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Starbucks originally sold coffee beans and not drinks in a cup. Slowly, the brand developed into what we know today as the "Starbucks Experience.”
Starbucks sells much more than the coffee; it's the community feeling, cozy interior design, satisfied employees, adequate coffee quality, and great service associate with it.
But how and when did Starbucks start?
The year is 1970. Three college friends, Zev Siegl, Jerry Baldwin, and Gordon Bowker, decide to get into the coffee business. At that time, Americans usually drank coffee at home or diners.
Their initial focus was to bring high-quality and carefully sourced coffee beans to customers used to drinking instant or canned coffee. That changed with the addition of one man, Howard Schultz - Starbucks marketing lead at the time.
After one trip to Italy, Howard realized it wasn't enough only to sell coffee beans. Afterward, Starbucks concentrated on creating a new experience for their customers for them to be able to relax and enjoy their time away from work.
Starbucks offered its customers additional value, and in doing so, completely reinvented the coffee experience.
Starbucks' initial focus was on bringing high-quality beans to US consumers who were more accustomed to instant or canned coffee.
Howard Shultz, the Starbucks owner, had a business trip to Italy that changed his perspective on coffee. As he explored the streets of Milan, he was taken aback by the number of cafes. Howard was captivated by the idea of the baristas making your coffee in front of you while you relax. He saw the customer feelings and experiences associated with coffee in another culture; Italians enjoyed coffee slowly, and coffee shops offered various drinks (latte, cappuccino).
Shultz was extremely passionate about having the Starbuck brand educating the US market about what coffee should look and taste like and how customers should enjoy it.
The goal was to transfer the "culture" of coffee drinking in the US and create a personalized coffee drinking experience.
Starbucks opened its first stores with an improved concept that included well-trained baristas making Italian espresso coffee in front of customers. The interior has been specially designed to meet the US customer’s culture but at the same time offer the same feeling of community seen in Italy.
In the 1980s, Americans didn’t enjoy espresso the way Italians did.
Schultz, Starbucks marketing director at the time, saw an opportunity in the coffee industry. He planned to reinvent a commodity. By taking Nike’s example from that time, Schultz wrote, “sneakers were indeed a commodity, cheap and standard and practical and generally not very good.” Nike pushed the limits of the customer's expectations, quality, design, and overall brand feel and transformed sneakers from commodity to complete experience.
The same concept also applied to the coffee market at that time; Americans bought coffee beans in the store and made their coffee at home, resulting in low coffee quality and experience.
Starbucks had a hypothesis that the customers would embrace the Italian coffee culture. The US customers had slightly different preferences, so Starbucks pivoted and added US specific elements to blend Italian coffee culture with the US culture.
Starbucks pushed the bar even higher with innovation in customer service and in-store experience.
The new Starbucks experience included:
With all those elements combined, Starbucks successfully reinvented a commodity and introduced a complete different coffee experience.
By the time the coffee industry got a bit more developed, most of the cafes only offered to enjoy their drinks in the coffee shop. As the business world’s pace picked up, customers wanted to take their drinks and enjoy them elsewhere.
Starbucks took time and researched what its loyal customers want. The research team talked with more than 200 people to find out what could be improved.
One thing that fits in perfectly in the lifestyles of Starbucks' customers is takeout cups. They still wanted a premium, quality product, but with the flexibility of having it on the go. Take out cups brought a whole new experience for people who are in a hurry and want their morning coffee done quickly.
You might find yourself in a foreign country, wanting a cup of coffee. But it’s hard to know what kind of quality to expect when you walk into a new shop for the first time.
Starbucks aimed to create high levels of quality consistency, making it easy to know what to expect. Starbucks makes their stores customer-friendly for newbies to coffee drinks. Explanations are everywhere for what they sell. That makes the experience less intimidating for new or experienced customers in trying a new product.
Starbucks tests around 1000 coffee cups throughout its stores daily to verify the superior taste that everybody expects. When a customer walks into Starbucks, he has a clear idea of how a coffee should taste, how long it takes to get it, how much it costs.
Fear of the unknown is deeply embodied in all humans. That’s why walking into a familiar place doesn’t seem as intimidating as going to an entirely new coffee shop.
Starbucks has succeeded in creating a feeling of belonging when you walk into their shop. Walking into Starbucks, no matter in which city, makes a similar feel. The familiarity of drinks, people talking or working on their computer, it all sums up.
The social aspects of coffee shops are the part that makes them appealing, for connections that resonate across all demographics.
Starbucks has made it a mission to create a positive experience for their customers. Starbucks employees learn how to recognize and respond to customer’s needs and wants. They use the “latte method” in unpleasant situations:
"We Listen to the customer, Acknowledge their complaint, Take action by solving the problem, Thank them, and then explain why the problem occurred”.
Starbucks employees respond well to difficult situations - something that most service representatives find hard. They create a positive experience for the customers.
In a fast-paced world, Starbucks couldn’t connect with customers using only traditional media. Starbucks continuously developed new digital solutions and made an effort to communicate with the customer.
One example is the Starbucks app, where customers can earn Stars toward free items, order drinks, pay, and more. It was a great solution during the lockdown when the company welcomed customers back to stores with modified store operations and pausing on seating in cafes to help create social distance. With the app, you can order ahead, pay, and even collect stars to earn free items.
It is also a way to collect valuable insights on what its customers love and appreciate about Starbucks. They’re using data and resources to be more front-footed on useful trends pointing what customers want from them.
In June, Starbucks announced a whole new set of features based on their loyal customers' feedback.
"Having a connection with our customers, whether in our stores or digitally, allows us to anticipate their needs and deliver the products and experiences they are looking for. Our customers have shared with us that they would like more options to pay and earn Stars in the app as a Starbucks Rewards member, in addition to the Starbucks Card," said Brady Brewer, Starbucks chief marketing officer."
— quote from stories.starbucks.com
Having a digital touchpoint with their customers enables Starbucks to lead a digital two-way communication. They can analyze the data about their customers, give them personalized offers, and ask for feedback. Customers today expect personalized experiences, tailored offers, and fun interactions, and many brands can learn from Starbucks.
Customers care about transparency, how did Starbucks leverage transparency in its favor?
Starbucks has always been very open about the ethical and sustainable sourcing of its coffee and how they run their business. The company is very passionate about trying to create a positive global social impact.
Starbucks continues to invest in people and their business partners to uplift customers and the communities they serve. For example, when the coronavirus was just starting to spread, the company announced a partnership with mental health provider Lyra Health and a new benefit to provide partners and their families with 20 free counseling sessions each year. That way, not only they're helping their employees; they're also creating meaningful connections with the customers that have the same values.
If we look at Starbucks' corporate blog, we can see various missions and charities the company supports. From offering jobs training for people with disabilities to feeding 10 million people through the FoodShare program, Starbucks is clearly on a mission to make this world a better place.
Coffee shops have a high employee turn-over rate. Educating new employees is time and resources exhausting, and they’re prone to making mistakes. How to create a pleasurable experience for your workers to give the best experience to the customers?
Creating a positive working environment and a welcoming atmosphere makes happier employees and lowers the employee turn-over rate. Long-term employees can engage with regular customers, learn what they love, and contribute to the creation of Starbucks’ experience.
Not only Starbucks has taken a serious step towards creating a more sustainable work economy by enforcing higher wages, but it also offers plenty of different benefits to its employees.
Those benefits range from:
From free coffee to bonuses, Starbucks employees enjoy some of the most competitive benefits. It has played a massive role in driving its growth because Starbucks believes that "success is best when shared".
Starbucks has grown to a world-known name, recognized for its premium coffees, experiences associated with their shops, and familiarity with the coziness and atmosphere. When you walk into a Starbucks in Vienna or New York, you should feel similar.
There is a lot to be learned from Starbucks regarding the customer experience. They were the first to bring the experience of enjoying espresso coffee to America. Starbucks focused on creating a premium experience for their customer through quality consistency, digital solutions, or new options (i.e., takeout drinks).
However, they didn't forget the importance of creating a premium experience for their employees through a set of perks unpresidential in the industry.
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