Marketing Lessons from Starbucks – a Q&A with author John Moore
A No-Nonsense Marketing Smart Tip November 7, 2006
John Moore spent years designing and implementing marketing programs for Starbucks, and he has roasted and steamed his knowledge into a new book: Tribal Knowledge: Business Wisdom Brewed from the Ground of Starbucks Corporate Culture (check out the associated blog and his Brand Autopsy blog, one of the most admired marketing blogs out there).
And make sure to listen to the full 15-minute audio interview (what follows is only an abbreviated transcript).
Starbucks does lots of marketing, but not so much advertising? How come?
Starbucks would rather spend its dollars to make a customer’s experience better than to make a better television ad. So that’s where their marketing money goes – from their different, unique beverages to their in-store music to creating a comfortable environment for customers.
Starbucks has baked the marketing into the product. So, in the end, they feel the best tool to get folks talking about Starbucks is their experience when they come into one, rather than hearing or seeing it on a television, radio, or print ad.
You say the main reason customers keep coming back to Starbucks is not just for the experience of the place per se or for the coffee itself but because of the connection they have with the barista. Likewise, radio has these folks between the records called DJs or personalities. And that makes radio more than a collection of songs or an iPod. Ideally, there’s a filter there, a personality, a sensibility. And it seems to me that’s analogous to Starbuck’s barista, right?
Yep. Because one thing Starbucks has in every store is a touch point, meaning customers get to touch the product every time they go in a Starbucks.
Radio’s a little different because you can’t really touch it. You can feel it. You can hear it. But you can’t really touch it. And I think some of the radio broadcasters out there miss that point: They should be thinking more about “high touch” rather than “high tech.”
You’re talking about the importance of shaking hands and kissing babies. Having our talent on the street and among the listeners.
Basically so. I think in today’s go-go high tech space, so many folks are trying to put the fun things online when really what might break through the clutter would be to actually go out there and shake some hands. Talk to folks. Let people interact with the DJs.
When I see stations doing a remote broadcast, sometimes they don’t bring their best talent out. They’ll bring the second-stringers or – worse – the intern who’s calling in on the cell phone. Listeners might come expecting some big hotshot DJ, and instead they get Sam the intern who’s been on the job for two weeks putting up banners.
So it’d be like selling Starbucks on the street corner on a folding table with a canopy and a hand-drawn sign?
I think that’s a great parallel.
You have dozens of “tribal truths” in this book. Which ones do you think are the most important, especially when it comes to the radio business?
Building the business creates the brand (not vice versa) – that’s one.
Second, the idea of trying to be the best, not the biggest. So many companies have these goals to be the biggest whatever, when they should probably concentrate on delivering the best product, the best service possible, and bigness is going to be a by-product of being the best.
Third, the concept of trying to abhor complacency, resist conservatism, and fight conceit. When businesses become complacent, they become satisfied with the status quo. They don’t take chances anymore. And they become conservative by not taking some of the risks they took when they were young upstarts.
I really believe that companies that want to grow and have a bigger impact must fight against conservatism, fight against conceit, and never become complacent.
Truth #46: “Profit is a by-product.” In this “tribal truth” you say profit is the result of doing other things right. Not the destination in and of itself.
A business truly profits when it does everything else right. When all the pieces fit together profit is the by-product.
But once you start to trick it up, that’s when I think you get some problems. That’s when you start to sacrifice some of the customers’ experiences. Because any time you squeeze the costs out to juice the margin, you are usually subtracting from a customer’s experience, Maybe you’ll pay your partners a little less, or maybe you’ll put fewer comfortable couches in a Starbucks store.
But if you are delivering a great experience, if you are treating your customers well, treating your stakeholders well, and treating your employees well, profits will come.
But do the “little things” matter enough to justify their cost?
At Starbucks, it all matters. Everything matters.
If you are running a business, and you see something wrong, you may say, “Oh, a customer will never notice that,” but chances are they will. And if they do, there’s a potential disconnect. It’s those little holes that add up. And it’s all those small things that truly matter and accumulate some big impact.
What do you think about loyalty or “frequent listener” programs?
I find that most loyalty programs do not enrich customers’ lives. They entrap lives.
I would rather see folks develop not loyalty clubs but fan clubs. Instead of trying to entrap their lives by giving lower cost goods, go further. Make their lives better. Give them something that’s exclusive. Give them the opportunity to be the first to buy whatever it is.
Most loyalty clubs are all about trying to get us hooked on a lower price. They’re not about trying to make our lives better. Your fans are going to talk about you because you treated them special and you’ve given them something more.