Brewing an unmatched experience

Leading marketing professionals recently came together to discuss the "extraordinary success" of Starbucks - a topic that does not fail to excite people despite the international coffeehouse chain's recent setbacks.

At a book briefing forum hosted by the Thailand Management Association last month, Samart Telecoms executive vice president Prasitchai Veerayuttwilai and Inhouse Products managing director Sornchai Chatikavanij reviewed "The Starbucks Experience: Five Principles for Turning Ordinary into Extraordinary", a book by Joseph Michelli. Even though the coffee chain recently announced a plan to close several hundred outlets and its stock price plunged from a high of US$100 (Bt3,400) to $15 a share, Prasitchai said, the company remains profitable and has reported a $600-million profit figure on revenues of more than $9 billion.

Prasitchai, who has co-translated the book with Sornchai, said Starbucks relies on the US market for 70 per cent of its income. However, due to current market conditions, the chain has had to close underperforming outlets.

"But, because of the 'Starbucks experience', customers at some of the outlets are protesting the shutdowns. So much so that a general manager of a company that has a Starbucks outlet in its building has asked for a meeting with Starbucks to ensure that they don't close down. This is a sign that Starbucks has become part of customers' lives," he said. A survey has shown that a customer usually visits a Starbucks outlet 18 times a month.

Sornchai said Starbucks has turned coffee - which was once an ordinary product that cost 60 cents a refillable cup at any American convenience store - into an extraordinary product. Starbucks, he said, has adapted the sense of glamour that Europe has imbued with coffee drinking into the American culture.

"The  challenge was not the idea itself but the proposition that they could price a cup of coffee at six to eight times more than what people were used to. Most marketers know that the novelty of ideas is less important than knowing how to sell them," he said. Sornchai said Starbucks' case illustrates a lesson that some things, once thought impossible, can become reality and a market leader can suddenly find that a competitor is "killing" its products.

Michelli's book lists five principles that have helped Starbucks turn ordinary into extraordinary:

n Make it your own: Every staff is called a "partner" and is empowered to act as if they are the owners of the outlet. Each branch has the freedom to differentiate - to realise its own character through the creativity of the staff, while maintaining its core format. Then, there is the company's principle of "Five Ways of Being": "Be Welcoming, Be Genuine, Be Considerate, Be Knowledgeable and Be Involved".

Prasitchai said that unlike staff at a call centre or a convenience store, Starbucks' employees are not required to use the same words to greet customers. There is also a rule that the server should propose those menu items that customers are familiar with. This explains why a Starbucks employee will never ask customers to buy a CD even though they are available for sales at the cash counter.

n Everything matters: "Retail is detail. Managers have to constantly put themselves in the shoes of their customers [and] see everything from the other side of the counter," Michelli writes in his book.

n Surprise and delight: Prasitchai said that a Starbucks staffer once told him she took notes about her customers to remember their preferences and be able to "surprise and delight" them. Some staff members even watched close-circuit television footage to help them remember their clients.

"The company, sometimes, holds free tests [of new coffee varieties]. In other countries, Starbucks doesn't tell the customers when it serves them a new variety because they like to surprise and delight them. However, in Thailand, they can't do that because regular customers are likely to complain," he said.

Starbucks introduced a campaign in which they attached a cup of coffee on the roof of a taxi, using magnets. Anyone who passed by and cautioned the driver that the cup might fall, would be given a free coupon to try Starbucks coffee.

n Embrace resistance: Sornchai said that this is the part he liked most in the book and it gave him an insight into how Starbucks has managed to deal with resistance from the communities where it was opening an outlet.

n Leave your mark: In addition to Starbucks corporate philanthropy and programme for giving grants, its employees get involved with communities by matching cash contributions to support local efforts.

Sornchai said companies should ask themselves whether their staff knows the products well enough to introduce them to customers. "If [the customers] don't know, it can mean just about anything to them." In this regard, Starbucks initiated a "coffee master" course, which encourages the staff to build knowledge about coffee. After the successful completion of the course, a Starbucks coffee master wears a special, black apron. Talking about Starbucks' present perilous position, Prasitchai said the company's unbridled expansion proved to be its undoing because it ended up "diluting the Starbucks experience". The economic slowdown added to its woes and made some outlets not viable.

TMA to host awards, seminar 

The Thailand Management Association (TMA), along with Sasin Graduate Institute of Business Administration, Chulalongkorn University, will organise the "Thailand Corporate Excellence Awards 2007" to honour organisations for management excellence. 

The corporations that have been shortlisted include Advanced Info Service,  Bangchak Petroleum, Bangkok Bank, Charoen Pokphand Group, Honda Automobile (Thailand),  Kasikornbank, MK Restaurant, PTT, Siam Cement, Siam City Cement, Siam Commercial Bank, Thai Airways International, Thai Beverage, Total Access Communication, Toyota Motor Thailand  and True. HRH Princess Maha Chakri Sirindhorn will graciously bestow the awards.

The event will also host a seminar on "Taking the Ordinary into the Extraordinary: Lessons for Growing People and Business" by Dr Joseph A Michelli, an internationally recognised speaker and author of best-selling books such as, "The Starbucks Experience", "When Fish Fly" and "The New Gold Standard". Both events will be held on September 3 at the Plaza Athenee Hotel.