Starbucked Read online

  Phase 1: Know the Target

  One drizzly November morning in Portland, Oregon, I met Jerome Conlon for coffee at one of the city’s two-hundred-plus Starbucks stores. Though one wouldn’t guess it from his scowling, brooding demeanor, Conlon happens to be an established authority on the psychological nuances of this exact social activity: getting coffee. When I first shook his hand, Conlon wore a huge, dark trenchcoat and a facial expression that seemed to imply that his mind contained ideas no other human has ever conceived; later on, that look was in full bloom when he told me, “I know more about the social role of coffee than anyone alive.”

  Now in his late forties, Conlon has spent his career plumbing the depths of the consumer brain to uncover not only what people want to buy, but how they want to feel when they buy it. During much of Nike’s growth spurt in the eighties and nineties, he was its one-man market research department, responsible for keeping marketers and designers aware of the consumer’s mood toward the company. When teens began seeing Nike as soft and institutional in the early nineties, for example, Conlon raised the alarm, spurring the company to launch an edgy and controversial ad campaign that featured the basketball star Charles Barkley declaring “I am not a role model.” In 1996, Conlon left Nike to join his former boss, Scott Bedbury, at Starbucks as the company’s first head of “consumer insights.” His assignment was to find out exactly what people want in a coffee-house.

  Starbucks badly needed the help. Despite the company’s massive popularity and the burgeoning espresso craze, a significant obstacle endangered its future: a lack of knowledge about its customers’ desires. By the midnineties, Starbucks had a solid lineup of drinks and a strong service reputation, but the company struggled with its image — specifically, in outfitting itself to attract its target customers: high-income urban professionals aged eighteen to forty-five. The company wanted to be an ideal haven, a quintessential “third place,” yet its stores hardly encouraged lingering. Efficiency, not coziness, was the goal. Store walls often blared the loud colors of the Italian flag, and customers had to perch on a piece of furniture nicknamed the “eight-minute stool.” “With the stool, there was no place to put your feet, so your legs dangled and your ass fell asleep after about eight minutes,” Bedbury recalled. “Starbucks definitely wasn’t going out of its way to make people comfortable. It was all about volume and capacity.”

  The solution was to find a uniform image around which Starbucks could shape itself, and it was Conlon’s job to quiz consumers and provide the general parameters this image should take. Bedbury gave him broad instructions for this mission, which he christened the “Big Dig”: go anywhere, talk to anyone, read anything — just find out what people consider the best interaction they can possibly have with coffee. Thus, Conlon embarked on a nine-month-long, multiphase investigation into the metaphysics of coffee. He scoured the literary landscape, from the writings of eighteenth-century London’s coffee-house denizens to the musings of the beats. He studied coffee’s cameos in art, music, and film. Bedbury and Conlon interviewed hundreds of coffee drinkers, sorting their responses according to their “need states” and “lifestyle segments.” (Or, as Bedbury later jargonized the process in his book, A New Brand World, “We probed the conflicted lexicon of the coffee category to ensure that we would be able to establish a clearer dialogue with coffee drinkers on all levels.”)

  They were struck immediately by the strong emotional pull the interviewees felt toward their daily jolt. “When these people locked into the focus groups and we told them they had to spend two hours talking about coffee, they all groaned,” Bedbury told me. “Then at the end we had to kick them out of the room — they had so many associations and recollections about it that they just kept on talking.” Conlon asked some of the participants to close their eyes and go into a “dream state,” then describe what they would see, taste, hear, touch, and smell in the greatest coffee experience imaginable. “We did over a dozen focus groups, and all of them told us about the same place,” Conlon said. “It was almost as if they’d all watched the same movie.”

  That movie must have been a chick flick, because — to the dismay of the company’s coffee-focused hard-liners — the interviewees talked very little about the coffee itself, but quite a bit about feelings and atmosphere. Most consumers didn’t really care about coffee minutiae like flavor profiles and acidity, as long as the product tasted decent; instead, they craved a sense of relaxation, warmth, and luxury, all within the safe coffee-house social sphere. “The coffee-house, when it’s as good as it gets, is much like a public living room,” Conlon explained. People wanted to have that coveted coffee experience, an idealized version of the much-loved “coffee break.” And they were willing to pay for it.

  To the Starbucks brass, this was shocking news. Company executives already knew that few customers wished to sit down in the stores (only two or three out of every ten), and even fewer said a word to anyone but the barista, so it was puzzling that people would crave a cozy social atmosphere above all else. But the reality was this: for those seeking a refuge from the world, the cup of coffee they bought was really just the price of admission to partake of the coffee-house scene. As Conlon knew, café dwellers through the ages had endured absolute swill for the privilege of loitering in the right setting. The coffee wasn’t the point — the place was. “The consumer is spending his money for a total experience,” said Harry Roberts, the longtime Starbucks marketing executive. “They may not be able to articulate that, but it’s the truth.” Even momentary contact with a soothing environment was important to harried office workers taking a latte to go; it was relaxation by osmosis.

  In later years, Starbucks took this kind of research on customer desires to new heights — it even paid one market research firm to hypnotize “hip young people” and find out the deep-rooted reasons why they so often derided the company as “corporate coffee” — but the overarching message was clear. Starbucks needed to concentrate on its customers’ feelings. Soon, planning began on what the company dubbed the “Starbucks Experience,” a phrase one sees in most every press release, pamphlet, and interview associated with the company today. In fact, if you read a comment by a Starbucks employee and he or she doesn’t mention the “Starbucks Experience,” the phrase “surprise and delight,” or the company mission statement, something has gone horribly wrong. Because once Starbucks figured out what its customers wanted, it never went off-message again.

  Phase 2: Salivating at the Dinner Bell

  That Starbucks would seek to become — in the liberal social critic Naomi Klein’s words — “the coffee shop that wants to stare deep into your eyes and ‘connect’ ” was no surprise, given the tenor of the time. After the minor cataclysm known as “Marlboro Friday” sent Wall Street into a panic, every American company with a pulse scrambled to infuse itself with a lofty “purpose.” On April 2, 1993, Philip Morris announced that, because of competition from generic brands, it was slashing the price of a pack of Marlboros by 20 percent, a previously unthinkable defeat. The rugged “Marlboro man” was one of the world’s best-known advertising icons; he’d been chain-smoking his way through the American wilderness for forty years, thinking deep and manly thoughts while staring off into the distance. But despite the billions Philip Morris had poured into the ads, consumers were increasingly turning to bargain brands. One cigarette was as good as another, they reasoned, so why should they pay a premium to smoke Marlboros?

  Hence the panic. If this happened to the once-mighty Marlboro, the same fate could befall Coke, Nabisco, Levi’s, or any other name brand. (Those companies’ stock prices did indeed dive, along with many others.) Terrified executives saw that they had a simple choice: convince consumers that your brand stands for Something Important — and thus that buying your merchandise is not just crass materialism, but something closer to an artistic statement — or fall into a price-cutting bloodbath with the generics. As David Brooks, the New York Times columnist, once explained it, “The peop
le who thrive in this period are the ones who can turn ideas and emotions into products.”

  In so many words, Brooks just put Starbucks’s astoundingly successful marketing apparatus in a nutshell. Through unwavering repetition of a basic theme — Starbucks coffee equals romance, relaxation, and luxury — the company made itself synonymous with those concepts, transforming a cheaply produced, age-old commodity into a “sophisticated coffee indulgence.” Bedbury claims a strong brand should influence consumers the same way Pavlov’s bell affected his dogs: just as the dogs would salivate at the bell’s ringing even when there was no food around, the briefest glimpse of a logo should stir up a cloud of pleasant associations in the consumer brain. Starbucks’s record in this area has been phenomenal. Within a decade of its debut on the national stage, the carefully sculpted Starbucks brand had become one of the most powerful in existence. In 2004, the consulting firm Interbrand named Starbucks the fourth-most effective brand in the world, behind Apple, Google, and Ikea.

  Schultz often insists that his company attained its current cachet almost by accident, just by being nice. “We never set out to build a brand,” he wrote in Pour Your Heart into It. “Our goal was to build a great company, one that stood for something.” In reality, however, Schultz had obsessed over the company’s image since the beginning, supervising everything from the typefaces on coffee bags to the wording of phrases in company literature. “He signed off on everything — everything,” Bedbury said. “Nothing went out without his approval.” Using the “Big Dig” research, Bedbury and Conlon had formulated a short “mantra” through which Starbucks could filter its marketing efforts — “Rewarding Everyday Moments” — but the choices were still made according to the instincts of a committee of one: Howard Schultz. His inability to cede marketing decisions to those he hired to actually make those decisions has long been a source of amusement within the company; during one three-year period, Schultz sent four different marketing vice presidents packing. “That job was the death knell,” one former executive told me. “It was because no one was better at marketing than Howard. He couldn’t keep his hands out of it.”

  Schultz considers himself the guardian of the Starbucks brand, and as such, he’s very careful about the ideas he associates with the company and its core product. For one, you’ll never see Starbucks drinks discounted in any way; Schultz wants you to view his product as the epitome of opulence, and would you ever see a “buy one, get one free” deal at a Jaguar dealership? On national issues, the company stakes out its positions with brand enhancement in mind. Its print ads usually “thank” customers for helping Starbucks provide some humanitarian service like tsunami relief funds, thereby aligning itself with the righteous cause in the consumer’s mind — in effect, making customers feel that buying a Starbucks latte is a form of global altruism. Another area Starbucks has monitored with particular vigilance is its movie and television cameos. The company received cartloads of Hollywood scripts in the nineties, and in order for one to get authorization to use the siren logo, it had to reflect especially well on the brand. So when the director David Fincher approached the company with the screenplay for the Brad Pitt vehicle Fight Club and asked for permission to destroy a Starbucks with a wrecking ball–sized metal globe, the request got a thumbs-down. But a suggested scene for TV’s Ally McBeal, wherein the title character and a costar would slowly and sensually savor their first sip of the day — as Bedbury put it, “Ally and her friend basically had oral sex with a Starbucks cup” — won enthusiastic approval.

  In the cafés, on the other hand, Schultz was far less stingy with the company emblem. “It was all about the brand,” Harry Roberts told me. “We would put a dozen logos inside each store. They were everywhere.” The more logo sightings, the merrier. (Unless the idea of failure was involved; on the few occasions when the company has had to shutter a location, every indication that the space had been a Starbucks was whisked away the same night the store closed.) The cups in particular were devised with brand exposure in mind; Starbucks intended them to be handheld ads. “Over the years, we’ve had a lot of arguments about the design of the cups,” said Terry Heckler, who shaped the look of both the cups and the logo. “We agree now that the Starbucks cup is probably the most effective piece of media that Starbucks has. Lots of people have wanted to change the design, but Howard’s taken a strong stance on it. I mean, forty million people a week — that’s a lot of billboards.”

  Over this painstakingly planned company image, Schultz and his marketers spread a thick layer of noble-sounding sentiment. Starbucks is more than a fleet of brick-and-mortar coffee-houses, Schultz says — why, it was “built on the human spirit.” In a video shown to incoming employees, a narrator claims, “At Starbucks, we are purveyors of coffee, and tea, and hope. And a little bit of sanity.” Some passages in Schultz’s book veer so far into the touchy-feely realm that they read almost like coffee erotica:

  I dipped my hands into the warm, fragrant beans and lifted out a handful, rubbing them slowly between my fingers. Touching the beans grounded me to what Starbucks was all about, and it became a daily tradition.

  One has to wonder how he can deliver lines like these and keep a straight face. Does Schultz really expect us to believe that he, a billionaire businessman — from Brooklyn, no less — shivers with delight as he plunges his hands into any container of coffee beans left unattended? Probably not. But he pulls it off in part because of the emotionally charged nature of the business. His oft-mentioned “passion” makes for an effective selling tool, perhaps because customers wish they had more of it in their own lives. (As a 2002 New York Times Magazine profile insightfully put it, “Schultz is very good at getting what he wants by imagining what you want and then telling you that.”) “The soul thing is a bit of a stretch, since not every tall nonfat latte will enrich your soul,” Bedbury explained. “But I also don’t think a lot of people go to Taco Bell or Wendy’s just to chill.”

  Some are less lenient than Bedbury about Schultz’s tendency to drone on about the human condition. A few critics have even called it a calculated scheme intended to deflect the ethical debates that surround the company (which we’ll go into in part two of this book); one writer for London’s Guardian characterized Schultz’s public persona as “the most nauseatingly sanctimonious cloak for perfectly ordinary hard-nosed commercialism.” Said Jerome Conlon, “That’s Howard’s shtick. If Starbucks is a nine-thousand-pound monster and Howard is a two-hundred-pound man who occasionally talks about heart, you have the right proportion.” Occasionally, the shtick gets exposed as such. In 1996, a Los Angeles Times reporter sat in on a Starbucks marketing meeting and overheard an executive discussing the company’s “passion” in unexpectedly callous terms: “My overall message is Starbucks coffee is a passion and an art, and the umbrella message is coffee is an art form and coffee is an inspiration. We’re looking at a focus on the art of whole-bean coffee, the romance of espresso, artisans, and inspiration.”

  But disingenuous or not, Schultz’s high-minded talk wasn’t what truly set Starbucks apart. The company’s signature innovation in the world of marketing was its invention of an entire proprietary language for its products. Before Starbucks came along, America lived in a state of ignorance, our cup-sizing lexicon limited to three archaic terms: small, medium, and large. Starbucks vanquished those dark ages, ushering in a world where customers had to keep detailed rec-ords of the various languages that stores required them to use before receiving goods and services. Want a double espresso at Starbucks? Order a doppio. And did you say you wanted a medium latte with orange syrup? You obviously meant to ask for a grande Valencia latte. Surprisingly, most of these words, now entrenched in the national vocabulary, were coined off-the-cuff in a single Il Giornale planning meeting. Today, though, some terms have acquired a sinister tint; when your smallest listed size is called “tall,” people will inevitably feel a bit manipulated. Starbucks has even trademarked the name of its largest size, “venti,” despite the
fact that it is the Italian word for “twenty” (that is, a twenty- ounce cup). * “One day, I expect to pick up La Repubblica and learn that Starbucks has purchased the entire Italian language,” said Bruce Milletto, a coffee consultant. “It’s insanity.”

  Of course, not everyone is thrilled to have to use ridiculous-sounding made-up terms just to get a cup of coffee — some customers stick to “small,” “medium,” and “large” as a display of personal integrity — but Starbucks-speak works. Consider this: for which of the following options would you be willing to pay more, a “grande caffe misto” or a “medium coffee with milk”? The former reeks of European sophistication, while the latter sounds boringly American. But they both describe the exact same drink. In adopting proprietary language, Starbucks bet correctly that once customers learned the lingo, they would feel out of place at other coffee-houses; if your native coffee language was Starbucksese, then Peet’s or Tully’s might seem that much more foreign. Mostly, customers don’t just tolerate the Starbucks vernacular — some actually go out of their way to get the phrasing of an “iced venti cinnamon nonfat mocha” order exactly right. The company accommodated them by publishing a twenty-two-page booklet called “Make It Your Drink,” which explained the syntax and helped customers “build confidence in beverage ordering.” It even included worksheets.

  The success of the build-your-own-vocabulary tactic at Starbucks generated scores of imitators. At Seattle’s Best, for example, to get a large coffee, one had to request a “Grande Supremo,” an indignity that sent the humorist Dave Barry into a tirade. “Listen, people,” Barry wrote. “You should never, ever have to utter the words ‘Grande Supremo’ unless you are addressing a tribal warlord who is holding you captive and threatening to burn you at the stake.” (That’s not even the worst of it; at the Cold Stone Creamery ice-cream chain, the three size options are called “Like It,” “Love It,” and “Gotta Have It.”) No one could capitalize on this linguistic fad like its creator, however, because the reward for learning the Starbucks dialect was so high. With consumers increasingly bent on expressing themselves through product consumption, mastering the lingo ensured that they could get exactly what they wanted: a beverage tailored to their unique needs by a Starbucks “customologist.”