year-over-year drop in customer traffic. Donald is out and Schultz is back as CEO.

The jury is still deliberating on Michael Dell and the turnaround of his company.

The jury is just convening about Howard Schultz and the turnaround of his company.

For the most riveting and rambunctious discussion about this unexpected CEO change-over at Starbucks, read the comments on the Starbucks Gossip blog.

McDonald's battles Starbucks

Sensing an opportunity to further democratize espresso, McDonald’s is moving full throttle into the espresso beverage business. Currently, 800 of McDonald’s U.S. locations offer lattes, cappuccinos, and frappes. By 2009, most U.S. McDonald’s locations will be selling coffee drinks ranging in price from $1.99 to $3.29. McDonald’s believes an expanded coffee menu will add about $1-billion in yearly sales.

Writing in the Wall Street Journal, Janet Adamy reports,

The program attempts to replicate the Starbucks experience in many ways -- starting with borrowing the barista moniker. Espresso machines will be displayed at the front counters, a big shift for a company that has always hidden its food assembly from customers. McDonald's says it wants customers to see the coffee beans being ground and baristas topping the mochas and Frappes with whipped cream.

"You create a little bit more of a theater there," says John Betts, McDonald's vice president of national beverage strategy.

The theater element, of having employees preparing food while interacting with customers, is a major shift in company culture for the operationally-efficient McDonald’s system. In the article, Adamy mentions how McDonald’s franchisees have been instructed to hire people who are “very friendly.”

That’s a start to bringing more theatrics to a customer’s McDonald’s experience, but why is hiring “very friendly” people a new behavior for McDonald’s? (Hmm.)

The people component to delivering customer experiences is ultra-important to McDonald’s — more important than the actual coffee beverage program. Why? Because Starbucks competitors can replicate products and programs, but they can’t replicate people.

In TRIBAL KNOWLEDGE, my book sharing business lessons I learned from Starbucks, I wrote about this topic saying …

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Ambitious coffee competitors like Caribou Coffee, Cosi’s, Tully’s Coffee, Gloria Jean’s, Barnies, CC’s Coffee House, and others have all tried to mimic Starbucks success in some way. And they have all fallen short in some way.

These coffee companies have tried and are trying to replicate the products and experiences Starbucks delivers, but they can’t replicate the people Starbucks has delivering the products and experiences to customers.

Products do not create brands, people create brands. It’s the people that matter more in creating a brand than the product itself. And Starbucks places a tremendous emphasis on hiring the right people to deliver exceptional products and meaningful experiences to customers.

When hiring employees for store-level and corporate-level positions, Starbucks looks for the following upstanding “people” qualities in each candidate: genuineness, conscientiousness, knowledge, and involvement.

Genuineness
Genuine people build solid relationships with others because they are approachable and likeable. Starbucks employees who are genuine make for great team members, and they can be trusted to deliver heartfelt customer service.

Conscientiousness
A conscientious employee is one who is considerate and pays attention to seemingly insignificant details because everything matters to them. And since “everything matters” at Starbucks, this quality is of utmost importance in all employees Starbucks chooses to hire.

Knowledge
Starbucks employees are expected to know coffee to the extent that they will confidently share their coffee knowledge with customers. To find employees with this quality, Starbucks looks for people who ask questions. Asking questions at Starbucks is not a sign of weakness. It’s a sign of strength. Inquisitive employees lead to knowledgeable employees and knowledgeable employees are quicker to share their expertise with others.

Involvement
Employees who get involved within the company and within their community are valued at Starbucks. When employees take the time to get involved and make connections with others, they showcase a caring soul. Starbucks seeks to hire caring souls because they are more likely to make emotional connections with people.

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Even if McDonald's can successfully change its company culture to hire engaging employees, it still must solve for how to integrate its highly-involved coffee program with its streamlined operations customer have come to expect.

As Adamy writes, “Still, the new coffee program is a risky bet for McDonald's. It could slow down operations and alienate customers who come to McDonald's for cheap, simple fare rather than theatrics.”

Solving Starbucks Problems

As a leading authority on customer evangelism and word-of-mouth marketing, Jackie Huba has added her voice to the discussion about the problems Starbucks is facing. She highlights how Starbucks losing its authenticity has driven the company from using customers as its primary advertising vehicle, to using national television commercials as an advertising vehicle.

Back in March, Paul Williams and I dissected many of these authenticity issues Starbucks faces in a series of back-n-forth blog posts. Together, Paul and I have a combined 19-years of marketing experience with Starbucks and we tapped into that experience to talk strategies and tactics Starbucks could follow to reclaim its authenticity.

At the time, we were responding to Howard Schultz’s leaked internal memo where he admitted that Starbucks has “… had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, some might call the commoditization of our [Starbucks] brand.”

Our series of posts have been given new relevance since Starbucks has decided to use national television advertising to solve some of its business problems. Re-read, or read for the first time, the laundry list of strategies and tactics Paul and I believe Starbucks could implement to become the company it once was.

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We began by addressing the LOSS OF COFFEE THEATRE issue:
Paul analyzed the switchover from the La Marzocco espresso machine to the Verisimo automatic machine and offered up tactical ideas Starbucks can use to course-correct itself back to espresso authenticity. I riffed off Paul’s post and added the idea Starbucks needs to give permission to store partners to showcase their flair and personality while on the bar in order bring some of the coffee theatre back.

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Next on our list was the LOSS OF COFFEE AROMA issue:
I explain in detail how “operational efficiencies” (not Flavorlock packaging) have led to Starbucks stores no longer smelling of coffee. I offer the quick-fix solution of finding ways to grind coffee in-store again. Paul disagrees with my exoneration of Flavorlock packaging and he smartly offers up the idea of implementing an “Aroma First” rule. This “Aroma First” rule would have Starbucks making in-store decisions based upon how any proposed activity would impact the aroma of coffee inside a Starbucks.

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We also addressed the LOSS OF STORE SOUL issue:
Paul breaks down what it means to be a Mom & Pop shop and gives specific ideas on how Starbucks store design should stop being all things to all people at all its stores. I offer up thoughts on how Starbucks should give more control to its stores to run store-specific marketing programs and post store-specific marketing signage.

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We touched upon the LOSS OF MERCHANDISE focus:
I explain how Bearista Bears and Finger Puppets sell very well, but it a great cost to the brand. As a solution, I propose Starbucks ask itself two questions to ensure its merchandise focus: (#1) Does the product link directly to coffee? If yes, sell it. If no, don’t. (#2) Does the quality of this product match the high-quality of Starbucks coffee. If yes, sell it. If no, don’t. Paul adds-on and modifies my two questions by asking if the merchandise links directly to either the preparation, consumption, and/or enjoyment of coffee. He closes his thoughts by expressing just because Starbucks can sell music, DVDs, and plush toys doesn’t mean they should.

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We close by addressing the LOSS OF IDENTITY issue:
Paul likens Starbucks returning to its core to restoring antique furniture to its core, original finish. He also brilliantly points out Starbucks needs LESS INNOVATION and MORE EXPLORATION. Starbucks didn’t invent coffee, it explored the world of coffee and brought interesting flavors to its customers. Paul says Starbucks should concern itself with digging deeper into the world of coffee and uncover exotic coffee concoctions and share them. I take the IDENTITY conversation in a different direction and explain how Starbucks needs to standup to the bullies working on Wall Street by pruning all of its unhealthy growth in order to rejuvenate its soul and refertilize its reason for existing.

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For even more ideas on how Starbucks can solve its business problems, read what myself and a cadre of other marketing-minded folks have to say in the WHAT MUST STARBUCKS DO? manifesto published online by ChangeThis in April of 2007.

Pass the Cheer Starbucks TV Ad

UPDATED [Nov. 27]: Starbucks has posted all three of their Holiday television commercials online. You can view them here.

The "Bear Hug" and "Window Washer" spots continue the good Samaritan "Pass the Cheer" angle with the major difference being the focus on the Starbucks Red Cup. The Red Cup is so much more recognizable as being Starbuckian than is the red Christmas Blend whole bean bag (seen in the Ski Lift ad).

As a marketer, I would like the closing shot on these two spots to linger a little longer. Both of these new commercials close with the Red Cup holiday beverage focus. However, the closing payoff shot feels rushed. Not enough time for us viewers to read, understand, or connect with the copy on the draped banner. They could have easily shaved off a second or two in the build-up and added it to the closing payoff shot for more effectiveness. Have a look for yourself. Click below...

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Lots of c-h-a-t-t-e-r about the television spots Starbucks is running. I haven't seen them on the tele, but Starbucks has posted one spot online.

Click below to watch the commercial....

Hmm ... okay. Starbucks waited 36-years for this? It's nice. It's benign. It's subtle. Can't see how this spot will drive in new customers, nor drive current customers to come in more often during the Holidays. (And yeah, I know this is just one component to the overall Starbucks Holiday promotion.)

What's your take? Does this television ad make you feel any different about Starbucks? Does it make you want to visit a Starbucks and buy some Christmas Blend?

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UPDATE:

In the comments section, Scott questions how this TV spot syncs up with Starbucks brand identity.

Great point. The missing ingredient of Starbucks first national television commercial is brand identity. This spot feels more appropriate for Caribou Coffee than it does Starbucks. (For those unaware, Caribou Coffee is the second largest coffee retailer in the US. According to Wikipedia, Caribou has over 460 locations in 18 states.)

Caribou's brand identity is wrapped around the cozy ski lodge concept as well as the leaping deer in its logo. The in-store décor of a Caribou Coffee location is reminiscent of a ski lodge, complete with exposed weathered wood and comfy chairs around a fireplace. (Photos here, here, and here.)

The leaping deer, which easily passes for a reindeer during the Holidays, is as iconic to Caribou as the Siren is to Starbucks.

Additionally, Caribou uses a pastel aqua-blue color as part of its brand identity.

So upon further review, this commercial from Starbucks works better for Caribou Coffee than it does for Starbucks. Ski scenes are more associated with Caribou than Starbucks. A deer is more linked to the Caribou brand than the Starbucks brand. Caribou’s color scheme has always been drenched in an aqua-blue color, while Starbucks color scheme hasn’t.

Upon even further review, this Starbucks commercial fails the “Logo Test.” If we were to swap out the Starbucks Christmas Blend bag at the end of the spot and replace it with Caribou’s Reindeer Blend, the commercial would still work just fine. Anytime you can swap out your logo for a competitor’s logo in any piece of marketing collateral and it looks fine, you have a problem.

So ... Starbucks, with its first national television commercial, has made a great ad for Caribou Coffee.

Starbucks Television Advertising

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UPDATE: Click here to watch one of the Starbucks Holiday commercials.

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What?
On a conference call with Wall Street analysts, Starbucks Coffee revealed fewer customers are visiting its stores and that year-over-year sales are stagnant. The company reported a 1.0% drop in customer traffic as compared to the same period last year and despite two price increases, same store sales increased only 4.0% from the year prior.

In response, Starbucks announced a three-point plan to reverse their sluggish financial numbers. First, the company will attempt to sharpen its store-level operations to better deliver the “Starbucks Experience” customers have come to expect. Second, the company will focus on introducing new beverages that are more innovative and more appealing to customers. Third, Starbucks will launch a national television advertising campaign in hopes of driving new customers into its stores as well as getting current customers to visit more often.

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So What?
Since being a publicly traded company, Starbucks has never experienced a reduction in customer visits. Remarkably, they have always had more customers visiting its stores … until now. This is uncharted territory for Starbucks. And Starbucks is concerned.

Additionally, for nearly a decade, year-over-year sales at Starbucks have been very strong—anywhere from 7.0% to 13.0%. So the current trend where comp sales are stagnate in the low single-digits is quite alarming for Starbucks.

For many companies, the answer to the question of, “Sales are down and customer counts are falling, what should we do?” is to spend marketing dollars on creating a television-heavy advertising campaign. That hasn’t been the answer at Starbucks.

Starbucks has always followed the unconventional strategy of using its in-store experience as its main marketing tool. Everything about the Starbucks experience marketed the Starbucks business: the coffee in the iconic white logo cup, the personal interaction between a customer and a Starbucks barista, the in-store decor, the music playing overhead, the welcoming smell of the coffee, and the feeling customers had during their Starbucks “moment.”

As noted in the conference call, Starbucks will continue down the unconventional path of spending marketing dollars to improve the customer’s in-store experience through better store operations and more appealing beverages.

But now, the company has also decided to follow the more conventional path to arresting declining sales through launching a television advertising campaign. According to Ad Age, we can expect to see three Holiday-focused animated 30-second spots running on select cable channels and network television channels.

This dramatic change in marketing strategy goes to show us how seriously the company is taking the soft comp sales and declining transaction comps. Starbucks is willing to risk its go-to-market strategy by spending significant monies on television ads to lure customers during the Holiday season.

To this marketer, it’s a little foolish to spend advertising dollars on television during the Holiday season without going all-out. I doubt Starbucks is putting mega-millions behind this television push. With so many retailers spending mega-millions on television advertising during the Holiday shopping season, the limited advertising spend from Starbucks is sure to get lost in all the ad clutter. Plus, I get the feeling these commercials will be go hard on pushing the relevance of the Starbucks brand during the Holidays and go very soft on selling specific products.

A smarter spend for Starbucks would be to go all-out during the Spring/Summer months and use television advertising to promote their promotion-friendly Frappuccino blended beverages. Starbucks has always treated their Frappuccino drinks as being more promotional than their other coffee drinks. For years, Starbucks has done regional radio, billboard, and print advertising to support their Frappuccino portfolio. They’ve come to believe this advertising push positively impacts sales and drives in new customers.

So why doesn’t Starbucks wait until the Spring/Summer months to go all-out with national television advertising? With sales already sluggish and customer traffic trending downward, the company doesn’t want to get too far behind their FY’08 sales goals. Keep in mind, Starbucks will generate around 25% of its 2008 sales during the six-weeks of Holiday. If the company falls behind early in hitting sales targets, 2008 could be a very rough year.

I believe this national television advertising push is a sign Starbucks is desperate to drive sales. Desperate enough to turn its back on the marketing strategy that has made Starbucks what it is today.

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What Now?
We all get to sit back, watch the television commercials, and watch to see what impact this new marketing direction has on the Starbucks business and the Starbucks brand.

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Want More?
Consider reading the What Must Starbucks Do? Manifesto. In April, I, along with a handful of other Starbucks customers, published a manifesto loaded with ideas on what Starbucks must do to reclaim its uniqueness, to better connect with customers, and to become the coffee company it once was. Read it again. Or, read it for the first time. >> MORE <<

If your appetite for mulling over Starbucks strategies is insatiable, you should review the series of posts Paul Williams and I did earlier this year. In this series of back-and-forth posts, we talked strategies, tactics, and shared some insider knowledge based upon our combined 19-years of marketing experience at Starbucks. Start here and work your way backward. Or, start here and work your way forward.

And of course, Jim Romenesko's Starbucks Gossip blog is all over this.

Who got Starbucked?

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Taylor Clark’s STARBUCKED: A Double Tall Tale of Caffeine, Commerce, and Culture is receiving lots of positive ink. The Wall Street Journal loved it. As did the San Francisco Chronicle. It’s being positioned loftily as a “Part Fast Food Nation, part Bobos in Paradise” treatise on coffee and capitalism.

Taylor’s book is interesting reading but not necessarily mandatory reading for business folk and cultural studies folk. He traces the Starbucks story well from its inception in 1971 to its impact in 2007. However, it lacks punch.

(Keep in mind, I’m very close to this story having spent my formative marketing years working at Starbucks Coffee as well as written a book about what I think makes Starbucks a successful business.)

In expected alt-weekly journalism fashion, Taylor, a former writer with Portland’s Willamette Week alt-weekly, runs down the same old story of Starbucks opportunistic and capitalist ways.

Yes, Starbucks is hyper-competitive. Yes, Starbucks seeks prime real estate locations. Yes, Starbucks could do more to support coffee farmers. Yes, Starbucks added sizzle to the experience of drinking coffee. Yes, the familiarity of Starbucks brings about opinions of homogenization. Yes, Starbucks charges an ungodly premium for its coffee drinks. Yes, Starbucks has a strong corporate culture ethos. That we know.

While I found much of Taylor’s book to cover well-trodden territory, he managed to talk with lots of former Starbucks executive heavies. And the quotes these ex-Starbucks higher-ups shared with Taylor are at times fascinating. I wasn’t expecting to read such sulliable and ego-laden quotes. Which leaves me wondering if these past Starbucks execs weren’t Starbucked.

Taylor caught Howard Behar, former big-time Starbucks exec and current Starbucks board member, with some choice comments When asked about Howard Schultz’s vision of selling espresso beverages back when relatively few people could pronounce it, much less enjoy the taste of it, Behar is quoted as saying, “Howard will always say he knew this would work, but he’s full of shit. We didn’t know how it would turn out.” (p. 53)

When the topic of Tom O’Keefe, founder of regional coffee competitor Tully’s, comes up, Behar is quoted as blurting out an emphatic, “Fuck him.”(p. 128) And when Behar talks about critics referring to the taste of Starbucks coffee as burnt, he’s quoted as saying, “What used to piss me off was when they’d say ‘Charbucks.’ That’s like walking into a gallery and saying, ‘Your art is shitty.’” (p. 70)

Scott Bedbury, former Starbucks Marketing VP, provided Taylor with some choice fodder as well. In talking about the role quality espresso drinks play at Starbucks, Bedbury is quoted as saying, “To be honest, you could train a monkey to pull a double-shot. It’s just not that hard.” (p.88)

Engle Saez, another former Starbucks Marketing VP, shared some candid comments about Starbucks true competitive advantage. Taylor quotes Saez as saying, “Starbucks doesn’t have a lockdown patent on the environment; it doesn’t have a lockdown patent on the experience; and it doesn’t have a lockdown patent on the bean or the roast. All of those things can be duplicated. So what it comes down to is the dominance of real estate. That’s the one area where no one can out muscle Starbucks.” (p. 115)

You’ll have to read the book to take in more choice candid comments from past Starbucks players. Starbucks insiders will get a kick outta how Taylor portrays former Starbucks Real Estate head Arthur Rubinfeld. (Oh my.)

Taylor and I actually spoke some months ago when he was in the process of writing STARBUCKED. I do not recall much about the conversation we had except the writer seemed young and guarded about the angle he was taking with the book. The quotes Taylor includes in the book from me are benign. Then again, I’ve already shared lots of pointed comments about Starbucks on this blog and Taylor had many former executive-level Starbucks people eager to riff about the company they once worked for.

Kudos to Taylor Clark for getting ex-Starbucks folks to open up and share some off-brand and at times, acrimonious remarks. I’m sure some of these folks will not be pleased with how they are portrayed.

As far as STARBUCKED being a book business enthusiasts would find worthwhile, I don’t think so. Just not enough business knowledge nuggets for us business wonks to learn from. However, the cultural studies crowd might find this book somewhat worthwhile … just not near as worthwhile as Fast Food Nation or Bobos in Paradise.

How Tiffany Saved Michael’s Life

In HOW STARBUCKS SAVED MY LIFE, Michael Gates Gill shares the story of how he dropped out of the corporate rat race and found happiness while working a $10.50/hr job as a Starbucks Barista. Michael’s story is interesting. However, the more interesting story is about Tiffany Edwards.

Tiffany, who Michael portrays as “Crystal Thompson” in the book, was the Starbucks store manager who hired him, an older worker with no relevant experience in the food service business. Michael’s relevant experience was as a former advertising executive and business consultant. Tiffany looked past Michael’s advancing age, his lack of food service experience, and his past-pampered professional life to hire him as an entry-level Starbucks Barista.

In his first couple days on the job, Michael became very concerned. He realized the job of being a Starbucks Barista was going to be much more difficult than he imagined. Michael writes, “I had originally thought that a job at Starbucks might be below my abilities. But now I realized it might be beyond them. This job could be a real challenge for me—mentally, emotionally, and physically.”

Keep in mind Michael was dealing with lots of issues in his life during this time. His consulting business was defunct, the relationships with his children were defunct, and due in part to an affair … his marriage was defunct. Also during this time he was diagnosed with a brain tumor. Michael’s whole belief system was shattered.

Tiffany helped to restore Michael’s belief system by being welcoming, considerate, and genuine. It just so happens those people qualities of being welcoming, considerate, and genuine are life skills Starbucks looks for in store-level employees, especially store managers.

Whenever I share with businesses some of the Starbucks Tribal Knowledge I learned from my days there, I always mention the importance of Making the Company Something to Believe In. This is about building an internal corporate culture where employees go way beyond being minions to being missionaries. When you make the company something to believe in, employees will talk about the quality of the company itself, the values the company endorses, and the ways in which their lives are enhanced because of it.

That’s what Tiffany did with Michael. All throughout the book, Michael gushes about how he believes in Starbucks. Michael learned those beliefs from the verbal and physical articulations of his superstar store manager, Tiffany Edwards. Read how Michael describes his Starbucks experience …

“I had found with Starbucks a better reality … not based on external status symbols but on a real feeling of confidence and support and genuine affection and even admiration for and from the Partners and the Guests. And Crystal. Crystal and Starbucks had saved me. Saved me from my pursuit of empty symbols, but also my anxiety about a fear-filled superficial life that hadn’t been, in the end, helpful or even enjoyable for me.”

An amazing story! Tiffany Edwards (“Crystal”) played a huge role in restoring Michael’s belief system by embodying the best qualities of the Starbucks corporate culture. Yet, we have heard nothing on record from Starbucks about this book, Michael Gates Gill, or Tiffany Edwards.

Starbucks seems to be purposely avoiding any connection to the HOW STARBUCKS SAVED MY LIFE story. Why is this? I don’t know.

Starbucks talks about getting bigger by acting smaller. As it relates to Michael and Tiffany, Starbucks is acting big, not small.

A big company avoids celebrating stories like the one in HOW STARBUCKS SAVED MY LIFE because it wasn’t “approved” by the company. On the other hand, a small company celebrates such a story because they are thrilled to have made a difference in an employee’s life.

Is it too much to ask for a blurb on the back of Michael’s book from Howard Schultz showing appreciation to Michael for sharing his inspiring story of finding happiness in life from being a Starbucks Barista? Is it too much to ask for doing an in-store book signing and reading at a couple Starbucks locations? Is it too much to ask for Starbucks to invite Michael to company headquarters to give a presentation to corporate employees on how life as a Barista gave his life meaning and purpose?

I don’t think so.

All of those simple acts would be ways Starbucks should act to get bigger by being smaller. Maybe Starbucks is doing some of these small things and I am just unaware. I hope that is the case because embracing the HOW STARBUCKS SAVED MY LIFE story is a simple way Starbucks can get small despite being big.

More EGM (Employee-Generated Media)

In the preceding post I mentioned how accounting firms are using Employee-Generated Media (EGM) in the form of short videos to help recruit new employees.

How about this instance of EGM … the just-published HOW STARBUCKS SAVED MY LIFE.

Michael Gates Gill, a former ad-exec, dropped out of the corporate rat race and found happiness while working a $10.50/hr job as a Starbucks Barista. Michael chronicles his self-discovery story in HOW STARBUCKS SAVED MY LIFE. (Read an excerpt here.)

It’ll be interesting to see how (or if) Starbucks embraces this book as an act of “employee-generated media.” Having a book on the market extolling the virtues and values of a company treating its employees well can only help in the recruitment of new employees.

On a side-note … Gill’s Starbucks story is remarkable, but not isolated. There are numerous stories of corporate refugees finding solace as a Starbucks Barista. I recall one such corporate refugee parlaying her Starbucks Barista job into being a Starbucks Zone Marketing Director.

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Learn more about Michael's story:
>> USA TODAY article
>> NY Times article
>> WSJ Journal review
>> Reveries article

an Audacious Marketing Idea

Dannielle Blumenthal has an audacious marketing idea for Starbucks. I think for an idea to be audacious, it must make us squirm ... not squirm a little, but squirm a lot. When an audacious idea is first presented, most businesspeople will believe the idea is ill-advised, absurd, inconceivable, and just too audacious to do. Danielle's idea certainly fits the criteria for being labeled AUDACIOUS.

Her idea for Starbucks is to KILL THE BRAND and replace it with a another one. Dannielle writes ...

"... kill the brand while it's still at its peak, and replace it with another one. Right now. Today, the Starbucks brand is extracting the absolute most it can from its brand equity. It is at the top of the hill. It has nowhere to go but down. The company should pull back and create another, new brand "from the makers of Starbucks" which redefines the coffee category and gets back to the essence of what Starbucks used to be all about." MORE

Yep, that idea seems ill-advised, absurd, inconceivable, and just too audacious to do.

Starbucks Documentary

WHAT : Documentary tracing the history and impact of Starbucks
WHEN : Wed., August 29th at 9:00 pm (EST)
WHERE : Biography Channel

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This should be worth watching. From my emails with the documentary producers, it appears they casted a wide net of talking heads to provide perspective on how and why Starbucks became an endearing and enduring business.

LEARN MORE HERE and watch on Wednesday.

Green Apron Stories

There’s a new addition to the online scene sharing tid-bits about Starbucks. We know about the StarbucksGossip blog. But have you been reading Pat Nerr’s GREEN APRON STORIES blog?

“Pat Nerr” is a former long-time Starbucks partner having managed many a Starbucks store. Not sure if he worked at Starbucks corporate headquarters; however, from his blog its clear he has connections and insider knowledge about Starbucks HQ.

Pat’s recent posting about his Starbucks store going head-to-head against a Tully’s Coffee shop shares lots of insider Starbucks perspective on store-level operations. (The nugget about monitoring customer counts at Tully’s is priceless.)

You should also read his list of unique Starbucks sayings as well as his ditty on life as a clopener. Interesting stuff.

Peet’s CEO Speaks

photo from flickr

I’ve always admired Peet’s Coffee — even when I was a die-hard Starbucks marketer. On market trips to California I would always bring back a pound (or two) of Peet’s whole bean coffee. And every Christmas I would order Peet’s Holiday Blend to compare with Starbucks Christmas Blend.

Peet’s has managed to maintain its coffee authenticity all the while growing at methodical pace. Peet’s authenticity stems from Alfred Peet who is regarded as the “grandfather of specialty coffee” in the US.

Alfred Peet’s story is remarkable. His father was a coffee roaster in the Dutch village of Alkmaar. In 1938, when Alfred was 18 years-old, he began helping his father roast and blend coffee beans. During WWII, Alfred was forced into a German labor camp. By 1948, Alfred left his domineering father and spent time in Java and Sumatra. While in the Indonesian Islands, he gained an appreciation for exotic, full-bodied Arabica coffee beans. In 1955, Alfred found himself working for a coffee importer in San Francisco. Eventually, he became unsatisfied with the poor quality of coffee the importer was roasting and selling.

Finding himself unemployed in 1965, Alfred Peet decided to open up his own coffee shop roasting and selling high-quality coffee. Peet’s Coffee & Tea opened for business on April of 1966 in Berkley, CA. (It was a few years later when three coffee-loving friends opened up a coffee shop in Seattle, WA selling Peet’s coffee. That coffee shop was then known as Starbucks Coffee Tea & Spice.) [source material from UNCOMMON GROUNDS, Mark Pendergrast]

So the authenticity Peet’s Coffee & Tea has is real … and today, the company is publicly-traded with 150 locations (mainly in California).

Patrick O’Dea has been the CEO of Peet’s since 2002 and in an informative interview with Fortune magazine, O'Dea shared some perspective on how Peet’s competes in coffee world dominated by Starbucks.

FORTUNE: How do your stores compare with Starbucks?

O’DEA: “We're fundamentally different from other coffee shops. Our average sales for stores open at least three years are $1.3 million, which compares to about $1 million for a Starbucks. Of that, $500,000 comes from sales of whole bean coffee and tea. When you walk into our stores, you will find a bean counter with 32 bins of fresh beans, and we scoop to order. You can also order a beverage, which accounts for the other $800,000. We sell a lot more straight-up coffee than Starbucks does. We do have a blended cold drink line called Freddos, but we sell very few beverages in our stores that don't contain coffee. Our prices are about 10 percent higher than Starbucks.”

FORTUNE: What do you make of Starbucks' [chairman] Howard Schultz's recent memo warning against the "commoditization" of the Starbucks brand?

O’DEA: “I think whenever you get that large, there is always pressure to continue to drive comp-store sales. But you have to be careful about how you go about doing that. We are indifferent to where you buy your coffee - in the grocery store, via home delivery or in our stores. As a result, we do not report comp-store sales because that would cause us to do unnatural things. Even though 68 percent of our business is from retail stores, we don't view ourselves as a retailer.”

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For more … read the Fortune Magazine interview.
For much more … read the dissection Paul Williams and I did on the Howard Schultz memo noted above.
And for much, much more … read the WHAT MUST STARBUCKS DO? manifesto.

The Languages of Customer Service

Korean entrepreneurs in Los Angeles have long-since learned conversational English. Now they are also learning conversational Spanish as a way to deliver better customer service and to increase sales. From a Wall Street Journal article we learn…

“More than a courtesy, the language exchange is born out of economic necessity. Korean immigrants here often open liquor stores, garment factories and other small businesses that don't necessarily require English language skills to run them. Their employees, by and large, consist of another group of recent immigrants who don't speak English -- mostly Mexicans and Central Americans. The upshot: Many Korean business owners figure it's more urgent to learn Spanish than it is to master English.” [source]

This learning of different languages to improve customer service reminds me of a Starbucks company campfire story...

In the late 1990s, an enterprising Starbucks store manager noticed that more and more deaf customers were frequenting her store. At first, this store used paper notes and awkward hand motions to communicate with these customers. But the store manager wanted to make these deaf customers feel more welcomed in her store so she, and a handful of her staff, began learning sign language. By learning a different language to speak with these deaf customers, this Starbucks store became a hub for the local deaf community. Business increased, customer respect increased, and customer loyalty increased all thanks to learning a different language customers were speaking.

Bryant Simon on Starbucks

Who:
Bryant Simon, Professor of History and Director of the American Studies Program at Temple University

What:
an 18-minute lecture on the cultural ethos of Starbucks

Why:
It’s an intoxicatingly brilliant and thoughtful look at the cultural ethos of Starbucks from a history professor who has spent far too much time deconstructing Starbucks. I am eagerly anticipating Bryant’s forthcoming book, CONSUMING STARBUCKS.

Watch:

RSS readers … click here to watch the video.

Starbucks TV News Story

(Click above to watch)

Sue Kwon of KPIX-TV in San Francisco recently did a story on the influential power of Starbucks as a retailer of products beyond coffee like books, music, and other stuff. Sue included me as a talking head in the piece. If interested, watch the segment by clicking here or by clicking the image above.

And rumor has it the Biography Channel is finishing up a documentary tracing the history and the impact of Starbucks Coffee. I’ll share more when the airdate becomes known.

Manifesto : WHAT MUST STARBUCKS DO?

In February, I asked you to submit ideas for what Starbucks must do to reclaim its uniqueness ... to better connect with customers ... and to become the coffee company it once was. Your ideas, along with a few of mine, have been turned into a ChangeThis! Manifesto.

(Of course the motivation for this project came from Howard Schultz’s leaked email in which he expressed concern Starbucks is in danger of losing its soul, its uniqueness—its remarkability.)

Thanks to everyone who submitted their ideas. Not all submissions made it into the manifesto, but a good chunk of them did. Take pride everyone. You shared many great ideas that Starbucks would be wise to follow-up on.

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Read the manifesto by clicking below …

*** Or, just click here. ***

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If your appetite for mulling over Starbucks strategies is insatiable, you should review the series of posts Paul Williams and I did last month. We talked strategies, tactics, and shared some insider knowledge based upon our combined 19-years of marketing experience at Starbucks. Start here and work your way backward. Or, start here and work your way forward.

GRANDE EXPECTATIONS

Business books have typically focused their view of Starbucks from the eyes of a marketer. GRANDE EXPECTATIONS: A Year in the Life of Starbucks’ Stock; however, presents Starbucks from the eyes of an investor.

The author, Karen Blumenthal, has spent years on the investment beat as a journalist for the Wall Street Journal. She uses her unique perspective to tell the story of the Starbucks business from the perspective of the investment community. This shift in view makes for an interesting read.

Karen’s well-written Starbucks story begins on the first day of trading in 2005 where Starbucks stock closed down a $1 to $61.14. Along the way she goes deep into explaining P/E ratios, buybacks, and earnings analysis in such a way creative marketers like me can understand.

One of the more fascinating angles in the book is the explanation of how the same-store-sales measurement came into vogue. Karen introduces us to Jerry Gallagher, who as a retail stock analyst in 1970s, wondered how much a company’s sales came from new stores versus existing stores. Gallagher developed "… his own method for sorting out how existing stores were faring without the obvious benefit from brand-new stores.” Today, the same-store-sales measurement is widely used as a way to gauge the health of a retail business.

Since 1992, Starbucks has recorded annual same-store-sales growth of 5.0% or greater. To continuously goose same-store-sales, Starbucks regularly introduces new, more indulgent and more expensive beverages like the Dulce de Leche Latte. The company also attempts to increase same-store-sales through selling music CDs and expanding its food offerings.

In GRANDE EXPECTATIONS, Karen outlines how Starbucks can increase its same-store-sales by a full percentage point if each store sold just two additional music CDs a day. Karen also explains how increasing lunch offerings (salads and sandwiches) at stores can contribute to yearly store-level sales increases of $30,000, resulting in driving up company-wide same-store-sales figures.

GRANDE EXPECTATIONS is a quick read that Starbucks junkies, like me, will learn something new from.