Pour Your Heart Into It (37 page)

“One sip of an icy Frappuccino creates a private personal cold front all around you.”

We aim for the unexpected, the offbeat, the clever. Coming up with just the right message and tone has proved much harder than I imagined. My highest aim is to have not just our advertising but the entire Starbucks experience provide human connection and personal enrichment in cherished moments, around the world, one cup at a time.

CHAPTER 19
Twenty Million New Customers Are Worth Taking a Risk For

Security is mostly superstition. It does not exist
in nature, nor do the children of men as a whole
experience it. Avoiding danger is no safer in the
long run than outright exposure. Life is either a
daring adventure or nothing.

—H
ELEN
K
ELLER,
T
HE
O
PEN
D
OOR ,
1957

H
OW
N
OT TO
B
ET THE
C
OMPANY

ON A
R
ISKY
D
ECISION

In January 1996, almost overnight, Starbucks more than doubled the number of people it was reaching. United Airlines began serving our coffee.

Over the next few weeks, we received hundreds of phone calls from all over the country. “You’ve got to get out of this,” people complained. “The coffee on United tastes weak and cold.” “Nobody can believe it’s really Starbucks.” “You’ve got to fix it.”

What was supposed to be a moment of glory was feeling instead like a disaster. We had taken a big gamble, and the early returns weren’t looking good.

Every traveler knows that airlines can’t serve a decent cup of coffee. Yet Starbucks lives or dies on the reputation of its coffee. So why did we risk the association? Because we had a chance to do something no one had ever done: redefine the image of airline coffee.

The gamble we took with United put to the test one of the foundations of our business: trust. If people can’t trust the Starbucks name to mean quality coffee, the brand becomes meaningless.

The United Airlines partnership started in June 1995 with a phone call by Vincent Eades, who had joined Starbucks only three months earlier as senior vice president for specialty sales and marketing, the department that handles our wholesale and restaurant business. Vincent found out about a recently completed United Airlines study in which its passengers complained about the quality of its in-flight coffee. He proposed that Starbucks might be the answer to that problem.

Since United is based in Chicago, most of its employee/owners knew Starbucks and were excited about the potential of the idea, even though our coffee is typically more than twice as expensive as the competition. United pilots and flight attendants had to suffer daily with what the rest of us face only occasionally: bad airline coffee.

But inside Starbucks, the proposition provoked a strong debate. Did this move make sense for the company? What damage would we suffer if it didn’t work? How many new customers could we gain from it? Ultimately, it came down to two key questions: Would it diminish the integrity of the brand? And, could we reliably deliver the quality our customers expected, on more than 500 planes all over the world?

It was a huge opportunity: Nearly 80 million people fly United annually, and between 25 percent and 40 percent of them request coffee. That’s a potential market of at least 20 million people a year, many of whom would be tasting Starbucks coffee for the first time.

Vincent arranged with Ted Garcia, head of our supply-chain operations, to explore what it would take to supply coffee to United. Ted discovered that we would need to provide ground coffee in 2 1/2-ounce filter packs, yet guarantee the highest quality possible. That meant working with our supplier to create a one-ofa-kind packaging machine for our needs. Because the manufacturer needed a six-month lead time, Ted went ahead and ordered the equipment, not sure if the deal would be approved.

We were, in fact, already supplying coffee to Horizon Airlines, a high-quality regional carrier based in Seattle. Horizon was the first airline to recognize the added value that great coffee gives to its passengers. But Horizon brews our coffee on the ground, under controlled conditions, rather than on board, and then serves it quickly on short-hop flights.

United was far riskier. With its longer flights, it had no choice but to prepare its coffee in flight. That process is much more difficult than brewing coffee in a restaurant. Airlines pick up water from cities everywhere, and its quality and taste vary dramatically. On long-haul flights across continents and oceans, flight attendants are tempted to leave coffee sitting on a burner far longer than the twenty minutes maximum we recommend. Airplane brewing equipment varies in quality, and airlines are always looking for ways to lessen the weight of almost everything on board. United has more than 22,000 flight attendants worldwide, and training each of them to make a perfect cup of Starbucks coffee seemed almost impossible. The downside risk was tremendous: Twenty million potential customers whose first impression of Starbucks might be awful.

In September, we turned United down. Vincent Eades was devastated. So was Ted Garcia. But our marketing people, as well as some board members, feared that the brand could be irreversibly damaged if it were associated with a business that was perceived as big, mainstream, and too ordinary. They were afraid United would treat us like just another vendor. They didn’t believe United was committed to serving our coffee the way we wanted it served. And finally, they weren’t convinced that United would promote Starbucks as much as we had hoped.

But United wouldn’t take no for an answer. The negotiations resumed until we finally worked out an arrangement that suited both companies.

We asked United to agree to a program far more comprehensive than any that they or we had ever signed before. We asked them to make a firm commitment to brew the best quality coffee. We wanted to train all their flight attendants, not only in the brewing of coffee and the fundamentals of what makes coffee fresh but also in the history and values of Starbucks, so flight attendants could answer questions asked by passengers.

We insisted on a comprehensive, grueling quality assurance program. We examined everything from the dosage and grind to the water filtration system. The brewing equipment on United was some of the best on any airline, but our research and development department found out they were planning to replace a stainless steel part with a less expensive plastic one. We tested the coffee made both ways, measuring the soluble solids, and asked them not to proceed with the substitution. They agreed.

To guarantee that there would be an immediate upside for us, United promised to promote the fact that it was now serving Starbucks coffee. In January 1996, it placed ads on the back covers of
Business Week
,
Time
, and
U.S. News & World Report
. It was not only our first national advertising but also a ringing third-party endorsement from the employee/owners of the nation’s biggest airline—exposure we couldn’t afford to buy. They included a line that I particularly liked: “After all, we don’t just work here. We have to drink the coffee, too.”

United even designed a funny and ingenious TV ad that captured what Starbucks meant to them. In it, a delivery man with a ripped bag of Starbucks coffee trails roasted beans through the airport to a plane door, attracting customers all along the way.

After so much careful preparation and quality control, the coffee should have been great from Day One. But we had not anticipated one major glitch. We had set February 1996 as the target date to start serving Starbucks on all United flights. By that date, United would have used up all supplies of coffee from its previous vendor. But as the Starbucks program began, only 30 or 40 percent of its 500-plus planes had the right brewing equipment. We had discovered that in the old machines, the hot water was passing through the grounds too quickly. To remedy that, United arranged for a brew cup with a metal plate at its bottom to be custom-built, but the supplier hadn’t been able to produce all the new parts by February. On some flights, United had to use the old coffeemakers for the first month or so.

United got an earful, too. But with guts and determination, both companies decided to stay the course. We immediately threw a lot of people at the problem to fix it. Within four months, the new brewing equipment was built and delivered to all United planes, and the coffee started tasting flavorful and strong.

Today, United rates its decision to serve Starbucks as one of its best moves—right up there with the idea of offering Happy Meals to kids. A survey we conducted in April 1996 indicated that 71 percent of coffee drinkers on United described the coffee as excellent or good overall. About 14 percent had tasted their first Starbucks coffee on United. While some said the in-flight coffee was not quite as good as what they had bought at Starbucks stores, a large majority of passengers said that it was better than that of other airlines.

There’s a metaphor Vincent Eades likes to use: “If you examine a butterfly according to the laws of aerodynamics, it shouldn’t be able to fly. But the butterfly doesn’t know that, so it flies.” At Starbucks, we likewise do things we don’t know we’re not supposed to be able to do.

At both United and Starbucks, we think the risk has paid off. And 20 million people, on 2,200 flights a day to destinations on every continent around the globe, are drinking Starbucks coffee, at 35,000 feet.

Y
OU
A
RE THE
C
OMPANY
Y
OU
K
EEP

Many people are surprised at how many opportunities for partnerships we turn down—far more than we accept. At the time we were debating the United arrangement, for example, we nearly implemented another multimillion-dollar deal with a chain of stores that would have taken our coffee to towns across the United States. But that store’s image and philosophy, we decided, were not consistent with ours.

While 87 percent of our sales are still generated through our own retail stores, we are besieged by inquiries to expand the distribution of our coffee to other venues. In assessing any of these ventures, Vincent’s specialty sales group looks not for standard vendors but for strategic partners.

We have a fairly rigorous screening process. Companies we’ve turned down include those who compete too directly with our retail stores, those whose management does not have the same quality orientation, and those whose attitude toward customers is incompatible with ours. Sometimes, too, we aren’t prepared, logistically, to service the business, often because of its geographic location. We also have to make sure we can build a long-term relationship that is beneficial to both parties, in terms of both profits and brand-building.

What began as Starbucks’ restaurant division, supplying coffee to white-tablecloth restaurants in the Seattle area, has now formed alliances with an elite group of organizations. Instead of merely evaluating proposals that come across the transom, Vincent has turned the specialty sales group into a professional sales force that strategically approaches specific businesses that fit into our larger objectives.

Our goal is to make our coffee available where people shop, travel, play, and work. Strategic partnerships have made it possible to drink Starbucks coffee at Nordstrom stores, on Holland America cruise ships, at Sheraton and Westin hotels, and in Barnes & Noble and Chapters bookstores, as well as in offices supplied by U.S. Office Products. The list keeps growing.

But as our coffee becomes more widely available, the inherent contradictions between increasing sales and preserving brand integrity have intensified. Ideally, we want everybody to have access to Starbucks coffee. But every time we sign on another big account, we face the same worry we faced with United: Will we lose control over quality? And will the increased exposure help or hurt our retail stores?

The answer, we found, was picking the right partners, training their people thoroughly, and monitoring as closely and regularly as we can their adherence to our standards.

When we enter into any partnership, we first assess the quality of the candidate. We look for a company that has brand name recognition and a good reputation in its field, be it hotels or airlines or cruise ships. It must be committed to quality and customer service. We look for people who understand the value of Starbucks and promise to protect our brand and the quality of our coffee. All these factors are weighed before financial considerations.