Marketers are especially guilty of overcomplicating nearly everything related to increasing sales.

At Starbucks, marketers uncomplicate their work lives by realizing there are three, and only three ways a business can increase sales:

1. Get new customers to buy

2. Get current customers to buy more, more often

3. Raise prices

1. GETTING NEW CUSTOMERS TO BUY

Every year, 25 percent of Starbucks’ total customer base consists of new customers. These are people who, believe it or not, have never purchased anything at Starbucks before. They are introduced to Starbucks in many nontraditional ways, including

Starbucks also triggers new customer visitation by expanding its menu offerings to include new coffee beverages and new noncoffee beverages. Coffee will always be the main draw at Starbucks, but there are significant numbers of people who either do not like the taste of coffee or do not care to drink coffee for health or religious reasons. Starbucks caters to these customers by continuously offering noncoffee alternatives, such as blended iced-tea drinks, blended noncoffee Crème Frappuccino beverages, and a variety of other options.

2. GETTING CURRENT CUSTOMERS
TO BUY MORE, MORE OFTEN

Most businesses think they can trigger more purchases from customers by treating them as on/off switches. These businesses attempt to flip the customer switch to “on” through implementing expensive and intensive, multidimensional advertising campaigns. In these scenarios, customers are bombarded with myriad marketing messages seen on television, read in print, viewed on billboards, and scanned over the Internet for a prolonged period of time.

Then, the heavy-up advertising stops. Businesses, unable to sustain the money-draining advertising expenses, essentially turn the customer switch to “off,” hoping marketing momentum will carry future customer purchases.

Starbucks treats its 40 million weekly customers as volume dials and not as on/off switches because Starbucks “advertises” to customers every day in its stores.

The typical Starbucks customer will visit about six times per month. And every time that customer visits a Starbucks, he and she will be exposed to either sampling of a new beverage or promotional activity highlighting something remarkable happening. This constant hum of remarkable marketing activity creates the virtuous cycle of customers returning more often and customers remarking to others about Starbucks more often.

3. RAISING PRICES

The average Starbucks customer spends slightly less than $4 every time he or she makes a purchase. Every few years, Starbucks will raise its prices by a nickel to offset increases in behind-the-scenes costs. These price increases also raise the average amount a customer spends, and that, in turn, drives overall sales.

Customers take Starbucks’ price increases in stride and generally do not blush at having to pay a nickel more for their coffee. Immediately following a price increase, Starbucks customer visitation dips slightly, but it rebounds quickly (within a few weeks), and the momentum of increasing its customer base continues.

Another way Starbucks raises prices is by introducing new beverages, many of which are limited-time-only promotional drinks. Pumpkin Spice Latte, Gingerbread Latte, Mint Mocha Chip Frappuccino®, and Toffee Nut Frappuccino® are all examples of new beverages Starbucks has launched in the last few years. Each of these drinks has one thing in common: They are more expensive than a regular latte or a blended Frappuccino beverage.

Businesses can simplify sales strategies by focusing on acquiring new customers; getting current customers to buy more, more often; and/or raising prices. It really is that simple.

Leading Questions …

TRIBAL TRUTH 9
Strong Brands Always Have More Brand Credits Than Debits

The Starbucks marketing research department is kept busy providing oodles and oodles of insights into the Starbucks brand through yearly brand audits. And the company learns a lot from these studies.

However, when it comes to measuring and managing the Starbucks brand on a daily basis, the Starbucks marketing department generally relies on a much simpler method—a brand checkbook.

Just as your personal checkbook has credits and debits, a brand checkbook has credits and debits in the form of brand credits and brand debits. Brand credits are business activities that enhance the reputation and perception people have of a brand, and brand debits are those that detract from the reputation and perception of the brand.

When faced with determining the appropriateness of marketing activities, such as a promotion, sponsorship, program, or special event, the Starbucks marketing department first determines if the activity is a brand credit or debit.

To determine the positive impact (credit) or negative impact (debit) of a potential marketing activity, Starbucks marketers ask the following questions:

If the marketing department answered “Yes” to three of these four questions, then the activity is considered a brand credit.

On the other hand, if Starbucks marketers answered “No” to more than one question, then the activity would be considered a brand debit. The Starbucks marketing department would then need to discuss the business importance of doing the brand debit activity.

An example of a brand-credit marketing activity is when Starbucks wrestled with the idea of running a sweepstakes promotion.

Before Starbucks ran it’s first-ever sweepstakes promotion in early 2003, the marketing department had to determine if a sweepstakes promotion was a credit to the brand or a debit to the brand. This particular sweepstakes had Starbucks partnering with Vespa® USA and offering Starbucks customers the opportunity to win a variety of prizes, from trips to Italy to snazzy Vespa® scooters.

The Starbucks marketing department decided this sweepstakes promotion was a brand credit because it was able to emphatically answer “Yes” to three of the four brand checkbook questions.

As it related to respecting the intelligence of Starbucks customers, the marketing department believed the Vespa sweepstakes did so because, not only did it conjure up romantic images of Italy, it also connected Starbucks back to its Italian coffeehouse cultural roots.

The Starbucks marketing department was confident in being able to deliver on all promises made to customers in the sweepstakes because a third-party contest administrator was running the contest, and they would be in charge of making sure all prizes were delivered to the winning customers and ensuring Starbucks complied with the requisite litany of legalities.

Having kicked around the Vespa sweepstakes promotion idea with Starbucks store-level baristas and hearing their excitement for it, Starbucks marketers knew baristas would be jazzed by the promotion.

The one question Starbucks marketers could not emphatically answer “Yes” to was whether or not Starbucks customers would view the marketing activity as being clever, original, genuine, and authentic.

But with three “Yes” answers to only one “No,” the Starbucks Vespa Sweepstakes ran, and, by all accounts, it was successful in driving sales as well as surprising and delighting customers with cool prizes.

An example of a marketing activity deemed a brand debit by Starbucks marketers concerns couponing.

Many restaurants and fast-food chains use coupons to drive sales and trials of new products. One common way these businesses coupon is by inserting coupons alongside offers from oil-change shops and dry cleaners in bulk mailings distributed by companies such as Val-Pak. These bulk coupon mailings are an inexpensive way to reach a broad audience.

Starbucks uses couponing but in a very judicious manner. Starbucks has always chosen not to use bulk coupon mailing services because the activity is viewed as being a brand debit more than a brand credit.

Starbucks marketers do not believe inserting a coupon into a bulk mailing envelope respects the intelligence of Starbucks customers. Nor would customers view this particular coupon activity as being clever, original, genuine, or authentic. Internal research has shown Starbucks marketers that its customers expect more originality and for Starbucks to treat them as individuals and not collectively through mass-mailing coupon envelopes.

Furthermore, Starbucks marketers believe store-level baristas would feel de-motivated if they worked for a company that had to resort to such a lowest-common-denominator marketing tactic to goose sales.

Now, just as it is unrealistic for your personal checkbook to have only credits and no debits, it’s also unrealistic to expect a business will participate only in brand credit marketing activities. But it is vitally important for a healthy, growing business to have more brand credits than brand debits. Otherwise, your brand checkbook will be in a constant state of brand debt.