Pour Your Heart Into It (34 page)

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OWERFUL
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ERSONAL
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ONNECTION

We never set out to build a brand. Our goal was to build a great company, one that stood for something, one that valued the authenticity of its product and the passion of its people. In the early days, we were so busy selling coffee, one cup at a time, opening stores and educating people about dark-roasted coffee that we never thought much about “brand strategy.”

Then one day I started getting calls. “Can you come and tell us how you built a national brand in only five years?” It was unusual, people told me, for a brand to burst onto the national consciousness as quickly as Starbucks had. In some cities, it seemed to catch on overnight. When I looked back, I realized we had fashioned a brand in a way no business-school textbook could ever have prescribed.

We built the Starbucks brand first with our people, not with consumers—the opposite approach from that of the crackers-and-cereal companies. Because we believed the best way to meet and exceed the expectations of customers was to hire and train great people, we invested in employees who were zealous about good coffee. Their passion and commitment made our retail partners our best ambassadors for the coffee and for the brand. Their knowledge and fervor created a buzz among customers and inspired them to come back. That’s the secret of the power of the Starbucks brand: the personal attachment our partners feel and the connection they make with our customers.

I’ve learned a lot about great brands from Jamie Shennan, the Starbucks board member who has devised marketing strategies for Procter & Gamble, Anheuser-Busch, Pepsi, and General Foods. He invested in the company in 1990 because he believed Starbucks was already becoming a powerful brand. Great brands, he says, have a distinctive, memorable identity, a product that makes people look or feel better, and a strong but comfortable delivery channel, which in Starbucks’ case was the store. To succeed, you need to be in a category large enough to be robust and vibrant and to have a clear and original vision. All of these factors are essential, he says, but they fuse only if the management team can execute well. Jamie thinks Starbucks can eventually become as widely known as Coke around the world.

Most national brands in America are marketing-driven. Although my background is in marketing, that hasn’t been the engine that drives Starbucks—at least not in the traditional sense. In the ten years after 1987, we spent less than $10 million on advertising, not because we didn’t believe in it but because we couldn’t afford it. Instead, we’ve been product-driven, people-driven, values-driven.

If you look for wisdom on brand marketing, most of what you’ll find is based on the Procter & Gamble model. That is, you go after mass markets with mass distribution and mass advertising, and then focus on grabbing market share from your competitors. That’s the basic way of life for mature products in established markets. If Pepsi gains a point or two, Coke loses. The same is true of cars and cigarette brands. The big packaged-goods companies spend many millions of dollars and design highly innovative ad campaigns with the goal of gaining a few percentage points of market share.

At Starbucks, we have a different approach. We’re creating something new. We’re expanding and defining the market. We didn’t set out to steal customers away from Folgers or Maxwell House or Hills Brothers. We didn’t go for the widest possible distribution. We set out, rather, to educate our customers about the romance of coffee drinking. We wanted to introduce them to fine coffees the way wine stewards bring forward fine wines. Just as they might discuss the characteristics of a wine grown in a specific region or district of France, we want our baristas to be able to intelligently explain the flavors of Kenya and Costa Rica and Sulawesi.

Starbucks built up brand loyalty one customer at a time, communicated through our people, in the setting of company-owned retail stores. Today, even managers of big consumer brands are starting to realize that if you can control your own distribution, you will not find yourself at the mercy of a retailer who may or may not understand your product. It’s an enormously effective way to build an authentic brand, but it’s certainly not the easiest way.

About 80 percent of the coffee sold in the United States is purchased on supermarket aisles. But from the beginning, we left these traditional channels to others and concentrated our efforts instead on our own retail stores in highly visible, high-traffic downtown sites and residential neighborhoods. We located in lobbies and on the going-to-work side of the street. We attracted people and got them to try our whole-bean coffee by first romancing them with espresso drinks.

Our competitive advantage over the big coffee brands turned out to be our people. Supermarket sales are nonverbal and impersonal, with no personal interaction. But in a Starbucks store, you encounter real people who are informed and excited about the coffee, and enthusiastic about the brand. Which brand name are you most likely to remember?

Today, there’s a lot of marketing rhetoric about adding value to products. At Starbucks, the value was there from the beginning, in the coffee itself. When your average sale is only $3.50, you have to make sure customers come back. And ours do—on average eighteen times a month.

Starbucks certainly wasn’t the first company to build a reputation through retail stores. Hundreds of local specialty retailers in cities everywhere do the same thing. Your local pizza shop may take pride in its unique spicy sauce. Or you may know a Chinese restaurant that has authentic
dim sum
, with a great chef from Hong Kong. Or you may frequent a local bookstore because the owner will special order obscure books for you. The point is, you know from experience, or from word of mouth, that they’re the best in town.

Traditionally, local retailers have always thrived by differentiating themselves from the competition and by winning loyal customers with products or services or quality unobtainable nearby. What’s extraordinary about Starbucks is that we used that model to become a national company and then leveraged our brand reputation beyond our stores, to wholesale and food-service channels as well as to new products sold through grocery stores and other outlets.

Starbucks’ success proves that a multimillion-dollar advertising program isn’t a prerequisite for building a national brand—nor are the deep pockets of a big corporation. You can do it one customer at a time, one store at a time, one market at a time. In fact, that may be the best way to inspire loyalty and trust in customers. By word of mouth, with patience and discipline, over a period of years, you can elevate a good local brand to a great national brand—one that remains relevant to individual customers and communities for years.

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UTHENTICITY
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AKES
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RANDS
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AST

In this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are stronger because they are built with the strength of the human spirit, not an ad campaign. The companies that are lasting are those that are authentic.

Take Nike as an example. Few people remember that Phil Knight disdained advertising for years, preferring event promotions and athlete endorsements. He built Nike’s reputation on the basis of authenticity, focusing on how its shoes improved athletic performance. Long after running shoes became a fashion statement and street wear, Nike continued to highlight technical superiority. Long after Nike became known for its megamillion-dollar award-winning TV ad campaigns, the company still embraced its legacy as the shoe of choice of the best athletes.

By contrast, take Gloria Jean’s, a coffee company started near Chicago, which began franchising nationwide in 1986. By late 1991, it was ahead of Starbucks, with 120 stores, compared to our 110. But Gloria Jean’s never developed the loyalty Starbucks did, and ownership ended up changing hands several times. One reason is that the company franchised the concept in more than 100 cities across the country, and each isolated franchise failed to create strong loyalty among customers. More fundamentally, though, the company never established a word-of-mouth reputation for authenticity and quality.

Mass advertising can help build brands, but authenticity is what makes them last. If people believe they share values with a company, they will stay loyal to a brand.

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RAND

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The number-one factor in creating a great, enduring brand is having an appealing product. There’s no substitute.

In Starbucks’ case, our product is a lot more than coffee. Customers choose to come to us for three reasons: our coffee, our people, and the experience in our stores.

Romancing the bean.
Nothing matters more in our business than the taste of the coffee. We are fanatical about buying the highest-quality arabica coffees in the world and roasting them to the desired flavor characteristics for each variety. It’s become a benchmark for us; everything else we do has to be as good as our coffee.

We make much of the romance of coffee buying, telling the story of how Dave Olsen and Mary Williams travel to origin countries and talk to growers. But ultimately, the point is not the mystique but the performance in the cup.

Coffee is easily ruined. Even if you buy the right beans, they can go stale on the shelf, be under- or over-roasted, brewed improperly, or served lukewarm. We are fastidious about making sure nothing goes wrong any step of the way.

Behind the scenes, our retail partners go to great lengths to ensure our coffee stays fresh and flavorful. We keep the beans in vacuum-sealed bags or dark drawers to minimize the harmful effects of air, light, and moisture. We grind them to a precise level of coarseness or fineness depending on how they’ll be brewed. Then we measure the proportions of coffee and water according to exacting standards. If a barista-in-training takes less than eighteen or more than twenty-three seconds to pull a shot of espresso, we ask him or her to keep trying until the timing is right.

Because 98 percent of coffee is water, bad water can ruin the taste of even the best coffee beans. So, behind the counter in every store, where most customers can’t even see it, we even have a special water filtration system. Each of these careful steps adds to our cost of operation, but they make a difference customers can taste and guarantee a standard of flavor and quality that is consistent from store to store and region to region.

Romancing the customer.
Dave Olsen has a saying: “Coffee without people is a theoretical construct. People without coffee are somewhat diminished as well.”

And Howard Behar has another: “We’re not in the coffee business serving people. We’re in the people business serving coffee.”

It’s our partners who pass on to customers their knowledge and passion about Starbucks. If we greet customers, exchange a few extra words with them, and then custom-make a drink exactly to their taste, they will be eager to come back.

So much of the retailing experience in America is mediocre. At the dry cleaner or the supermarket or the bank, you’re reduced to a number, or a credit card, or a personal identification code. You’re just one transaction in a file of consumers that come before you and after you.

But when you meet with an experience at a higher level, where you are treated positively, where someone goes out of her way to make you feel special, where you’re welcomed with a smile and assumed to be intelligent, the experience stands out.

Because we entrust the Starbucks brand to the hands of the baristas, it’s vitally important that we hire great people and imbue them with our passion for coffee. We do that through a training program whose sophistication and depth are rare in retail.

For years, Starbucks spent more on training our people than on advertising our product. We’ve continually refined the twenty-four hours of training we offer to each hire. Every new barista has to take some basic courses in Coffee Knowledge (four hours), Brewing the Perfect Cup (four hours), and Customer Service (four hours), as well as classes in basic orientation and retail skills. From their first day, we try to immerse them in our values-centered culture, showing them the importance of treating customers and one another with respect and dignity. Our trainers are all store managers or district managers themselves, with on-site experience. We train baristas to make eye contact with customers, to anticipate their needs, to explain the different coffees simply and clearly, and to compensate dissatisfied customers with a
Starbuck
coupon that will get them a free drink.

Each time we open stores in a new market, we undertake a major recruitment effort. Eight to ten weeks before opening, we place ads to hire baristas and start their training. We send a Star Team of experienced managers and baristas from existing stores and use a buddy system for one-on-one training.

We also encourage a dialogue with customers by providing comment cards in each store. Typically, we receive about 150 responses a month. About half the comments are negative, 30 percent are positive, and the remainder are questions or requests. The number-one complaint is about long lines. Some customers identify with us so strongly that they write lengthy, eloquent letters, whose tones range from the sublime to the horrific. One man wrote a three-page, single-spaced epic about a tense drive to the hospital with his pregnant wife, and how a latte had eased the stress. To respond thoughtfully to such comments, we asked one of our longest-tenured employees, Barbara Reed, to set up a customer relations function in 1992. She had joined the company in 1982 as a barista, managed the Pike Place store for many years, and worked as a district manager in Canada, so she was familiar with the realities of customer service at the store level.