March 20th, 2009
Have you ever had anything in your life that you really liked – loved, even – and so when it went bad you raged, you beat your fists, you cried out in angst?!?
Then at some point, finally, you had to accept that whatever was to be, would be. As with the 7 stages of mourning, you had no choice but to find acceptance?
Well that it what I am trying to do, as a coffee-drinker and long-time sales and marketing executive, with respect to:
Yes, Starbucks. I give up. I do. Seriously. I started writing about Starbuck’s travails on a whole other blog, for cryin’ out loud, and things have only deteriorated.
Yes yes, I can hear you counter with a reminder that I like the Pike Place and the oatmeal, or that maybe the $4 breakfast combo isn’t too bad. Neither could balance a series of seemingly endless missteps that I did not think could get any worse. Then Howard Schultz rode back into town on his “You ‘executives’ need help; I’m back to bring this place back to its roots” horse and the place went entirely over the edge.
Seriously – I am like this because I love Starbucks coffee.
The problem with Schultz’s naked arrogance is that the world around this company has changed forever. The “roots” from which this company originally drew sustenance are long gone. We can all see that the company over-extended itself with respect to both its geographic footprint and prices… but where is the leadership?? Schultz has been back in that seat for nearly 2 years.
Just as I can’t blame Obama for AIG’s 2008 bonuses, I’m not going to pin firings and store closings on Schultz. He had to clean up a mess that he found upon his return. But beyond that… he spent part of his comeback interview in last July’s Portfolio magazine lavishing praise on a “magical” blended drink from Italy that was “going to be the next Frappuccino.”
Meanwhile, I can’t get a cup of coffee in under 15 minutes in the morning and have to wait for the milk to be refilled.
Since the Portfolio interview last summer, the company’s made a number of “puzzling” moves, including:
- launching the new Vivanno (starting at $2.79)
- reversing its decision to kill the breakfast sandwiches that were difficult for staff and smelly for customers
- maintaining prices despite the worst recession in living memory
- laying off staff with no accompanying attempts to address the stores’ painfully long lines
- creating a new rewards program that was minimally rewarding (Costco had a better deal)
- promising to eliminate the music program that remains in full swing in New York (where the music rack is often neater and more stocked than the condiments counter)
- announcing a new instant coffee
Earlier this week, I cut to the middle of a WSJ article about Starbucks in which I spotted a quote from Schultz: “The issue at hand… is the cost of losing your core customer. It’s very hard to get them back.” I saw a spark of hope – at last, maybe the chain was going back the basics. Was it possible??
Nope. Instead, the article says that Frappuccinos will come off the menu boards altogether, only to be hand-sold by a salesperson in what will undoubtedly be a lengthier, more harried transaction. And in a world headed toward greater transparency, where restaurants are being forced to post calorie counts on their menu boards, Starbucks is headed in the other direction with a plan to remove prices (prices!) from their menu boards. If you want to know what your order actually costs, a staff member will have to stock and point you to a new paper menu somewhere on the jammed counter next to the CDs.
Ironically, Schultz’s response to all this is to start running a new ad campaign that counters the “myth” (his word) that Starbucks coffee is too expensive. Unfortunately, nothing reinforces an existing impression that your products are probably too expensive than you deciding to hide your prices from me.
But, hey: new, “more sophisticated” test stores will have wood decor and a big wood table.
Saving core customers, making a store feel “more like a coffeehouse” – these are worthy ideas rooted in the company’s past that should remain. The thing is, a brand must sometimes re-envision its execution of such fundamental values based on the contemporary circumstances surrounding it. Let’s say Ford had “Get a customer safely from here to there” as one of its original tenets. Back then, that might have involved horses and buggy whips. Today? Same concept, updated execution.
Starbucks is unquestionably struggling to see its external circumstances in a clear and honest light. If it did, it would understand that it has so weakened its own brand that it must re-earn its customers’ trust by truly going back to square one: a good cup of coffee, at a decent price, delivered in a timely fashion. Hold the wood table. Period. The company must remind us that it is first capable of delivering on this primal promise before it can have our psychic ”permission” to explore any of these pet projects (e.g. fruit drinks made from powder).
Until then, all these Vivanno-like moves will not only deepen the company’s failure, they’ll also remind us every day that the company cares more about itself than it does about its customers.
As for the 7 stages of mourning, I am trying to get my head around the possibility of reaching the final stage – Acceptance – while standing in a Dunkin Donuts, holding a latte.