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Venti Sized Relationship Marketing


Starbucks Coffee Header

As someone who has had coffee on three continents and at least 25 states in the US, I like to think I’m a coffee connoisseur. I also worked as a store manager for Starbucks Coffee for over a year. To say I love coffee would be an understatement.

During my tenure at Starbucks Coffee, I tried all of their coffees, including the special roasts. And of course I tried all of the espresso drinks as well. Starbucks coffee is good, but it’s not great. I personally think it is roasted too dark and just a mediocre bean. The best coffee I’ve ever tasted was in Vietnam, brewed fresh, in a single cup filter, at my table.

If Starbucks’ Coffee is just okay, why do people wait in line up to 30 minutes for it? Why do they pay two to three times more for a latte than they would in the family owned cafe down the street (odds are the family owned place will taste better too)? It boils down to marketing. In Starbucks’ case, relationship marketing. Starbucks knows what their customers want and goes the extra mile to make them feel like royalty.

Starbucks began in Seattle, Washington in 1971. The original store, which is still there, is at Pikes Place Market. Their claim to fame was fresh, high quality coffee beans and brewing equipment. However, in 1988 the company was purchased by Howard Schultz who changed coffee consumption as we know it.

The company expanded from plain drip coffee to hand crafted espresso drinks, inspired by espresso bars in Italy.  This is where the relationship marketing revolution began.

Baristas were trained to have a “just say yes” attitude with customers. Customers could customize their drink any way they like, from a simple dopio espresso to a complex quad venti soy upside-down extra caramel sauce caramel macchiato. Any barista will craft the drink (mostly) the same, at any Starbucks in the world.

In order to focus on their customer rather than a coffee assembly line, baristas only make one or two drinks at a time, giving them a chance to create a warm personal connection with their consumer. In my store, regular customers didn’t even have to order their drink, when a barista noticed them in line, the drink order would be automatically placed and waiting for the customer when they reached the register.

As the overall brand and the “just say yes” culture grew, Starbucks expanded their marketing to include a “third place” concept. The place between home and work that people go to connect with their community. They encouraged customers to hold business meetings, relax with friends, read books and magazines and organize for the community. To encourage stores to organize philanthropic projects in their community, Starbucks pays baristas up to 40 hours a year for community service work they do.

Using this “third place” approach, Starbucks slowly but surely connected the majority of Americans with their local Starbucks store by providing a safe, comfortable environment with oversized furniture and free wifi.

Once the brand went international, Starbucks moved away from the “third place” culture and went more for a consistent, mass-produced feel while maintaining strong personal relationships. This is where drive-thru locations, Starbucks music stores, licensed stores and kiosks and mass market packaged goods came into play.

One of their most successful relationship marketing tools has been the Starbucks card. Everyone I know has gotten a Starbucks card at some point, either as a prize or as a gift. Starbucks expanded this program beyond a simple gift card into a relationship-building tool by creating the Starbucks Rewards Program.

Using the power of database marketing, they collect information about their clients and incentivize them to return again and again. At the first level, just for registering their card, Starbucks gives rewards program members a free birthday drink, discounts on coffee beans and retail products and special discounts in the mail. At the next level, more frequent guests receive free drink upgrades (syrup, extra shots, soy milk, etc). And at the final level, the Starbucks Gold Card, members receive a special gold gift card in the mail with their name on it. Not only do they get all of the benefits of the other levels, but they receive a free drink for every 10 that they buy as well as better discounts on products.

Starbucks’ ultimate success lies in integrated marketing communications. They coordinate their communication between text, e-mail, direct mail and social media to spread their message to the largest possible audience. They have pioneered new ways to pay like the Starbucks app for smartphones where customers can just scan their phone to get rewards without having to carry around their Starbucks Card.

To better understand their consumers, they conduct frequent market research to see what their customers think. At the most basic level they use in-store observations and at the most technical level they conduct formal market research using surveys and focus groups.

As small business owners we don’t have the multi-billion dollar marketing budget that Starbucks has, but that doesn’t mean that we can’t employ some of these same strategies to better connect with our consumers.

  1. Setup a Client Relationship Management (CRM) database to track information about your customers, past interactions, future opportunities and important dates like birthdays.
  2. Send thank you cards, happy birthday cards and sales promotions to customers (with their permission) using an integrated marketing approach.
  3. Make your customer feel special: address them by name, establish a human connection beyond business, if possible have the customer always work with the same person at your business.
  4. When something goes wrong, own it and make it right. Most of us can’t solve a problem by just giving someone a free drink, but it is important to make every customer feel special and appreciated, even the difficult ones.
  5. Reward loyal and repeat customers.

Written by Michael

November 11th, 2012 at 2:19 pm

Is The Customer Really Always Right?


business, communication, customer service, ethics, KPI, marketing, objectives

Conventional knowledge says that the customer is always right. Period. But is the customer really always right?

Working in the marketing and web design industry, we do not believe the client is always right. In fact, in my experience, the client is often wrong. And usually doesn’t know what they want until you tell them.

Some examples from web design: musical flash intros. Blinking text and flashing graphics. Splash pages. Graphical mascots. Guest books. These things were great in the 90s. But they are obsolete (and distracting) when it comes to conventional Web 2.0 standards of design.

Is The Client Wrong?

When considering what is right or wrong for a client, we must remove any emotion from the equation. We must distance ego from from the project, perhaps asking the advice of an uninvolved third party, to be as objective as possible. What are the client objectives? What are the pros and cons of this specific client request? Will it help their overall objective or hurt it?

In many cases, the client will know their target audience better than marketers will. After all, they deal with their market on a daily basis. Keeping this in mind, if it still seems that a client is wrong, suggest some alternatives. Compromise on an alternative rather than just telling them they are wrong.

At the end of the day, the client is paying us to meet their needs, not necessarily industry conventions. If a request helps their bottom line, even if it is absurd, just do it.

Speak The Client’s Language

Remember that a client may not necessarily speak “techno babble”. They may not realize that a seemingly simple request may take 20 hours of coding. It is important to communicate with a client in a language that they can understand.

When in doubt, help the client define the following things:

  1. Overall Objective(s)
  2. Measurable KPIs (Key Performance Indicators)
  3. A Marketing Communications Plan
  4. Set & Execute Milestones
  5. Compare Results to KPIs
  6. Make Changes As Necessary

When client requests can be directly and objectively measured against KPIs, a client is much more likely to take marketer advice.

When To Say No

It is important to remember who is the expert. Clients don’t hire consultants to complete tasks they can do themselves, in-house. They hire consultants to help them improve their business because we are experts in our fields.

As such, it is important to maintain credibility. My motto is to “under-promise and over-deliver”. Set realistic goals and exceed clients’ expectations by meeting and exceeding these goals.

Ethical Conflicts

The following are situations where a client is always wrong and it is okay to say no:

  • Being asked to work for for non-monetary compensation or for significantly less than the market rate of compensation.
  • Being asked to commit to an unrealistic timeline.
  • Being asked to do something you find ethnically questionable.
  • Being asked to take on more work when you are already overextended.

In all of these situations, there is big potential to disappoint a client. And as a result, not only fail to help a client, but perhaps hurt a client.

When it comes to ethical conflicts, always say no. It is not worth hurting your reputation for a client. There are plenty of shady companies out there who will take their project. Choose the ethical high-road by saying no. The universe will send you plenty of new business to make up for the one lost contract.

Continuous Changes

In the web design industry, some clients have the idea that they own their designer for life once a website is designed. They expect changes to be made to their website frequently, instantly and for free. Therefore it is important to set boundaries and proper expectations to what is and isn’t included in your service.

At my company, we explain to a client up-front the scope of our service. We outline our 90 day satisfaction guarantee and what services carry additional cost. We still encounter the occasional client who expects free updates, but we can refer them to our written policies, offer to make changes as a one time courtesy and then explain to them that future changes will be billed at our standard rate.

This is not the answer most clients want to hear, but it has enabled us to save a lot of relationships while earning a fair rate for our services.

Photo Credit stratfordcollege on Flickr

Written by Michael

October 11th, 2012 at 4:32 pm