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November 28, 2007
It's still the customer experience
One of the world's best word-of-mouth and customer evangelism success stories, Starbucks is launching its first national advertising campaign. [See the spots here.]
Why advertise? Because store visits are down 1% from same time last year. The stock price is falling. You could say that Starbucks is officially middle-aged. It's no longer the exciting whippersnapper.
Is that because Starbucks has finally reached a saturation point? Or is it more complicated, the result of a series of decisions that has compromised its roots of authenticity?
I believe it's the latter. To save money, Starbucks has:
- Switched from hand-pulled espresso shots to automatic espresso machines.
- Eliminated the aroma of ground fresh coffee in stores in lieu of "flavor locked packaging."
- Streamlined store designs; today, they lack the customized funky cool of yore.
Starbucks wants to please Wall Street, so it's chasing the P/E carrot by opening stores at breakneck speed. To exploit new revenue sources, Starbucks has:
- Delved into movie producing.
- Launched a record label.
- Started selling shelf space for book promotions.
With this new-revenue recipe, coffee is the appetizer to the big pie of entertainment. Eureka: store visitors are captive audiences. Turn up the Marketing Machine. When you start dreaming of monetizing seats or places in line, you change the nature of what you once delivered.
Will a brand-building TV ad campaign make people visit stores more often? Probably not. Some think the ads might drive people into competitors' stores.
Starbucks is a beloved brand because of the quality of the store experience. Period. End of story. Slurp! It took years for McDonald's to re-learn that.
Other blogs that reference It's still the customer experience:
» rebranding vs. advertising : the starbucks conundrum from Jon Burg's Future Visions
Starbucks is slipping. Store visits are down, stocks are falling. Starbucks' solution? Advertising... sigh. Starbucks once epitomized successful authentic branding. And as they've grown, they seem to have lost their way. Here's the issue: Stabucks' bra... [Read More]
» Does Starbucks Need to Advertise? from Mary's Blog
Via Opinionated Marketer, Jackie Huba is pondering on this. Heres some of the post to jog your synapses:
Why advertise? Because store visits are down 1% from same time last year. The stock price is falling
To save money, Starbucks has:
... [Read More]
Starbucks was successful because of their brand message - homey warmth. Creating a large chain that retains that brand message is virtually impossible. So as I see it Starbucks has only two choices:
- redefine the brand, pushing into a new direction, joining corporate America as a feelingless corporation
- inject a lot of money in redefining the corporation and their retail outlets as everything they originally were.
In a way, starbucks has already made a decision. They are inadvertently going with the first option, while trying to create authenticity (the second option) through advertising. This may work in the short term, but to this consumer, it just kills the whole vibe.
Hi Jackie:
Nice post - and when I started reading I was thinking exactly the same thing. I can't tell you how many *baristas* don't know how what a doppio macchiatto is any more.
If they aren't coffee experts, then what exactly is the point?
Tom O'Brien
Jackie:
I completely agree with your assessment and I think that Starbucks did a lot to "mainstream" themselves and lost a LOT of the good conversation that came from the coffee community.
When they turned into a pseudo commodity, they alienated many true coffee lovers that would support them through recommendation to their friends.
If you visit www.coffeegeek.com you can get the sentiment of how people feel about Starbucks. I also agree that when they "streamlined" their operations with auto machines, etc. they shot themselves in the foot.
Great post!
Kevin
Jackie ... nice dissection. To clarify my take on the Starbucks “Ski Lift” commercial. I don’t necessarily think that spot will drive people to visit Caribou Coffee instead of Starbucks. I do think that commercial, with its ski images, use of a deer, and the baby blue background, embodies more of the Caribou brand than it does the Starbucks brand.
This is an interesting time for Starbucks. As you point out, they’ve made compromises for the sake of growth. Is it too late to put the toothpaste back in the tube for Starbucks? Probably so.
Another way to think about Starbucks is that they’ve out-grown being a coffee company. Back in the 1990s, they had the dream of becoming the next Coca-Cola. Their continuing ubiquity and forays into being everywhere customers expect them to be has them down the path of being just as convenient as a can of Coke.
Which leads me to this point — Starbucks no longer competes on quality, they compete on convenience. Nowadays it’s almost too convenient not to get a cup of Starbucks coffee. Where Starbucks once decommoditized coffee, its focus on convenience over quality has re-commoditized coffee again.
On a different coffee note … let us all know your thoughts about Austin’s newest coffee spot—The Latte Dolls. Getcha some “sexpresso” at this joint that recently opened up at Lamar & Mary (1817 South Lamar).
Hey, Latte Dolls is just down the street from Church World Headquarters. Guess that means I'd better volunteer for hazard duty and lead a Congressional Fact-Finding Mission into learning more.
Jackie,
Starbucks is all about the experience that resonates on an emotional level, it was never about the coffee. They lost their way when they started thinking they could marginalize the experience without losing market share or revenue. It would seem they can not. Customers who walk into Starbucks are there because they are filling an emotional need, not because they have analyzed the decision logically. They are still the largest and most influential coffee house in the world and can certainly bring to bear the resources necessary to refocus the company. I for one hope they do.
Starbucks needs to read your post and re-focus on the customer, and the customer experience. I have two ideas for them, coming directly from a customer :)
1. They need to offer free WIFI. Charging an arm and a leg for T-mobile is shortsighted and they are losing out to mom and pop coffee houses who DO offer WIFI. One of the reasons why Starbucks was initially so successful is because their stores offered a new place to hang out, read a paper, chat with a friend. Free Internet fits right in with this concept.
2. They need better food! Their baked goods stink, in my opinion.
So, my 2 cents and my 2 ideas, both of which have absolutely nothing to do with advertising, although I'll go on a limb and say that they have everything to do with the original Starbucks' appeal and brand.
I believe that Starbucks is going the way that McDonald's did in the 1980s, losing focus over its core brand, losing discipline in its operations, and failure to innovate along its established lines (fast food served reliably, cheaply, and quickly). For me, McDonald's "jumped the shark" when its bathrooms were no longer clean. It's come back a long way, but it missed some great opportunities along the way.
My wife and I spend way too much at Starbucks, but we're losing our passion. Too many indifferent, cold barristas, constantly running out of my favorite pastries (which everyone else seems to want, so why can't they order more), displays of music I don't listen to and videos I'd just as soon rent from Netflix. Oh, and funky tables replaced by boring, brown, institutional ones that I wouldn't have in my own home, and don't want to sit in.
When McDonald's coffee gets a top-quality taste rating, it's time to get back to your core, Starbucks!
Aneil Mishra
For your consideration: Starbucks jumped the shark when they opened their first drive-through. If I want it fast, I can get it faster and cheaper someplace else.
As for the advertising - looks like they're using the "P Plan' (for panic.)
Jackie, I agree with most of what you said. Don't see it with McDonald's, however. Although they are toying with new concepts aroud the world (and even inside the US)- they continue to focus on the "mobile eating" experience in their advertising. Everything that I've read by or about Ray Kroc likewise focused on food (the facility, its cleanliness, etc. served merely as a "staging area"). I'd welcome evidence to the contrary, as I enjoy being educated on the subject. Thanks, and keep up the great work you guys are doing. Love reading your books and posts! -SD-
