Ultimately, given enough debits, a company will find itself facing brand insolvency, a condition that happens when a business continually promises more than it actually delivers, bankrupting the brand. Once this happens, it is extremely difficult to earn back brand credit … or customers.
Strong brands, like Starbucks, always manage their business to have more credits than debits in their brand checkbook and so never have to face the threat of brand insolvency.
Leading Questions …
How does your business determine which activities are considered brand credits and which are brand debits?
If you’re not sure how you would determine brand credits and debits, what questions would you have to ask to create a credit/debit measurement tool?
How might your business incorporate the brandcheckbook measurement model to better measure and manage the marketing activities which impact your business on a daily basis?
One of Starbucks’ greatest challenges is to try to break the mindset that big can’t be good. If we don’t, we’ll lose the very values that attracted people to us in the first place.
HOWARD SCHULTZ
(Pour Your Heart Into It)
Jim Donald, current Starbucks CEO, and Howard Schultz were chatting just before going onstage at the 2004 Starbucks shareholders meeting when Howard remarked to Jim that he couldn’t believe Starbucks was about to open its 9,000th location. Jim replied by saying, “Howard, we haven’t opened 9,000 locations. We’ve opened one store, 9,000 times.”
It is obvious that Starbucks has been built for growth, but what’s not obvious is that Starbucks still acts as if it is growing one store at a time. What is hopefully clear is that Starbucks still maintains its small-company values. When people think of big business, they tend to think of faceless corporations driven by greed and dishonesty that care more about profiting off people than they do about making people’s lives more rewarding. But you can’t be self-serving while professing to serve your customers.
That’s why focusing on being the biggest, as opposed to being the best, undercuts your company’s values. Once a company puts its needs—faster growth, increased market share, bigger profits—ahead of its customers, it loses its soul. And it can happen in subtle ways, without anyone even noticing.
In 1996, Starbucks opened its 1,000th location, more than doubling its number of stores from just two years before in 1994. The exuberance of opening new stores in new cities became contagious for everyone working inside Starbucks. A mantra, “2,000 by 2,000,” meant to focus the company’s mental energy on store growth, began to spread throughout the company, starting first in the corporate boardrooms and spreading deep into backrooms of stores. The objective of the “2,000 by 2,000” mantra was to have Starbucks open 2,000 locations by the turn of the millennium. Although it was a catchy phrase, and Starbucks’ growth was related to its mission, it wasn’t where the focus ought to have been. Fortunately, because the ingrained culture of Starbucks is so quality-obsessed (and because the goal of 2,000 stores was reached early in 1999), it wasn’t difficult to redirect the Starbucks ship back to true north, focusing on making a great cup of coffee and delivering unparalleled experiences to each and every customer.
Just as it never sought to create a brand, Starbucks never set its priority to become the biggest coffee retailer. Starbucks did, however, set out to become the best coffee retailer, trusting that growth would be a by-product of being the best. If the overriding goal had been to be the biggest, Starbucks would have made compromises galore on its quality that it has always been unwilling to make. Growth was and is encouraged, and made possible, by wanting to meet the desires of customers more than wanting to meet sales or profit projections. As Starbucks gains new customers, it wants access to more stores in more convenient places—on the way to the metro train in the morning, near the office after lunch, next to the dry cleaners, just off the Interstate. And Starbucks is determined to be everywhere its customers expect it to be.
The company believes everyone deserves great coffee. And it is this unrelenting desire to share the best coffee with everyone that has truly fueled Starbucks’ unparalleled growth.
Starbucks’ steadfast drive to become the best coffee retailer has resulted in its being the biggest coffee retailer. It can often work out that way … but it never seems to work in the reverse.
Leading Questions …
Review your company’s mission statement. Are the stated goals more about quality and excellence than about growth and profit?
Has your business compromised its values to get bigger? If so, what must your business do to reverse and/or minimize these compromises?
As your company grows, how do you plan to maintain the focus that led its growth in the first place, both among company leadership, long-time employees, and newly hired employees?
“Location, location, location” is the most well-known mantra in the real estate game. Because of Starbucks, it is also becoming a well-known mantra for savvy businesses to receive free advertising exposure.
Locationing is a real-estate—turned universal—marketing strategy where every retail location also serves as a billboard for a business. Everything about a store’s physical exterior, from the awning to the logo on the side of the building to the company name in lights, is essentially a billboard communicating the business to customers.
Starbucks locationing strategy is called Main & Main, and the real estate department maximizes every opportunity to place Starbucks locations in the most highly visible and highly trafficked street corners—just as advertisers do when selecting billboard sites. Keep in mind that, when Starbucks began growing, this is where the company spent most of its money. Instead of buying billboard space or broadcast air space, Starbucks bought retail space and opened stores. Its creative advertising, through sampling and word-of-mouth coupled with creative locationing, gave it a high-profile presence. That’s marketing at its best.
Starbucks continues to place stores with an eye toward marketing itself. It positions its stores to trigger impulse purchases from customers.
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