Since I live in “Starbucks land” and “Microsoft land” there doesn’t seem to be a day that goes by where there isn’t some article on Starbucks in the papers. The latest is on the extensive layoffs this year and next year and the store closings all over the country – or should I say the world! If you are a pretty regular visitor to Starbucks, like me, you should have figured this would be coming sometime in the near future.
The answer is pretty simple in my opinion – they simply forgot what business they were in and who they were. They aren’t a coffee shop, they aren’t a retailer, they aren’t a supplier – they are “AN EXPERIENCE” that people pay 3 – 5 times as much to enjoy. However, when the experience goes away or changes for the worse, competition is looming in the wings (i.e. McDonald’s and Dunkin Donuts and others) to snap up your “satisfied” customers – not your “loyal” customers. I have always had a saying, “A satisfied customer is one that is simply looking for the next best deal to come along.” This means that as long as you have the “best deal” then they stay with you but as soon as someone offers them something a little better or different, they defect – because they aren’t “LOYAL” they are merely satisfied. I hate it when companies say they have all these “satisfied customers” – all I hear is that they have all these “customers waiting to defect” when something changes or something new comes along.
Back to Starbucks. If you frequent many of these establishments, you realize that it was originally all about the experience. It was the way they treated you, the ambiance, the environment, the Batista’s, the way you felt when you went in there. What it has morphed into is a coffee house – a place to go get a cup of coffee. What happened to the customer – when did they lose sight of the one person that pays them for what they do? Not sure when, but it has happened. Not all locations are like this but more and more of them seem to be moving this direction. I read an interesting article in Inc. Magazine, “How Hard Could It Be?” by Joel Spolsky. He started by saying, “Starbucks’ meticulous policy manual shows employees how to optimize profits. Too bad it undercuts basic customer service.” He is spot on – read the article.
To me this is sad. Not because I love coffee but because I am disappointed when I see companies that start out focusing on the customer somehow get to the point where they feel they are “too good” or “above” having to worry about them any longer. I don’t know of many examples in history where this doesn’t come back to bite them in the you know where and they have to spend all this money and fire all these people because they lost sight of what they were really all about and the customer. It is very disappointing to see this happen over and over and especially to an icon like Starbucks.
I want Starbucks to succeed and be a star in the business world. I hope they get this and figure it out sooner than later. I can’t tell you how many people, knowing I spend a lot of time working with companies on strategy, customer experiences and customer loyalty, come up and say, “why can’t you help them understand what they seem to have forgotten – the customer experience is what we are paying for, we can get “coffee” anywhere.” If it ends up being a “convenience issue” where people see Starbucks as being all over so they will go there because they are convenient, this would be devastating. How many drive through windows does McDonald’s have in the country – they would kill Starbucks if it came down to that issue. No, I think Starbucks needs to rethink this and make a major statement in the market that they once again care about their customers.
I hope they get it sooner than later. Let me know what you think – are you a Starbucks fan or not? Do you think they have lost sight of what they were all about in your area or are they doing great in your opinion? It would be interesting to hear what you have to say about this since they are everywhere. Thanks in advance for any comments…
Blaine
Hi Blaine, great summary of the fall of Starbucks. So much focus on how to be Starbucks, the Emperor seemed to forget he was not wearing any clothes with regards to customer loyalty and retention. Great writeup! We reviewed it on our blog as well.