The 3 keys to how Starbucks brews international coffee
Posted on Thursday, November 3rd, 2011 by Steve Prodger
“We don’t want to be in the transaction business, we’re in the business of human connections, and we are in the business of creating a third place between home and work”
Going through my daily reading list I came across these two stories. Starbucks has been dipping its toes into international waters and according to FastCasual magazine have opened their 500th location in China and are at the same time in a battle for market share in India.
That level of growth is amazing if you think back just few years and remember that Starbucks was once a company in a tailspin. The stock (Nasdaq:SBUX) was trading below $10, and there was even a best seller on the New York Times reading list that promoted the idea that NOT going to Starbucks was a formula for wealth creation – Latte Factor anyone?
It was around this time in 2008 when Howard Shultz regained the CEO role of the company and took on the task of steering what appeared to be a sinking ship.
Shultz has often been criticized for his overly romantic notions of what the value of a cup of coffee is, but three years into his second reign at Starbucks and the proof is in the pudding. Their international growth is taking off and the stock now trades at over $40.
What I see in Starbucks when I look past the romantic notions put forth by Shultz is a great example of a company who has been successful in understanding the three pillars of delivering on a brand promise.
Looking at the in-store experience Starbucks really has transformed a simple morning coffee and turned it in to a unique experience that customers will look forward to. Schultz is famous for making outlandish statements such as “Starbucks is not in the business of feeding bellies, we’re in the business of feeding souls”. But just look at their in-store experience, from free Wi-Fi, to shifting focus away from hot foods, Starbucks has built an experience focused on premium coffee and provides customers with an inviting location where they can spend a few extra minutes each day enjoying it. It really is a third place outside of home or work where people can stop in, enjoy a beverage and read a book or catch up with friends, or on work.
Employees at Starbucks are also highly regarded as a key ingredient toward delivering an exceptional customer service. As the company was being rebuilt many locations were known to be closed for 2-3 hours at a time so that all staff could partake in intensive training. These sessions not only helped them brew a better cup of coffee but also gave them a sense of belonging and an understanding of the Starbucks values. To further “walk the talk”, in America Starbucks also provides their full-time employees with health benefits. These are just two examples of the high value Starbucks places on its people.
Advocacy is an area where at the worst of times they used to fall down. In the middle of the decade Starbucks was one of the whipping boys of the online community. Bloggers looked to Starbucks as the poster child for greedy excess on the part of its consumers and also as a faceless corporation serving overpriced beverages. Today much if not all of that has been reversed with close to 2 million followers on Twitter, and 26 million likes on Facebook.
When you think about it maybe Shultz wasn’t so far off in his romantic view of my morning coffee. What do you think? Does Starbucks provide you with the type of experience you enjoy?