CRM Hits 'n' Highlights from 2007 -- First Coffee on Starbucks

David Sims : First Coffee
David Sims
| CRM, ERP, Contact Center, Turkish Coffee and Astroichthiology:

CRM Hits 'n' Highlights from 2007 -- First Coffee on Starbucks

The news as of the first coffee this morning, and the music is First Coffee's Third Favorite Album from 2007, not necessarily an album released in 2007, but what First Coffee reckons was his third most-played album of the year… envelope please…

Miles Davis's Kind of Blue (1959). The jazz album you're most likely to hear in a restaurant or put on when a "friend" comes over for an evening. Its unobtrusiveness is frequently misunderstood, however. This is the furthest from elevator or background music jazz has ever produced, the fact that it gets so many repeated listens is due to how good it is, not how bland it is.

And First Coffee's Third Favorite Book Read in 2007 is Empire of Wealth: The Epic History of American Economic Power by John Steele Gordon (2004). Academics hate business because they're rarely any good at it, and they really hate successful businessmen because somebody making a roaring success out of something they're incompetent at, in their view, needs to be ignored if possible and denigrated when noticed. Therefore, the history of the stunning success of American business is rarely taught well in school, and when mentioned at all men like Carnegie, Vanderbilt or Rockefeller are presented as caricatured villains. This book is a good antidote to all that, presenting in lively prose the story of how American ingenuity, creativity and hard work built the greatest economic colossus and most affluent society in world history.

Hey folks, we'll be honest: There ain't no CRM news now worth $2.95, and probably won't be until after New Year's. And we're not going to pretend there is. But we know you turn to this space for escape from your everyday lives, for guns blazin', girl-chasin' and roof-raisin' thrills, so we're going to sum up a bit of what we did in 2007, re-hit the highlights. One company First Coffee paid a bit of attention to in 2007 was Starbucks, and for good reason, as we see here in the Ghost of First Coffee past…

In February The Wall Street Journal printed the full text of a rather impressive memo Starbucks Chairman Howard Schultz e-mailed to company executives on Valentine's Day. In it Schultz laments the fact that Starbucks' rapid expansion -- " from less [sic] than 1,000 stores to 13,000 stores and beyond" in the past ten years, as he writes -- has necessarily included a dilution in the quality of "the Starbucks experience."

Amen, First Coffee wrote at the time. You simply can't have 13,000 stores, be shooting for 40,000 around the world, and expect everything to be the same as it was in your first store in Seattle. It will lead, as Schultz said, to "the watering down" and "commoditization" of the brand. My friend, if you're opening in airports and Barnes & Noble stores as fast as possible, you're not controlling quality too closely, you're keeping the profits rolling in.

Schultz pointed out that competitors are piecing off Starbucks customers -- "small and large coffee companies, fast food operators, and mom and pops." The strong implication in the memo is that if Starbucks simply gets back to the Starbucks way of doing things, such competitors will, in his term, be "eradicated."

Well, in point of fact, First Coffee wrote, Starbucks doesn't seem to be losing overall customers. Schultz knows this. What they very well might be losing, however, is a certain kind of customer near and dear to Schultz's heart -- the one who is drawn by the aroma of fresh-ground coffee, one who considers watching a barista prepare a coffee drink an "intimate experience," and who appreciated hand-pulled espresso shots. That guy doesn't feel much at home in a Starbucks anymore, and this nags Schultz. But you can't have it both ways, and Starbucks' shareholders will decide which way they go.

Then in April there was an excellent piece by industry observer Mary Hayes Weier on the tech weapons Dunkin' Donuts is using to try to combat Starbucks, including a system built by business intelligence vendor Oco, which Dunkin Donuts CIO Dan Sheehan told Weier is like "a CRM application with a scorecard built on top," in Weier's words.

Most of Dunkin' Donuts' 5,000 or so franchises are in the Northeast, as First Coffee noted at the time: "You give directions in Boston by how many Dunkin' Donuts to pass before turning left. Starbucks would like a piece of that action." And as it turns out, the private equity group that bought Dunkin' Donuts last year, Weier said, would like a piece of Starbucks' global action: They're planning for "15,000 franchises worldwide," whereas Starbucks has 12,000 stores worldwide, "including 8,800 in the U.S., and plans to add another 2,400 globally this year."

Dunkin' Donuts is wheeling out a system to streamline the process of awarding franchises, on the theory that if they're the first to occupy ground they can fend off Starbucks later. "Salespeople and managers use the system to manage information about these [franchise] customers, including the stage of each potential deal and how financing is going for them," Weier explained.

And this is key, First Coffee wrote: "Since Starbucks doesn't franchise they can parachute in anywhere whenever they want, no mucking around with franchisee approval and funding and royalties and all that." And the Dunkin' Donuts system gives company managers "a dashboard-type software application to identify any problem areas so they can keep deals on track," Weier explained:

"They can get a geographic view of regions where deals are stalling, and then drill down into a specific account to determine what's slowing down the process. They can identify potential deals in locales that are too close in proximity. They also can identify high-performing areas, and gather best practices from those regions' salespeople to share with other areas."

Of course the best of all possible worlds would be Dunkin' Donuts doughnuts with Starbucks' coffee. Here in Istanbul we buy pastries at a Turkish-French café along Istiklal Caddesi, walk three doors down and get coffee at Starbucks. Fortunately neither establishment minds the arrangement.

In June First Coffee received an e-mail from an independent coffee shop owner complaining that Starbucks' coffee was overrated, that there is better coffee to be had, so why aren't Starbucks customers going to the places serving better coffee?

First Coffee would agree that Starbucks rarely has the best coffee in any sizeable city. But "what Starbucks gets right," I wrote at the time, is "what any successful franchise -- Starbucks, Barnes & Noble, the Church of England -- gets right: they always hit the customer's minimum standards." Always. And that's the key.

Because what Starbucks grasps is that it's all about the customer experience. "Walk into a Starbucks you know it's not going to have lumpy, uncomfortable furniture, it'll have good lighting, the music won't be terribly good or bad but sufficient background. The service will be competent and the coffee drinkable. If you want a relaxing afternoon, meeting friends or working on a laptop, that's all you're ask for," I wrote.

Yes there is better coffee than Starbucks to be had. Yes there are better bookstores than Barnes & Noble, yes there is better preaching than that generally offered by the Church of England, but when a customer walks into one of those places, she can count on what she's going to get. Competing coffee shops, bookstores and churches around one of those outlets needs to be at least that good. If they're not, well, they probably don't deserve to be in business in the first place and aren't going to last long.

Because a coffee shop isn't selling coffee, it's selling a pleasant customer experience. If you're just selling coffee all your orders are to go, right? Customers want good coffee, but they want to enjoy, or at least not be turned off by, the tables, artwork, music, staff, temperature -- more than once I've had to walk out of coffee shops here in Istanbul which are so hot I'm uncomfortable. I'm after the customer experience as much as anyone.

And in August First Coffee received the following e-mail:

I have purchased and used a Starbucks' coffee mug for over six months...Usually, I am charged the grande price, less the 10 cents saving. However, sometimes I am charged the tall price for coffee, also less the 10 percent discount.

Now my question is how much should I be charged. The bottom of this steel Starbucks container claims it is 16 ounces. However, I have carefully measured its contents and only if you fill to the overflowing brim can you get 16 ounces into it.

It truly is handed to me with 13 ounces each morning by the wonderful employees who dispense it. Anyway, how much should one pay for coffee when using your mug?

"Excellent question, if a bit misguided on the fact that First Coffee, alas, is not in charge of Starbucks -- were it up to me, my friend, you'd get 17 ounces," I wrote. "But as the self-appointed arbiter of issues arising from the confluence of coffee and customer service, I'd say Starbucks needs to cough up an honest mug that contains 16 comfortable ounces."

If read off-site hit for the fully-linked version. First CoffeeSM accepts no sponsored content.

Featured Events