Monday, September 25, 2006

From Starbucks, a Lesson in Thinking Like a Customer

Over at StarbucksGossip.com, a blog that exists solely to comment on Starbucks, there's been a little debate raging about customers who make their own iced lattes.

Scanning the coffee menu at Starbucks on Fourth Street in Santa Rosa reveals that the cost of a tall iced latte is $2.45.

Don't want to pay that much? Order a shot of espresso and a cup of ice — at a cost of $1.35 — and use the milk at the condiment bar to make your own latte. That's a savings of $1.10.

Is it stealing? Some say it is.

Some of the baristas find it particularly annoying:

At starbucksgossip.com, many of the more than 400 posts on this topic said customers are taking unfair advantage of the company, which for the month of August reported revenue of $617 million, up 21 percent from August 2005 revenue.

"The condiment bar is called a 'condiment' bar for a reason," a barista wrote. "The milk should be used as a condiment, not the base of a beverage."

"I have to say that this is a sucky thing to do," another barista wrote.

A lot of companies would look at the money lost of DIY lattes, get worried, and come up with some kind of irritating scheme to lock up the milk or turn the store employees into latte police. Starbucks, to its credit, did not:

In a statement released last week, Starbucks sided with customers.

"Customization is a fundamental attribute of the Starbucks Experience," the company said in an e-mail statement. "We provide condiments to our customers so they can make their drinks to their liking, and we appreciate their patronage. We trust our customers to make the choices that are right for them."

The statement reflects the company's "Just Say Yes" policy, another way of saying the customer is always right.

Starbucks knows what its selling. The coffee is good but not great. What brings people in is the desire to go to Starbucks.

With the margins on those eighteen-syllable concoctions that are more like candy than coffee and the add-on sales of CDs, mugs, coffee machines, and the like, they can afford to lose a little on the DIY-crowd. What they can't afford is people who don't like going to Starbucks, because then the whole business falls apart. This kind of thinking is one of the reasons they're so fantastically successful.

Don't annoy your customers over the little stuff; recognize what makes them want to do business with you, and you'll find plenty of profitable ways to sell to them. If you damage that fundamental relationship, all the smart products in the world won't help you.

1 comment:

Sean Branagan said...

Agreed. The cheesy places count the number of paper napkins, condiments, etc. they give you and you have to go back to the counter person for more. The cost in inconvenience and mistreatment of your good customers is far greater than the savings from stolen napkins and other items. Think of the parent with the little kid in the backseat. There are never enough napkins!