Brand Autopsy

Espresso Sessions

Okay ... I never intended for LIGHT BLOGGING AHEAD to mean NO BLOGGING. But I've been busy and the respite from blogging on Brand Autopsy has been nice.

As I mentioned on a previous post, I was invited by Rich...! (Missing Link [business], Jo'blog [blog], and Hello World [blog]) to be a part of Standard Bank's ESPRESSO SESSIONS.

In these sessions, Standard Bank invites some of their small business and entrepreneurial clients to an early morning power breakfast designed to jumpstart their day with coffee, connections, and kick-ass business ideas. Along with cricketer turned banker dude, Jonty Rhodes (bio | photos), we all shared espresso-sized shots of business ideas and ideals during the aptly named ESPRESSO SESSIONS with folks in Cape Town, Durban, Pretoria, and Johannesburg.

Rich...! told us how First Impressions Lie and his theory on Strategic Cursing. While Jonty served as jovial host and shared business applicable experiences from his cricket playing days. As for me ... I gave my Starbucks Tribal Knowledge spiel.

I'll blog more about my takeaways in the days/week to come. Until then, here is a photo of the Espresso Sessions Trio:

Jonty, johnmoore, and Rich...!

Starbucks Talking Walls

A nugget of Starbucks Tribal Knowledge is the concept of ‘Talking Walls.’ Howard Behar, a long-time and since retired Starbucks executive, used to walk into a Starbucks and listen to the walls. Yep … he would listen to the walls.

Forget scouring over a store’s P&L report or reviewing employee surveys, Howard could gauge a store’s profitability and employee moral just by hearing what the walls were saying.

Stores with walls talking good vibes were usually more profitable and had lower employee turnover rates. While stores with walls mumbling bad vibes were usually struggling profitability-wise and had a difficult time keeping a full staff.

I was reminded of this ‘Talking Walls’ concept from reading Seth Godin’s post about a nice Starbucks experience he had recently. Seth clearly heard the walls talking good vibes as he comments on how Starbucks bakes marketing into its business through its employees. Seth writes ...

"Inside the Starbucks, the first thing I noticed, tucked deep in the corner, not for customer inspection, apparently, was a bulletin board. The bulletin board was jammed with pictures of the staff. The staff on a picnic. The staff at an amusement park. The staff kidding around.

That very same staff was working behind the counter. If it's possible to make an herbal tea with enthusiasm, they were doing it. If it's possible to make a $4 transaction feel joyful, they accomplished it.

Okay, the obvious thing here is that this is the Starbucks marketing effort, almost in its entirety. They don't advertise, they don't launch new products every day, but they are selling the way it makes you feel to purchase something there. And I have to tell you, it made me feel great.

The less obvious thing is that the folks behind the counter weren't making this up. It wasn't inauthentic. They had decided to enjoy their jobs, they were enjoying their jobs and it was helping not just Starbucks, but it them, too. All I had to do was glance out the window to see the difference." MORE from SETH

Howard Schultz in Spin Control

BusinessWeek’s strong take on Starbucks ‘disappointing’ results with their Hear Music Media Bar drew the ire of Howard Schultz, Starbucks chairman. In a letter to the editor, Howard, with corporate spin cycle verve on high, defended how the Hear Music Media Bars “… are just one element of a much broader strategy that has already made some very real and radical changes in the way music is marketed and delivered to consumers.”

I decided to run Howard’s business speak-laden letter through the BULLFIGHTER INDEX to determine how much bull he was spewing. Turns out Howard was spewing a whole lotta bull. The instant diagnosis from my Bullfighter Index software add-on was:

You like to hear yourself write. Despairing of the thought of bringing a sentence to a close with something as demeaningly ordinary as a simple period, you shower readers with gratuitous, interminable and often weighty if not impossibly labyrinthine prose. Meaning lingers, albeit awash in a thick tide of metaphor and exposition that threatens to drown the writer's message. Seek help. [source: Bullfighter Diagnosis]

You can read Brand Autopsy’s take on the BW article here as well as my prior takes on the Starbucks music download strategy here and here.

Howard's complete letter to the editor can found on BusinessWeek.com or by clicking below.

The Evolution of the Starbucks Logo

The Deadprogrammer's Cafe Blog did some expert sleuthing to show the evolution of the Starbucks logo from the old school brown Nordic-inspired woodcut to the slicker, more contemporary logo we know today.

However, this logo evolution story failed to highlight the significant role the Il Giornale logo played in the evolution of the Starbucks logo. If it wasn't for the green circle-shaped Il Giornale logo, the Starbucks logo may never have become what it is today.

(Il Giornarle was the espresso café Howard Schultz opened up in 1986 after failing to convince the original owners of Starbucks to focus on serving espresso beverages. By 1987, the two remaining original owners of Starbucks decided to sell the business and Howard jumped at the chance to buy Starbucks and remake it into the espresso bar concept he had just begun at Il Giornale.)

Lifting words directly from Howard Schultz’s POUR YOUR HEART INTO IT, here’s a more complete evolution of the Starbucks logo.

1971 - 1987

"Terry [Heckler] also poured over old marine books until he came up with a logo based on an old sixteenth-century Norse woodcut: a two-tailed mermaid, or siren, encircled by the store’s original name, Starbucks Coffee, Tea, and Spice. That early siren, bare-breasted and Rubenesque, was supposed to be as seductive as coffee itself." [pg. 33]

1986 - 1987

"Our logo reflected the emphasis on speed. The Il Giornale name was inscribed in a green circle that surrounded a head of Mercury, the swift messenger god." [pg. 88] (Note: Please excuse the poor condition of the Il Giornale logo. I scanned the image from a many times photocopied memo from Il Giornarle letterhead.)

1987 - 1992

"To symbolize the melding of the two companies [Il Giornarle and Starbucks] and two cultures, Terry [Heckler] came up with a design that merged the two logos. We kept the Starbucks siren with her starred crown, but made her more contemporary. We dropped the tradition-bound brown, and changed the logo’s color to Il Giornarle’s more affirming green." [pg. 108]

1992 - today

"In 1992 we also asked Terry Heckler to revise our logo: She stayed mostly the same but lost her navel." [pg. 309]

Howard Schultz on Emotional Connections

The Spring/Summer issue from KNOW Magazine has an interview with Howard Schultz, Starbucks grand poo bah. It’s a way worthy read as Howard shares his insights on the importance of businesses connecting emotionally with consumers. Enjoy this snippet:

KNOW asks: How do you explain this need by consumers for emotional connection?

HOWARD says: The fracturing of our humanity, fracturing of trust in public institutions and corporations has created significant cynicism. However, people want to be a part of something that they can believe in. They want to be associated with a product or service that they can rely on. Companies that are serving these emotional and human needs of the customers will really stand out amidst this cynical backdrop.

KNOW asks: You built Starbucks without traditional advertising and marketing spending; we are particularly interested in your views regarding the loud industry voice that the marketing mix needs to shift…and that many nontraditional vehicles are the wave of the future, like product placement or orchestrated word of mouth.

HOWARD says: Let me answer it with a story from a recent speech. I asked the audience how many were wearing a Live Strong bracelet from Lance Armstrong's charity or how many non-Bostonians in the room were rooting for the Red Sox to win the World Series. The theme is that people want to be part of something bigger than themselves. They want to be part of something that touches their hearts. T

The art of marketing today is the ability to build this emotional connection. I am not going to tell people where they should be spending their money, but I would advise that all marketing be authentic, and relate to reaching into people's hearts to let them know that you want to be part of their life.

At Starbucks, we have integrated ourselves in a way that is very different than selling a cup of coffee. We have an emotional relationship with our customers. It's not one thing, but a lot of things. It's not good enough to have a good ad, but everything you do helps complete the circle…the packaging, the community involvement, the service all help build that emotional connection.

[READ MORE: html | pdf]

UPDATE | Starbucks Hear Music Media Bars

Starbucks Coffee introduced its Hear Music Media Bar concept in 45 Seattle and Austin pilot locations with much ballyhoo and media attention last year. I questioned the move with some HMOs (hot marketing opinions) here and here on Brand Autopsy.

Well … nearly 8 months have passed since Starbucks launched the Hear Music Media Bars and according to a BusinessWeek article [sorry, sub. req'd], the venture has been disappointing.

Hear Music insiders say the response at the stores in Austin -- a college and live-music town -- has been disappointing. Even in Starbucks' home city of Seattle, few customers were listening to the music during recent visits to four stores with media bars. During several hours at each of the four spots, only one CD was burned.

The Austin experiment could be a sign that Starbucks is misreading its customers. The city is full of tech-savvy music downloaders who carry iPods, not portable CD players. Digital music these days means MP3 file mixing and sharing, and that's not in the business model yet, says digital music analyst Josh Bernoff of Forrester Research Inc. "Starbucks is not going to be a significant contributor to the music economy."

Living in Austin, I’ve yet to see someone actually buy a customized CD. However, I have seen lots of students using the Media Bar as a personal jukebox instead by listening to tunes over headphones while studying/reading in one of them comfy chairs Starbucks has.

Plans were to have up to 1,000 Hear Music Media Bars in Starbucks locations by the close of 2005 ... I reckon those plans have been scaled back and are being retooled.

While the Hear Music Media Bars are struggling, the Hear Music record label is succeeding. Starbucks sold oodles and oodles of Ray Charles’ GENIUS LOVES COMPANY album and now they have caused Antigone Rising’s debut album, FROM THE GROUND UP, to climb the charts.

Starbucks Real Estate Learnings

Like McDonald’s, Starbucks is a concept driven as much by real estate as it is by coffee and the coffee experience. These days Starbucks opens at least three new locations a day somewhere in the world. It has taken a lot of real estate to open up 9,000+ Starbucks locations and it will take even more real estate to reach their stated goal of 30,000 global locations.

There is much to learn about Starbucks expertise in the real estate game and Arthur Rubinfeld, former EVP of Real Estate with Starbucks, shares many of these learnings in BUILT FOR GROWTH (Wharton Publishing, 2005).

[Heads Up | Arthur covers a lot of territory in this book including branding, business model infrastructure, retail site selection, innovation, and delivering customer experiences. BUILT FOR GROWTH is at its best sharing real estate advice more so than anything else.]

Beginning with Ch. 12, Arthur shares actionable insights into how Starbucks gained market dominance through finding the best real estate locations.

For example, have you ever wondered why so many Starbucks stores are located near dry cleaners and video stores? That’s so Starbucks can take advantage of the ‘going-to-work’ traffic generated from people dropping off clothes at the dry cleaners on their way to work. And, Starbucks takes advantage of people picking up movies from Blockbuster on their way home from work.

Arthur mentions his secret for locating heavily trafficked parking lots – oil stains. Yep, if a parking lot has lots of oil stains, it means lots of cars come and go.

“In retailing,” Arthur says, “you are judged by the company you keep.” That’s why he advocates always locating your store near other tenants who attract a more affluent customer base than does your store. Starbucks avoids locating stores in close proximity to fast food chains because these restaurants generally draw a less affluent customer.

Small business owners looking to become big business owners should pay close attention to the site selection process Arthur shares in Chapter 14. It’s straight from the Starbucks playbook. In fact, you can download a Real Estate Decision Logic Template and a Site Evaluation Form from the book’s website. These templates look very similar to ones Starbucks used in the mid-to-late 90s. (To access these templates as well as other tools, you will need to ‘register’ with the site.)

Starbucks Need for Speed

Reveries has a nice sum-up of the Wall Street Journal article on Starbucks need for speed.

For years now Starbucks has been fixated on reducing customer wait time (i.e. speed of service). However, at some point a fixation can become an obsession and not all obsessions are healthy.

From the WSJ article, “This is a game about seconds,” says Silvia Peterson, Starbucks director of store operations engineering, adding that she and her team of 10 engineers are constantly asking themselves: “How can we shave time off this?”

It occurs to me Starbucks used to be obsessive about quality. Now they seem to be obsessive about quantity.

My Starbucks Tribal Knowledge tells me this …

“People will wait for a burger – it’s lunch.”
-- Howard Behar, long-time influential SBUX executive --

And people will wait for coffee. It’s just coffee after all.

The HB Way

Known simply as HB, Howard Behar has had an enduring and endearing impact at Starbucks.

Howard Schultz, Starbucks demigod, openly credits HB with making the company more customer-driven. My Starbucks Tribal Knowledge tells me it was HB that popularized the now often quoted line of: “Starbucks is not in the coffee business serving people. Starbucks is in the people business serving coffee.”

HB is also known for spreading the gospel of Servant Leadership throughout Starbucks. Last night while perusing the bookshelves at Barnes & Noble I noticed James Autry’s book, The Servant Leader, is now available in paperback and the foreword is written by Howard Behar.

For those not in the know, Servant Leadership eschews the classical definition of a leader being a stand-alone hero. Instead, Servant Leadership asks leaders to focus on creating a shared vision for all employees, fostering a spirit of interdependence, and managing with respect, honesty, and empathy.

In the foreword, HB shares the story of how in 2001, he returned to Starbucks to find the company leadership culture different than what he had experienced before.

“The pathway of Starbucks phenomenal achievement has been full of twists and hurdles, some of which were unwittingly created by the very partners (Starbucks employees) who were working so hard to make us successful! I retired from Starbucks in 1999, and was enjoying the good life – no meetings, no deadlines – it was great. But in 2001 there was a change in the leadership in our North American business unit, and Starbucks President and CEO Orin Smith asked me to come back to work on an interim basis as president of the business unit.

Orin had notice something different at Starbucks. The passion and values were still there, but sometimes we spent more energy on our individual or department goals than focusing on the greater good. Not just what we could do within the four walls of our offices or our stores, but the greater good that our now-expansive organization was binging to the world – how could we serve each other and people around the globe.

From an outsider’s perspective, there was nothing to complain about: the company’s financial achievements, growth and innovation were chugging ahead full steam, and partners devoted near-obsessive attention to quality and ethics. But could we sustain our success for the next 10, 20, 50 years without taking a hard look at our leadership practices? We didn’t think so.

Orin and I began to evangelize the principles of servant leadership … we held trainings, read books, and more importantly, we lived it. And we are still living it. You can see it today as people meet in the hallways. You can feel the power behind the change, and the power that servant leadership gives to everyone it touches, in every aspect of our lives. Servant leadership is truly alive at Starbucks.”

Besides spreading the gospel of Servant Leadership throughout Starbucks worldwide, HB is also known for spreading weathered truisms, known affectionately as HB-isms, throughout the company. Some of the more memorable HB-isms include:

We think rules make us safe. They don’t. Don’t give me rules, give me tools.

Where we have a problem, we have a problem leader.

Profit is what comes when you do everything else right.

Customers don’t think about rules. They want what they want.

Your customer will tell you whether you are right or wrong – just try it.

I’m not smart. I’m just not stupid – I learn.

Don’t be lulled into complacency – we will hit the wall.

There is no conflict with doing the right thing and making money.

Starbucks Verbose Vessels

Today the Seattle Post-Intelligencer ran story announcing Starbucks plans to replace standard blurbs printed on the paper cups with inspiring messages designed to get customers to think and discuss.

The 'white cup' has become a Starbucks icon. The current writing has become static. About espresso shots... About the coffee quality... However, printed with refreshed and contemporary comments, the cup may become more than just a container.

A few years ago, Starbucks created a magazine called Joe that had essays, stories and articles designed to get customers to think and discuss. It only lasted three issues... Seemed it was more content than the typical customer wanted to digest. Perhaps the bite-sized ideas printed on the cups will inspire coffee talk...

This will be interesting to follow!

Will Speed Win?

Fast Company has a web-exclusive article, It's Not About the Doughnuts, on Dunkin’ Donuts' strategy to siphon business away from Starbucks . (It’s a way worthy read.)

Dunkin's strategy? Be faster and cheaper than Starbucks.

If you're going to take on Starbucks, the leviathan of the coffee business, you need an edge. And Dunkin' Donuts, the 54-year-old New England chain famous for its Boston Creme doughnuts and award-winning beans, thinks it's found the key to being a contender: speed and price. So this, then, is the new management team's new strategy: be the faster, cheaper, user-friendlier alternative to Starbucks -- the average Joe's average joe.

In an unofficial 'speed and price' test, the author, Linda Tischler, visited a Dunkin’ Donuts in the Tribeca area and received her ‘small, skim milk, vanilla latte’ in 2 minutes, 4 seconds for a price of $2.16. And at Starbucks, Linda’s ‘tall non-fat, vanilla latte’ was prepared in 2 minutes, 55 seconds and it cost $3.69.

Clearly, Dunkin' Donuts beats Starbucks on speed and price. And that is exactly why Dunkin' is betting younger consumers, who have grown up drinking Starbucks, will eventually choose waiting a little over 2 minutes and paying $2.16 for their latte.

Will Dunkin' Donuts' speed and price strategy work? I don’t think so. Taste will always trump speed and price.

And Starbucks makes a better cup of coffee than does Dunkin’. Just as Dunkin’ makes a better donut than does Starbucks.

Speed and price is an important aspect to a great customer experience but is it more important than a clean store? A friendly staff? Great coffee taste/flavor/quality?

Be it a glazed donut or a cup of coffee, I’ll gladly pay a little extra for something that is higher-quality, has more taste and flavor, and is served by a friendly employee in a clean store. How about you?

********************** On a relevant side note … read Laura Ries’ blog entry taking Starbucks to task for violating a branding law known as 'The Law of Contraction.' In the blog, Laura offers her opinions on why Starbucks is risking brand dilution by selling oven-heated sandwiches. It’s a classic Al & Laura Ries branding strategy lesson. Good stuff.

Starbucks Venti Viral Video

Years ago Fallon (big-time ad agency) pitched Starbucks on the idea of doing short films as a marketing tool. Starbucks said no. Fallon then took the idea to another on of their clients, BMW, and they said yes.

This Holiday season, Starbucks is attempting to get in on the online viral video marketing bandwagon with theredcup.com.

http://www.theredcup.com/

[WARNING: The download is clunky and it’s not as cool as the homemade iPod video that’s making the rounds online.]

Starbucks Marketing Bingo

The recent Business Buzzword Bingo postings from Seth Godin and Johnnie Moore reminded me of a Starbucks Marketing Bingo game Paul and I used to play back in the day (circa 2000).

Yep, we actually played this a few times and once … Paul recorded a blackout. Impressive.

Click here to download your PowerPoint version of Starbucks Marketing Bingo.

Marketing Cornucopia

A recent BusinessWeek online article quotes Howard Schultz, Starbucks Coffee Chairman, as saying, "We (Starbucks) are much more than a retail store. Much more than a coffee store. We are becoming alternative distribution."

Howard is clearly playing off Ted Levitt's enduring 'Marketing Myopia' business philosophy where Levitt says growth opportunities decline for companies because they define themselves too narrowly. To overcome ‘marketing myopia,’ Levitt states companies should define their businesses more broadly to take advantage of growth opportunities.

But ‘alternative distribution?’ Huh? Is Starbucks beginning to suffer from a virulent strain of marketing myopia known as Marketing Cornucopia?

It’s my unoriginal take (which admittedly could use more thought behind it), companies suffer from Marketing Cornucopia and eventually stymie growth opportunities because they define themselves too broadly and fall into the trap of trying to be all things to all people. Ultimately this results in consumers no longer being able to relate to what made the company remarkable in the first place.

So … is Starbucks suffering from Marketing Cornucopia by defining themselves more as an 'alternative distribution' point and less as a third place experience provider? (Heck, defining your business as a third place experience provider seems broad enough, eh?)

Starbucks Fourth Place

Hi. My name is johnmoore and I am addicted to the Starbucks Gossip blog.

I’m addicted because as a former long-time Starbucks partner (employee), I am fascinated by the conversations which take place between brand supporters, brand detractors, cheerleading Starbucks partners, and cynical Starbucks partners.

The recent conversation (here and here) on Starbucks donating 50,000 pounds of coffee to US Troops stationed in Iraq has sparked some intense debate.

Company policy, as I knew it, has always been that Starbucks tries to avoid donating to causes with political or religious connections. Exceptions are made, especially at the store level, but Starbucks has typically been very consistent in not trying to alienate customers by showing support for polarizing and divisive areas like politics and religion. This particular instance of donating coffee to the US Troops is a damned if you do, damned if you don’t situation. How can a company show support for the Troops without showing support for the war? (Hmm … good fodder for all.)

And there is the recent conversation about Starbucks playing Christmas music beginning on November 8. Again … lots of great debate from evangelists, vigilantes, cheerleaders, and cynics. Knowing how careful and protective Starbucks is about managing its reputation, I’m enjoying the free-flowing conversation about the Holiday promotion at Starbucks.

To give you some background, Starbucks has typically started its Holiday retail promotion the week before Thanksgiving. The rationale has been the company wants to make sure customers have enough opportunity to pick up some Christmas Blend to enjoy on Thanksgiving Day.

As for the Holiday music … Starbucks has learned customers don’t really notice the festive Holiday signage but they do notice the festive music. (Seriously, customer research has shown Starbucks customers recall the Holiday music more than any other in-store element. So what is up with all the in-store Holiday signage then? Good question.) Getting a jumpstart on the Holiday shopping season is critical to Starbucks because the company derives a SIGNIFICANT percentage of yearly sales in the matter of just six or seven weeks.

But I digress … back to the Starbucks Gossip blog.

I am enjoying how the grassroots Starbucks community has created a Fourth Place. As you know, Starbucks takes great pride in how its stores are the ‘Third Place’ (with ‘First Place’ being the home and ‘Second Place’ being the office). And now, it looks like the people have created the Starbucks Fourth Place ... on the Starbucks Gossip blog.

Always Say Who You Are

Can you sell goods and services by telling consumers of the problems inherent in using them?

That’s the question the Wall Street Journal asks with regards to AOL’s current advertising campaign.

The article references a recent AOL television commercial where, “… a female subscriber barges into a staff meeting at AOL to list the features she wants in her online service, including automatic spam blocking, and virus blocking, and pop-up blocking.’” Another AOL televison commercial depicts a million man march of AOL subscribers asking for improvements to the Internet.

So, does highlighting problems inherent with the Internet convey that AOL is part of the problem?

At Starbucks, the tribal knowledge Paul and I learned about how best to convey a marketing message was …

Always say who you are, never who you are not.

Given this tribal knowledge lesson learned, it appears AOL would be better served by telling subscribers and potential subscribers who they are and not who they ain’t. Dig?

Recognizing Outstanding Creativity at Starbucks

Within the walls of Starbucks, the Starbucks Creative Group has had to endure a revolving door of departmental Vice-Presidents, the occasional wrath of a tyrannical CMO, and ever-increasing workloads and expectations from Starbucks project groups.

However, through it all, they have remained dedicated to passionately expressing the essence of the Starbucks brand at every customer touch-point imaginable.

(I should know … I worked many years with the Starbucks Creative Group.)

From napkins to paper cups, in-store posters to annual reports, t-shirt designs to in-store architecture – the Starbucks Creative Group tells the story of Starbucks in such a way that deserves more recognition than they receive internally or externally.

Well … in their October 2004 issue, HOW design magazine has recognized the Starbucks Creative Group with their In-House Design Group of the Year Award.

Kudos Starbucks Creative Group!!! Kudos.

One reason why the Starbucks Creative Group has been able to articulate the brand so well is because they live the brand. In the HOW magazine article, Thomas Prowell, senior copywriter and Miami Vice trivia whiz, says …

“Because so many of us started as baristas, we kind of view ourselves as the keepers of this tribal knowledge. I started here in 1990, before the big Starbucks explosion, and of the things that intrigued me about this company was that they took something that was mundane – coffee – and made it interesting and exciting again. That’s our ongoing challenge here, to avoid being mundane, to continue to find the excitement in the product. As long as we keep delivering that surprise to our customers, we’ll be successful – both commercially and creatively.”

Another reason why the Starbucks Creative Group has been successful at conveying the brand is because the company chooses to InSource before they OutSource. The internal creative agency at Starbucks handles most of the creative work for the company with outside advertising agencies working on larger, multi-dimensional projects.

The flat hierarchy structure of the creative team also contributes to a thriving work environment and culture. HOW Magazine writes,

“The in-house creative teams’ lack of hierarchy is another plus. There are just two levels: senior designers and copy writers, and designers and copywriters. Unlike in other global empires, titles aren’t hoisted around here like flags.”

While the article highlights Jeff Ashley, Bonnie Dain, Doug Keyes, and Thomas Prowell … there are three former Starbucks Creative Group partners who deserve recognition for their contributions to the design, the voice, and the style of the Starbucks brand –– Alice Meadows, Anna David, and Anna Sandilands.

Alice, Anna, and Anna may no longer work for Starbucks … but their combined spirit continues to work at Starbucks.

Ubiquitize Me!

Over at the Church of the Customer, Ben and Jackie introduced the blog world to John Winter Smith and his quest to visit every Starbucks company-owned location in the world. So far, he has visited nearly 4,300 locations in North America, UK, and Japan. WOW! That is fanatical behavior becoming of an evangelist!

In their post, Jackie writes the following:

"Ultimate evangelists like Winter don't turn up every day. He's generating lots of favorable press on his own. Starbucks should embrace Winter in every conceivable way. Promote his visits. Lend him a car with the Starbucks logo on the side. (Winter sleeps in his old car with no air conditioning when he goes on his frequent Starbucks road trips.) He's authentic, not a schlocky spokesthing. Make him a hero. Starbucks, your Jared is here."

Here at Brand Autopsy we have a different take on Winter becoming the "Starbucks Jared." We contend Starbucks should acknowledge Winter in an ongoing manner, just not in every conceivable way that Subway acknowledges and promotes Jared.

Someone like Winter is good for those folks who LOVE Starbucks - it makes those who visit 3x a day feel better because they can say, "At least I’m not that Winter guy going to ALL the stores… Now, that’s freakish!"

As Ben and Jackie have taught us, customer evangelists exhibit fanatical behavior (some more fanatical than others). Jared fanatically used Subway to better himself by losing 245 pounds. His actions of eating Subway sandwiches to improve his health plays into Subway's branding strategy of being a more healthy alternative to the other fast food chains. Jared is a credible* spokesperson/evangelist for Subway because his personal goals were/are more in line with the business/branding goals of Subway.

*(he's credible in a 30-second spot to the masses, but he is still only the 1 in 123 million who has seen results from a Subway diet. I'm sure the fine print reads -> "Individual results may vary. Not typical weight loss.")

Winter’s goal of visiting every Starbucks in the world is fanatical evangelist behavior. However, his goal does not mesh with Starbucks goals. Winter’s goal perpetuates the perception (and in many ways the reality) that Starbucks is ubiquitous, that Starbucks is everywhere. Starbucks is trying not to promote its ubiquity and that is why Winter wouldn’t make for a credible Starbucks spokesperson.

Winter would be a more credible spokesperson, along the lines of Jared, if he exhibited a passion for aspects of Starbucks beyond its massive reach such as Starbucks involvement in local communities, its coffee quality, its business practices, etc.

If you read Winter’s travel logs, you’ll notice that he admits to gagging and nearly vomiting after drinking too much Starbucks. (Ouch.) That behavior is not becoming of a Starbucks spokesperson. In fact, this conjures up images of Morgan Spurlock, of Super Size Me fame, and his McBurps, McNausea, and McRegurgitation after downing too many Big Macs.

Imagine if a documentary was made chronicling Winter’s journey … it could be called, “Ubiquitize Me.” (Double ouch.)

For the record, we think Starbucks should ACKNOWLEDGE Winter in an ongoing manner just not as Subway acknowledges Jared.

Instead of featuring Winter in marketing/advertising campaigns, we contend Starbucks SHOULD…

Empower Winter to fulfill his passion by sending him an updated quarterly roster of newly opened stores

Send Winter a personalized Starbucks Card (with his photo on it) and upload dollars to it on a quarterly basis

Invite Winter to Seattle to tour the Starbucks HQ, have a cupping with the Starbucks Coffee Dept., and have a cup of coffee with Howard Schultz

We also agree Starbucks SHOULD consider making a donation to a charity each time Winter visits a new store. (That is Jackie's great idea).

(In return, Starbucks should politely ask Winter to stop saying the coffee is making him sick).

That’s Brand Autopsy’s take … what’s yours?

More on Music and Mochas

Mark, Scott, Hugh, Nathan, Simon, and Brand Examiner Paul's Mom all added interesting perspective with their comments to my original post regarding the Fast Company article on Starbucks reinventing itself through revolutionizing the retail music industry.

With their comments in mind, further exploration of "Music and Mochas" is in order.

Please don't misunderstand me, I applaud Starbucks for trying new things to make sure the brand stays relevant. The culture of Starbucks will never allow for complacency to seep in ... and that is a very good thing.

What I find presumptuous is that burning music CDs will reinvent the Starbucks brand and that Starbucks believes they are poised to revolutionize the retail music business.

It is still my contention that the brand does not need reinventing.

However, the Starbucks brand does need to remain relevant and I suggest Starbucks do this through evolutionary means and not through revolutionary ways.

There is still plenty of opportunity for the Starbucks brand to remain relevant and to further evolve the Starbucks experience by focusing on their core competency of coffee. I am not convinced that Starbucks should fall victim to lifestyle brand mentality and attempt to reinvent the brand by revolutionizing the retail music industry.

Starbucks has fallen victim to lifestyle brand mentality before. In the mid-to-late 90s, the thinking throughout Starbucks upper management was, "our customers have given us permission to branch out into lifestyle areas beyond coffee." This thinking lead to disastrous results including:

Mazagran - a failed carbonated coffee soda beverage from Pepsi and Starbucks.

Joe Magazine - a lifestyle magazine from Time and Starbucks that lasted three issues.

Café Starbucks - a full scale restaurant that never expanded beyond three locations in Seattle.

Circadia - a radically hipper version of a 'Starbucks' complete with a performance stage and alcohol coffee drinks. Circadia never connected with customers.

E-Commerce and Internet Portals - Starbucks forged online and offline partnerships with Cooking.com, Living.com, Kozmo, and a handful of other internet companies. (Of course, Starbucks wasn’t the only major 'bricks and mortar' retail chain to get caught up in the dot-com craze.)

Books - Starbucks partnered with Oprah Winfrey to sell Oprah’s Book Club selections as well as other books consistent with the 'Starbucks lifestyle.' After two years of sluggish sales, the partnership ended and Starbucks stopped selling books.

Reading, Writing, Rhythm merchandise assortment - a failed attempt to reinvigorate slumping coffee-related merchandise sales by focusing on odd lifestyle products such as pencil sharpeners, leather bound journals, desk clocks, and other fancy office accessories. This merchandise approach lasted 10 months.

Compare those failed revolutionary attempts to reinvent the brand with these evolutionary initiatives that have helped to bring new relevance to the Starbucks brand.

Frappuccino - Without cold blended coffee, Starbucks wouldn’t be the success it is today. Frappuccino created an entirely new coffee category for Starbucks that helped to drive coffee sales and increase traffic during the hot summer months where previously the business was soft.

Starbucks coffee on United Airlines - Before Starbucks was commonly available on every street corner, Starbucks partnered with United Airlines to not only improve airplane coffee, but also to sample the signature taste of Starbucks with millions of people who previously never had the opportunity to taste a richer, bolder cup of Starbucks coffee. (Admittedly, the relevance and importance of this partnership has faded since Starbucks has grown to nearly 10,000 locations world-wide.)

Bottled Frappuccino - Taking the lessons learned from the failed Mazagran soda experiment, Pepsi and Starbucks went back to the drawing board and developed a ready-to-drink milk/coffee beverage that tasted more like a familiar iced latte than an unfamiliar ice-cold carbonated coffee soda.

Whole Bean in Grocery stores - In the late 90s, Starbucks partnered with Kraft to offer whole bean coffee in the grocery channel … a retail channel where something like 95% of all coffee is purchased.

All of these successful initiatives clearly leveraged Starbucks core competency of coffee to bring new relevance to the Starbucks brand. And, they did it through evolutionary means and not by revolutionary ways.

"Sometimes you have to leave home to realize how sweet home really is." That was a quote from a senior Starbucks executive following the company’s last foray into failed lifestyle branded ventures. Which leads me to ask this question ... how far is Starbucks straying from home in their attempt to reinvent the brand by revolutionizing the retail music business?

I hope Starbucks remembers to bring some bread crumbs with them on their journey away from home …

Music, Margins, Motives, and Mochas

The July cover story in Fast Company on Starbucks attempt to transform the retail music industry got this former Starbucks marketer thinking …

The article focuses on Starbucks recently implemented new-concept music store where a customer can handcraft a personalized music CD while a Barista handcrafts their grande, non-fat, no foam vanilla latte. Starting with a pilot store in Santa Monica, Starbucks has plans to roll out fully-integrated CD burning café-music stores beginning in August with ten stores in Seattle and a few thereafter in Austin.

The article goes on to reference Theodore Levitt’s “Marketing Myopia” assertion that companies should not narrowly define the business they are in and how Starbucks is clearly not limiting their business to the coffee business, but rather to a lifestyle of comfort, affluence, and convenience.

The crux of the feature story centers around this quote, “This push into music is the start of a daring effort to reinvent one of the world’s best-known brands.”

Having worked for Starbucks from 1994 to 2003, I read this Fast Company article with a somewhat skeptical insider’s eye and left with questions related to music, margins, motives, and mochas.

Why does Starbucks need reinventing?
Same store sales have been in double-digits for nearly two years. Year-to-date, revenue is growing at a robust 28.8%. Starbucks stock is trading at an all-time high. The company has upped its earnings projection for 2004. The brand strength has never been stronger having received accolades and recognition from across the globe.

Are those symptoms of a company that needs reinventing? I think not.

True … Starbucks success could come to a grinding halt. However, given the business performance and brand performance since going public in 1992, Starbucks is well positioned to milk future success for years on end without having to reinvent itself through transformative change.

Will burning music CDs financially reinvent the company?
Profit margins in the espresso business are HUGE!!! Huge as in up to 95% margins. Profit margins in the downloaded music are SLIM!!! Slim as in the wholesale costs for an individual song range from 65 cents to 79 cents and the going download rate for a single tune is around $1 dollar.

Given the slim margins in downloading music, I have my doubts that it’ll financially reinvent Starbucks. I’ll take the margins in mochas over the margins in music any day.

Can Starbucks reinvent itself by financially exploiting a technology adjacency?
Starbucks has garnered tremendous media attention for their wi-fi hot spots. Nearly every article that mentions wi-fi also mentions Starbucks. But, how has wi-fi financially impacted the business at Starbucks? To my knowledge, Starbucks has not released numbers detailing the financial impact wi-fi has had on driving top-line sales.

From my unsubstantiated research, I believe Starbucks has increased their “road warrior” business traveler customer base through wi-fi. Most of the users I’ve seen are business types whose companies pay for the spendy service.

My insider knowledge does know Starbucks benefited greatly from the wi-fi installations as it significantly upgraded their back-of-house technology. Through the wi-fi connection, Starbucks locations now have a two-way high-speed network connection with headquarters. Better yet, all this enhanced technology came at virtually no out-of-pocket expense from Starbucks.

Free wi-fi is fast becoming a cost of doing business for coffeehouses and other "third place" community gathering spots. In Austin, every other coffeehouse, besides Starbucks, offers free wi-fi to their customers. For coffeehouses, there seems to be very little money to be made in wi-fi hot spots. Sure, a customer may linger longer but lingering doesn’t always translate into incremental sales.

Will customers embrace burning CDs at Starbucks and not at home?
I have not used the CD-burning system at the one Starbucks café-music location. However, I’m hard-pressed to believe the technology interface in the download kiosk is easier to use than standard CD read/write technology readily available and used today on a home computer.

The learning curve to download music and burn to a CD with a home computer is not that steep. Because it is so easy to make a CD at home, I struggle to believe that Starbucks can make it any easier for customers.

Then again, making coffee at home is ultra-easy and Starbucks has seemingly made it easier, more convenient, and tastier for customers. But that’s coffee and Starbucks has been in the coffee business since 1971, not the music business.

If Starbucks is busy doing music and entertainment, who is busy doing coffee?
Label me old-school, but with each move Starbucks makes into the entertainment and technology area, the farther they deviate from coffee.

I firmly believe a company “jumps the brand” when they promote their brand over the category. Starbucks used to be about promoting the coffee category. They have and are still transforming the coffee category. But with each step into music and entertainment, Starbucks seems to be more about promoting the Starbucks branded lifestyle experience than promoting the coffee category.

So, if Starbucks is busy doing music and entertainment, who is busy doing coffee? Peets.

Am I totally against Starbucks entering the music and entertainment business?
No, not at all. I fully support Starbucks enhancing the coffee experience by offering music and entertainment options. However, I am not going to fall victim to the thinking that burning a music CD in Starbucks is a transformative tectonic-plate shift in reinventing the Starbucks brand.

Instead, I see Starbucks offering entertainment options as an enhancement to the Starbucks experience and not as a reinvention of the Starbucks brand.

Dunkin' Coffee?

A friend of mine sent me a link from an article in yesterday’s (Wed. Apr. 7) Chicago Tribune entitled Company perk; Can a roasting expert from Chicago give Krispy Kreme a coffee buzz?" (registration required) The focus of the story was about Krispy Kreme taking efforts to increase the quality of their coffee - potentially to compete with Starbucks and Dunkin’ Donuts.

Starbucks has often defined it’s purpose by saying…

"We are in the people business serving coffee." (Vs. - We are in the coffee business serving people.)

This perspective has allowed Starbucks to focus on the customer need vs. a limited perspective of simply and only coffee. It has allowed experiments like Café Starbucks - a full restaurant concept. (Now defunct). Or the new Starbucks/Hear Music Coffeehouse in Santa Monica where you can hand-craft and burn your own CD in-store with even more options than a barista has in hand-crafting a latte!

The article points out that globally, Dunkin’ is known more for its coffee. (In the states, growing up on the east coast, I’ve always known them as a doughnut place, with coffee). Dunkin’ has 5,600 locations worldwide to Krispy Kreme’s 394. In fact, John Gilbert, Dunkin' vice president of marketing, was quoted as saying…

"We are primarily a coffee business that sells doughnuts. Krispy Kreme is primarily a bulk doughnut business, selling doughnuts by the dozens."

From a brand perspective, this got me thinking…

I’ll bet Dunkin’ wishes it could sell doughnuts in bulk by the dozens. Is that a weakness of Krispy? Or a threat to Dunkin’?

Shouldn’t Dunkin’ Donuts have a similar approach to their business as Starbucks and others have? That they’re not in the coffee OR doughnut business, but in the business of serving their customers?