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A Hard Lesson Learned from Starbucks

A Hard Lesson Learned from Starbucks

February 26, 2008

That Grande Espresso or Tall Caramel Macchiato should taste a little better by now.

Tuesday night, all 7,100 Starbucks stores closed early frustrating some weary-eyed PTA members and college-students looking for a late-night jolt of java from Seattle to Miami. There wasn't a national holiday you missed or heaven-forbid a coffee shortage!

Instead, the famous upscale coffee chain shut its stores down for three hours so it can retrain employees how to make coffee. Yup. You heard that right. After its stock price slid 44% last year and its sales increased only 1% in the 4th quarter, the worst three-month performance in the company's history. Starbucks is launching a turnaround and it's beginning with the basics.

Who is always the last to learn the hard lesson?

The company is finally admitting it got away from its core competency of making a good cup of coffee. Seems like the company execs were the last ones to realize that. Walk into a store lately and you'd have a tough time figuring out if they're trying to sell music, sandwiches or coffee.

Well, as part of the turnaround, they're getting rid of the hot breakfast sandwiches because the aroma 'interferes with the coffee aroma' in the stores, according to Howard Schultz, chairman and CEO of Starbucks. And they're getting back to putting some pride into making coffee starting with their barista re-education. Topics covered include how to pull the perfect shot, steam milk to order and how to customize a customer's order.

To learn how to make a great cup of coffee, the 135,000 employees at Starbucks would probably be amazed to see the barista competition at Coffeefest USA in Washington, D.C. last week. I know I was!

I was there to talk about how coffee store owners can attract more prospects and increase sales with innovative marketing. It was really eye-opening for them and me ' and it wasn't just the caffeine. I was amazed at how much energy and excitement went into making a great cup of coffee. I guess I shouldn't be surprised because to do anything well, you should be passionate about it.

I hadn't seen a barista competition before. The judges scrutinized every move as the competitors labored over making the best cup of coffee.

The customer is the ultimate judge

Starbucks could learn a lot from the baristas I saw. In fact, I think we could all learn something. Because in the end they were competing to produce the best quality product for their customer. Not themselves. Not shareholders or investors. Rather, they had to produce a great cup of coffee that was better than anyone else's for their customer.

We're judged in the same way by our customers every day. Everything you do should be done to please your customer ' not you or anyone else in the organization. The customer decides what is good or bad or what should be done differently.

The secret? Know your customer. Talk to your customers regularly. If you're in a retail environment, get out from the back office and wait on customers. Yes, you probably did that all the time several years ago, but it's time to do it again because I bet your customers have changed.

How to find out what your customers want from you

If you don't get to see your customers face-to-face, pick up the phone and call them. I have a friend, who ran a publishing business and he had all his employees call subscribers to find out what they liked best about the publication and what they liked least. Ten percent of the people contacted said they wanted to cancel their subscription. The customers weren't as satisfied as the staff assumed. The employees learned some valuable lessons about what the customers really wanted.

I'm speaking at the New Jersey Landscape Contractors Association today and one of the big things I'm talking about is how to use the off-season or down-time to meet with customers and prospects one-on-one. There's nothing more powerful than if you can tell your staff or your colleagues: 'This is what I'm hearing from our prospects ''

If your customers prefer to communicate electronically, you can certainly contact them by email. For me, nothing beats a good, old-fashioned conversation with your customers or prospects. How can you get more 'face time' with your customers?

Here are a 4 suggestions:

1. Set up a lunch meeting or dinner with a group of random customers at your next conference or trade show.

2. Send a personal letter to customers asking them about their experience with your organization.

3. Go out and meet with your clients or customers at their office or home, on their turf.

4. Spend a few minutes today, just calling a few customers and ask them, 'How are we doing?'

You'll be amazed at the responses you get. And what you learn will help you increase sales for months and years to come.

Taking you from where you are to where you want to go,