Reviving A Brand

"We will focus on what is most important; we are committed to customer experience” was the battle cry of Howard Schultz as he addressed investors on a conference call earlier this month as he once again took the reigns of mega coffee giant Starbucks. Starbucks has long been the poster child for great customer experiences and has in fact inspired a book written by Joseph A. Michelli titled The Starbucks Experience, in which he discusses 5 key principles for turning ordinary into extraordinary.

As the company has grown from less than 1,000 to more than 13,000 locations worldwide in the past 10 years, many believe the Starbucks Experience has become diluted. In a email to then CEO Jim Donald, dated February 14, 2007, Schultz expressed his concerns about the commoditization of the Starbucks experience (Note: There is some dispute over the authenticity of the email. Whether the email is authentic or not, from an outsiders perspective, I agree with many of the points made in the email and have chosen to reference it here...you can draw your own conclusion as to it’s authenticity.) In his email, Schultz acknowledges and accepts some responsibility for these changes and to some degree accepts what has occurred as necessary to achieve the tremendous growth of the company. Schultz points to specific actions that were taken that have contributed to diminishing the experience. Schultz cites the use of automatic espresso machines, packaged beans and even the physical size of their new machines as removing the “romance and theatre” and hurting the “intimate experience” of their customer being able to watch their beverage being made. He even points out that by using the packaged beans they have lost perhaps the most powerful non-verbal signal—the loss of aroma—of the barista grinding the beans on site. Recently, Starbucks also announced it would stop serving breakfast sandwiches, stating the aroma of the sandwiches was conflicting with the aroma of the coffee. While many details on how Schultz intends to “turn things around” are still not clear, he has vowed to return the company to its roots by having its baristas focus on building great customer experiences and less on transactions.

Starbucks has seen its second consecutive quarter of US store growth as traffic decline, shares are down 43% over the past year and they are facing increased competition from giants like McDonalds who is now adding baristas to a number of their restaurants. While these are compelling reasons to change, they should not be the only reason. I’m impressed by business leaders who are in touch with their customers, which it appears Schultz is, and understand the value of the customer experience. The lure of rapid growth and money is a touch magnet to break free of, but as our products and services become more commoditized, it’s important to stay focused, accept the fact that you can’t be everything to everybody. Focus on what you do well; create superior customer experiences and growth will come!

In my opinion, 2008 is a rebirth of the Starbucks Brand, not that it is down and out by any means, but it certainly has some tarnish on it. The market has changed a great deal since its birth in the 1970s; there’s a coffee shop on every corner and customer expectations and desire for “experience” is ever increasing. I’m excited to watch as Schultz attempts to polish off the tarnish and return the company to one that is all about the customer!