TakeAway: In this adaptation from his new book, Trade-Off: Why Some Things Catch On, and Others Don’t author Kevin Maney explains the tension between two key qualities — fidelity and convenience — and how a great brand fell into the trap of becoming too familiar got caught in a no-man’s-land between them.
For a brand like Starbucks, familiarity and ubiquity are deadly.
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Fortune, How Starbucks lost its ‘fidelity’, September 16, 2009
We constantly, in our everyday lives, make trade-offs between fidelity and convenience.
Those trade-offs, and how they affect business, help explain why Starbucks hit a wall in 2007 — and why CEO Howard Schultz is still struggling to get his company’s mojo back.
Fidelity [as in high-fidelity] is the total experience of something.
At a rock concert, for example, it’s not just the quality of the sound, which often isn’t as good as listening to a CD on a home stereo, but also everything else going on, like the crowd around you and the social cache of later telling people you saw the band live.
Convenience is how easy it is to get what you want. That includes whether it’s readily available, whether it’s easy to do or use, and how much it costs. If something is less expensive, it’s naturally more convenient because it’s easier for more people to get it.
Consumers are willing to give up convenience for great fidelity, or ditch fidelity for great convenience.
But anything that offers just so-so fidelity and so-so convenience falls into a no-man’s-land of consumer apathy that I call the fidelity belly. That’s where music CDs, newspapers, and desktop Windows-based PCs find themselves today.
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Remarkably, the most successful products and services tend to be either high in fidelity or high in convenience — one or the other, but not both. In fact, products attempting to be both typically end up with a confused brand, like if McDonald’s tried to do gourmet meals.
This impossible place of both fidelity and convenience is something I call the fidelity mirage. And Starbucks chased it big-time.
After a decade of stupendous success, Starbucks ran into trouble in 2007.
Starbucks, during its heyday, was all about fidelity.
It was all about creating a high-fidelity experience that was greater than just the coffee … “a taste of romance” and “an oasis — a small escape during a day when so many other things are beating you down.”.
And the products Starbucks served? Once Starbucks arrived on the scene, it suddenly seemed boring to walk into a deli or a Dunkin’ Donuts and just order coffee with cream and sugar.
Starbucks had a special aura. The green label on a cardboard cup made the coffee it held seem better. Holding that Starbucks coffee cup, being seen in a Starbucks, and being enough of a regular that you knew your favorite complex beverage combination off the top of your head conferred a bit of identity. And for all of this, Starbucks charged premium prices.
As coffee goes, there was essentially nothing convenient about Starbucks. You had to travel to a store, wait in line, and pay exorbitant prices for a product you could make at home or in the office for relatively nothing.
Then. Starbucks launched aggressive expansion plans.
If you build fidelity, the temptation is to then pursue growth. But that growth can lead to the very thing that can kill a high fidelity brand: familiarity.
“Once Starbucks became ordinary, it was committing suicide.”
Starbucks carpet-bombed the world with its franchises. In 1998, the world was populated with 1,886 Starbucks stores. Ten years later, there were 16,226.
The Starbucks brand was extended to ice cream, packaged beverages, and a record label.
Starbucks Schultz blessed it all, convinced that Starbucks could be everywhere and still be special.
Starbucks started with high fidelity — a unique, a feel-good experience that conferred upon its customers a sense of identity.
But the expansion plans went in the opposite direction, toward high convenience — making Starbucks available at every moment.
Convenience acts like anti-matter to fidelity. The more convenient something becomes — the easier it is to get — the more its aura dissipates.
The more convenient something becomes, the less that item identifies its owner as someone unique and special.
For Starbucks, excessive convenience dragged down the brand and made it commonplace.
On the flip side, Starbucks could not achieve genuine convenience.
The prices of Starbucks’ products were too high, and the lines were toolong, too slow moving. Making fancy customized drinks like frappuccinos tied up the baristas, causing back-ups. Customers realized that if they were looking for a quick, good-enough cup of coffee, it was easier to go to McDonald’s or 7-Eleven, and save a few bucks.
Starbucks’ customers reacted predictably.
Despite more Starbucks around than ever before, people started veering away.
People looking for convenience saw less reason to pay Starbucks’ prices.
People looking for aura and identity turned back to smaller chains or independent local coffee shops.
When anything — a brand, a rock band, a style of clothing — becomes popular with a huge mass market, the cool people increasingly find it uncool, and look for something new.
In February 2007, founder Howard Schultz deplored “the watering down of the Starbucks experience” and “the commoditization of our brand.”
He immediately began reaching backward, toward Starbucks’ high-fidelity core to “go back to our roots and reaffirm our leadership position as the world’s highest-quality purveyor of specialty coffee.”
First, he shut down 7,000 Starbucks stores for three hours so 135,000 baristas could learn how to correctly make a Starbucks espresso.
Second, Schultz announced that 600 Starbucks outlets in the United States would close — the first time Starbucks backed away from its drive for convenience.
This year, Starbucks got so desperate to win back its premium position, it started opening “stealth” stores — Starbucks-owned stores minus the Starbucks name, meant to mimic small, independent, high-fidelity coffee shops.
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For a brand like Starbucks, familiarity and ubiquity are deadly.
The aura and identity Starbucks once had is gone for most Americans.
It doesn’t mean people will stop going to Starbucks. But it does mean people will be less inclined to seek out Starbucks.
Coffee purveyors that are more convenient (like McDonald’s or 7-Eleven) or are perceived as higher fidelity (independent coffee shops or smaller chains) will have an easier time competing against Starbucks than they used to.
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Full article:
http://money.cnn.com/2009/09/16/news/companies/kevin_maney_starbucks.fortune/index.htm?postversion=2009091612
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