Bloomberg news interviewed Howard Schultz on May 10, 2012, and there were a few interesting points that I want to highlight.
Here’s the link to the video and interview:
http://www.bloomberg.com/video/92427115/
I should be very clear that the above video belongs to Bloomberg.com.
Per the interview, one in four transactions is now through either the mobile card app or using the registered Starbucks card. Here’s what Howard says about that:
“Starbucks is the leading company and brand in the U.S. in terms of revenue and transactions on mobile phones. That, coupled with the Starbucks card, is now 25% of all transactions.”
I often emphatically post that partners need to know the card perks backwards and forwards, and I still intend to write more about that at a later time. With so many transactions via the card, it is now more important than ever for partners to know the perks.
Howard Schultz indicates that Starbucks now has over a 15% share of the K-cup market. That too amazes me, especially considering that one year ago, it was a zero. That means in about 8 months Starbucks has grown from no share of the K-up market up to 15%. That’s a lot of K-cups.
Howard Schultz told Bloomberg, “We have a winning hand, first with Via, which is single serve instant coffee where people can take Starbucks on the go, and then we have obviously this unique relationship with Green Mountain. Green Mountain is an installed base of about 12 million machines in North America. And in less than eight weeks since we went on the platform, we have over 15% share. So the demand for Starbucks coffee in a K-cup is quite significant and sustainable.”
At the end of the interview, Bloomberg TV’s Adam Johnson asks, “You wrote your book back in ’08, Onward, you laid out the platform … what’s the one core value that comes out of that book, that has driven business?”
And Howard replied, “That is a very easy question for me. Starbucks built its brand in a very unusual way — not through advertising or marketing — but quintessentially through the experience. And that experience comes to life through our people. The one thing we have tried to do, and we’re not perfect, is manage the company through the lens of humanity, providing health insurance for our people, equity in the form of stock options, giving back to the communities we serve, and also taking a position on the issues and the crisis facing the country. Most importantly, most recently, on how Starbucks can use its scale for good, and help the country create jobs.”
I just thought my readers would enjoy some of those interview segments. Again, all credit goes to Bloomberg.com. As just a side note, the book Onward was released in late March 2011, and given that the book covers numerous events in 2008 and 2009, it was likely written in 2010.
(Please use the Amazon.com widget in the right side column to buy your copy of Onward and support this blog – or use the widget to buy whatever it is you’d like! Thank you for your support.)
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15%….wow, that was fast! I do not buy Starbucks K-cups because the price is nearly $1 per cup and I cannot justify paying that much for a single cup of coffee brewed at HOME.
I use Starbucks in my reusable K-cup instead.
The phone app is WONDERFUL and I have used it on both Android and Iphone and have only had it fail once. I love reloading it while standing in line or sitting in traffic and getting an email confirmation. It almost makes it TOO easy to zip by Starbucks for a cappuccino.
Very interesting interview with Howard. I was intrigued by Howard’s comments re the core value of the business. Maybe I am being a bit cynical, but I am not totally sure what he says in an interview or in writing is actually successfully implemented across the board at all SB. I know it depends on the partners, SM, DM, etc. but there has to be more accountability. Another thought I have been thinking about especially with the discussion in an earlier post about customers and getting the coffee the way they like it is what impact does a customer have on a local store level meaning are the customers really being listened to and if not what can be done? I guess Melody perhaps that could be another blog post? What effect does the customer have at the local level and can there be harmony between the customer and SB personnel?
great comment from @ purple………I agree with every word. H.S. is definitely a very inspirational speaker, having seen him myself last yr…and met him. Very nice etc. But, as was said above…not sure about the real focus. Plus, it does slay me when a company THIS big feels the need to raise prices so often and usually quite quietly. and are the customers really being listened to? Sometimes not so much.
The whole direction toward ‘light’….in the release of BLONDE and the disappearance of, it seems, so many coffees……. I don’t know. have to come back later…. about to run out the door.
Melody, thanx for taking the time to do this thread! as alwaya……
@purple1 – That’s a complex question. In that particular Howard quote, he talking quite a bit about the quality of benefits that partners get which separates the company from other retail. So if you were to go work at another retail business, clothing, or other quick service food retailers, it is unlikely you’d have health care for partners, stock options, and it is true many companies don’t take a big swing at things like community service to jobs in the usa etc…
If a store is on its game, the overwhelming majority of customers will be happy. There will always be a small percentage of customers who aren’t happy. The whole process is a listening process. We customers though, honestly, have very little voice. We can call customer service or email a DM if something is amiss but that’s about it.
On a larger level, sometimes Starbucks is really unresponsive to customer inquiries. I have definitely experienced that. That’s an area where there is an opportunity for improvement.
Your response Melody opens up to me the question then of where does HS see the customer and how does he value the customer? I agree that from a retail point of view and an employee point of view SB offers alot especially as it applies to health benefits for part time workers. The question I ask has been asked before if I recall in other blog posts and I guess this is an ongoing discussion with no real answer.
@purple1 – Starbucks takes the attitude that you have to take care of the partners to take care of the business. Makes sense. Happy employees means that the experience should better for the customers.
After taking care of partners, then there is the age-old question of what role does the customer play and where do they fit? I know that once in a while my own inquiries to the SSC have gone unanswered, creating a frustration for me. Overall, I think that Starbucks is responsive to customer complaints.
I definitely think Starbucks as a corporation values customers – I have heard somewhere Howard Schultz say that it takes five customers to make up for every lost customer.
When a person talks in vague terms, the conversation goes nowhere: For me, I specifically want to see partners in the store be more knowledgeable about the card, and I’d like to see Starbucks remind all partners that you can take photos in the store.
I don’t think any particular customer wields influence, but if you some specific issue then bring it to the DM or customer service. I’m trying to hurry off to work, and not sure if this makes sense. The more concrete we can be in where we’d like to see change, the more we can effectuate that change.
If I was being vague, then I am sorry. I agree with your two points about the card info and photos but I also would like to see something quite simple and too often not done as simple as it seems- I have come across too many partners that just do not acknowledge the customer a simple how can I help you, a smile, and an acknowledgement of how can I make your experience here a good one. It would nice to feel when you walk into a SB that it is that third place. I pretty much know all the partners at my local SB so I have conversations with them, but I do see at times their reactions to customers that are not regulars. I suppose everyone is allowed good and bad days for sure. I have also spoken up when I feel it needed. I am sorry if I got off topic.
@Purple1 –
The issue of welcoming and greeting customers is a good one. When a customer walks up to the register, the side conversation about what party you were at last night should end. There can be standards and strategies to welcome customers: For example, a standard of greeting every customer within 15 seconds of walking in the door (many businesses do something like that). Starbucks could teach partners about the strategies not to single out regular customers and making everyone feel welcome (there is a ‘bob not bob’ training piece on this, so I have heard.) And re-emphasizing “help a customer” as the first thing that happens over things like re-stocking mugs, and lastly striving to enthusiastically satisfy customers. Those are all the aspirations. Training helps get you there.
It is a bummer to walk into a store & meet grouchy partners, or those who give off the vibe that they’re entitled to an easy job, all perfect customers, and a store that magically cleans itself. Much of that has to do with hiring practices. I am sure that hiring the right people is a huge challenge too.
Commenting on customer service: As a starbucks partner I feel like we don’t work for tips as much as we used to considering we only take cash tips, unfortunately tips are a great incentive to be nice to customers and pay attention to them. Almost no one carries cash anymore and since 25% transactions are on the Starbucks card and most every thing else is credit card we are dearly hurting in the tip department. Yes we get health benefits put we are still only working minimum wage and slightly above. On the Starbucks idea website corporate said they are not planning on allowing tips on credit or starbucks cards saying it will slow down business and that we still won’t make as much considering taxes. But I strongly believe that our cashless society needs another way to give tips at Starbucks! Thanks : )
Sam, the issue with the tips is a good one. I don’t talk much about tips with partners who know me. I doubt Starbucks will ever go to a system of tips other than cash because I think it creates a messy situation with taxes. One change I see is that some customers tip one larger amount every few weeks rather than small change every visit since if you use a card, there is no small change.
re: tips: I use a Sbux card and I carry cash and I tip. (altho there is a part of me that feels asking to pay for tips…which is essentially what those little boxes are doing….is just somehow not so ‘right’…no matter what the wage) I feel it’s up to Sbux to pay its partners…of course, it’s still thru the customers…we pay for it all or there’d be no Sbux.
I realize healthcare is a huge benefit but now, with all these young people being allowed to stay on their parents insurance until they’re 26……. ??? and considering 25 is practically considered an old partner in MOST or many Sbux….. ??? not to mention, Sbux is not paying healthcare in Canada….which I assume is its next largest market.
AND, there’s that $$$ on the cards issue. Now, with so many cards, imagine the enormous loan Sbux gets every single minute with this “rewards” plan.
I was looking at the “coffee wall’ today while waiting for my drink and it’s just so minimal, it’s amazing. The whole top shelf was “blonde”, 2nd down was a very few kinds of “medium” and also very few, BOLD on the bottom. We’ve really lost alot of coffee and that is disheartening to me.
Melody – you are right on the money with being specific as possible. My CV comments have been filled with vague concerns at times, none of which I can really answer because I’m really unclear as to what the real issue is. Then, I had a customer give a really specific suggestion about moving the condiment stand – we took it upon ourselves to do so during the last rollout, and we all *love* it. Has completely changed *where* the congestion is in my small store, and is making it way easier for people to get in and out! I, and most other SMs out there, are totally onboard with making changes if they meet a need our customers have and meet the needs of our business 🙂
And in terms of customer service, it *is* about hiring the right people, which is hard nowadays when the people I’m hiring have grown up so attached to technology and detached from people, but it is more about consistent expectations, and following through when they are not met. I could write a large paragraph about how proud I am of my partners and their customer service, and how good they are at looking out in the cafe and reading the situation and responding correctly, but I won’t. But the reason they are so awesome 🙂 is because every time I see it not happening, I look at it as a teaching moment for them to know what to do next time.
– “Hey – do you see what I see? That customer tapping his foot at the end of the line? Open up your till.”
– “Do you hear the timer beeping and see your fellow partners trapped in position? Brew the coffee.”
– “Do you see the 27 bazillion people waiting for drinks at the bar? Help the bar person.”
See the situation for what it really is. Interpret it correctly. Act. Over and over – gentle coaching and teaching them to read cues that honestly, half of them have not grown up learning how to read. Therein lies the real problem I find with most service-oriented businesses – the young people being hired do not have the awareness of body language/reading cues/common sense that was more prevalent even 10 years ago, and companies aren’t adapting their training fast enough to reflect this deficiency.
Stepping off my soapbox – I loove teaching/training in general, and it always gives me a thrill to watch the rough edges come off a partner and watch them become so great at adapting to different situation after different situation.
Rebecca, you hit the nail on the head. A day at a time and teaching by example and showing your concern over and over gets the job done and makes for happy repeat customers. Starbucks is privileged to have you as an employee.
This morning at my local SB I had the experience with one of the partners where she was more interested in side chatter with another partner than discussion with me. It seemed to go on forever (although I know that was not the case) and it seemed to delay the transaction and the line. This person has been known to do this with others. On the other hand, another partner there was very involved with the me and customers almost the extreme opposite.
@Sandra – awww, thanks. I had a terrible weekend – coffee brewer and sanitizer broke. Mix in a very sunny weekend of Happy Hour meant that I did not actually get to see much of the sun, or my home, or my blogs – so I very much appreciated the kind words.
And I don’t exist in a vacuum – I have a great DM who is also very supportive – sets expectations and follows through with coaching and/or celebration when I am or am not meeting them, and I have a great ASM/shift team who are proactive, take projects on, coach partners in the moment, and in general make it soo much easier for me to be able to teach as well. It is easy for me to love what I do – I have some awesome people to work with!