What Starbucks Can Learn from Barack Obama

I have been to several Starbucks in my travels over the last few days. (Picture from MIT’s Branding Blog, which is missing the point I’m about to make.)

They’ve got trouble. Terrible, terrible trouble. Their merchandising is stale. The message from their all hands meeting the other night is they’re happy being McCoffee.

What’s worse is they think they’re in the coffee business. They’re not in the coffee business. They’re in a host of businesses, most of which they’re doing as afterthoughts. Mainly they’re supposed to be in the experience business.

Their coffee equipment selection sucks — my carafe broke today and I couldn’t replace it there. Their music selection is horribly limited. Their baked goods are stale. Worse, the employees don’t care — all the chain cares about is making good coffee.

I could jazz that place up in 5 minutes. Watch me:

• Bring in musicians. Empower local stores to find them. Add their CDs to the rack. So what if each gig only brings in a half-dozen souls — that’s all the place can hold. But it starts a process of connecting to music’s grassroots.
• Better doughnuts. Or brownies. Or whatever. You need your people checking out the local bakery purveyors, bringing those suggestions up the chain, and you need to empower lower-level managers to try something new. Something fresh. Something from the area.
• A Better WiFi deal. The current AT&T deal lets people with a Starbucks card get free WiFi. Why not print a daily passcode on your receipts so anyone who buys a coffee drink today gets free WiFi today?
• Better merchandise. I wanna carafe. I want better selection, which means you need better buyers who will scour the globe (as they used to claim they did) for coffee-related stuff. Start it small, buy more if it does well. Spruce things up.

Oh, the Obama headline? There’s a ton Starbucks can learn from Barack Obama. But you’ll have to click through to learn what it is.

CRM.

It stands for Customer Relationship Management. It’s a technology term which really means getting better data on your customers, then using that data to drive money and loyalty.

The secret sauce of Obama’s campaign, from the very start, has been that he has the best CRM in the business. In almost any business.

Think about it. Go to an Obama rally because you’re curious and they’ll get your name. Throw him a quarter, a dollar, almost anything, and you’re on the list. The upsell begins, and you can climb the chain to regular contributor, to volunteer, to precinct captain, in any direction you choose to climb it. However you decide to participate, you’re growing the campaign, becoming committed to it, and probably making your friends and neighbors into Obama fans, too.

Starbucks has a CRM, but it starts at the card level. In other words, someone has to make a major commitment, and take  a Starbucks loyalty card, before the company’s CRM can start kicking in on them. In political terms you’re waiting until they cut a $100 check before you acknowledge them. It’s Clueless.

As Alex Wolfe noted above, Obama also makes better use of his data than Starbucks does. The company didn’t notify its best customers when it closed its doors for barista lessons the other day. In other words, it doesn’t really have a relationship with them — just a set of customer touch points.

Now, on to the product itself. If you think Barack Obama is selling just himself, you probably think Starbucks is a coffee store. You are wrong.

Sure, the product is appealing. The black suit, the jump up the stairs, the hand claps. The voice. The Kennedy comparisons to Barack Obama are wrong. So were my Springsteen comparisons. The man is Sinatra. Watch how he holds the microphone, how he draws you to him with his songs, how he riffs, adjusting his playlist to the crowd. Chairman of the board, man.

But separate the product from the merchandising, and what is Obama really all about? It’s an experience. An Obama rally is a branding exercise which leads you deeper into that CRM. The experience doesn’t end with the rally. They’re drawing you in to the whole process of change. The CRM will seek to change you, taking whatever time or money you devote to it, giving you value in return. Do you think that CRM is going to disappear if Sen. Obama becomes President Obama? No way. That’s the 21st century of his politics, right there.

Starbucks can learn a lot from that.

1. Seek to start your relationship sooner, with the first cup of coffee someone buys.
2. Sell the experience, not the coffee, and make your shops into community centers.
3. Make all your people into merchandisers in order to extend the brand where you want it to go.

In order to succeed in these tough economic times you need to be more than a brand. You have to be an experience, something integral to your customers’ lives, something they can believe in, something they wish to get deeper into. Then you have to deliver on those desires, through your people, all the way down to the store level. They’re not baristas. They’re a movement.

Or you can just go Chapter 11, like the Hillary people.