Tuesday, August 16, 2011

Starbucks Cuts Off Its Customers

It's well known that coffee shops today have moved well beyond just places to order coffee and run. Cafe's have transformed into a "third place" between home and work; a place for meetings, working, relaxing, dates and generally spending a lot more time.

Of course, this didn't just happen by accident. This phenomenon is was created as the invention of marketers. The thought behind this innovation is simply if customers spend more time in the store then they'll spend more money at the store. Therefore, cafe's and bakeries are now designed to look and feel less like restaurants and more like living rooms and backyard patios- complete with big comfy couches, area rugs covering the floors, fireplaces warming the air and coffee filling real mugs and not paper cups.

Most of the credit for sparking this revolution in coffee consumption in America belongs to Starbucks. Without question, these innovations in where and how people enjoy their joe greatly contributed to differentiating the Starbucks brand from the coffee once consumed. Naturally, consumers were more than willing to swallow the higher prices because the experience was better or at least made them feel it.

It was a brilliant strategy that not only built the Starbucks brand but also an immeasurable number of followers. Which is why the story about Starbucks customers in New York City complaining about fellow customers "squatting" in the seats for too long is so interesting. It's a problem created by the fact millions of people live and work on an 18 mile stretch of land and there is likely not enough Starbucks to go around.

Yet, New Yorkers are certainly not people that take kindly to inconvenience. One customer commented in New Yorker-like fashion, "if there’s no more space to sit, they should get up and leave.” A contrarian might offer the tried and true adage of first come, first served. If you want a seat then get there earlier.

Oddly, the decision on a solution to this problem is being left to the individual store owners, leaving the door open for the troublesome potential of differentiation within its own brand. Further, the solution that some store owners have settled on is covering up the outlets used to keep customers wired to their computers. Although, I'm not sure this a good idea for a few reasons.

First, this could initiate the problem of creating cracks in Starbucks' brand consistency. Second, squatting is ingrained in the fabric of the brand and a custom largely their own creation. If they end that, what other reason will they give customers to pay $5 per cup?

Finally, I'm inclined to trust the original equation of more time spent in the Starbucks results in more money spent at Starbucks. Perhaps viewed over the course of one day this may not be true; however, viewed over the course of a month or a year, I believe the customer who treats Starbucks as that "third place" between home and work will spend more than the average customer. These so-called "squatters" are the ones that Starbucks is more than coffee to; it's a lifestyle and are likely their most valuable customers.

What do you think Starbucks should do about the problem of too many customers? As always, thank you for reading and contributing with comments on, suggestions for and sharing this site.

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