Leadership Lessons from Starbucks

Regardless of what you think of Starbucks coffee, it’s hard to argue its success.

The global coffee chain is practically unavoidable in major metropolitan areas, suburban shopping centers and even airports. Its original location in Seattle, Wash. has turned into a tourist mecca, and its products can be found in the coffee aisles of grocers and major supermarket chains.

In April, Starbucks announced that it had generated $3.6 billion in revenues during its fiscal second quarter, a record for the company. And in a sign that the premium coffee brand is shrewdly weathering a rocky economic climate, Starbucks reported that comparable store sales grew 6 percent worldwide and traffic rose 4 percent during the quarter.

How does Starbucks do it? Joseph A. Michelli has unearthed some of the secrets behind the success of one of America’s most iconic brands. As a consultant who helps businesses develop and deliver rewarding customer experiences, he uses his insider access to reveal what works and often what doesn’t.

In his new book, Leading the Starbucks Way, Michelli explores how organizations big, small and in-between can learn from Starbuck’s rise to the top and how the company cemented its spot as the “third place between work and home” for consumers around the globe. Here are some of his tips that mirror several themes in the book.

How to Sip Success from Starbucks’ Cup

1. Make Them Fall in Love

A crucial step to building customer loyalty is to “focus on fueling passion,” says Michelli. Small businesses owners should “try to help their people fall in love with their products and services.”

That passion, in turn, influences customers and wins them over. Give it an earnest try but don’t bother faking it. “If you don’t love your product, your customers probably won’t,” he warns.

Caffeine addiction alone isn’t helping Starbucks drum up brisk business. The company has been effective in fostering customer loyalty by developing great rituals, he says. To motivate yourself and your workers, try instituting rituals that bring back the excitement and emotional investment that you first felt when your business idea was nothing but a doodle on a napkin—coffee-stained, of course.

2. Get in Touch with Your Feelings

“Tell your team how you want people to feel and have conversations about that,” advises Michelli.

Anyone can peddle coffee. With Starbucks, you get a friendly and welcoming respite from your workday, a cozy spot to recharge (your gadgets and yourself) and a chance to connect with friends and colleagues. In short, it strives to make you feel at home. When was the last time a street-corner coffee-cart did that?

How customers feel about your product or service, and the emotional connections that are formed as a result, factor heavily on whether they’ll be back. And overwhelmingly, your customers want to feel cared about.

Michelli suggests creating uplifting moments. “Now if you’re in the business of selling experiences, that uplifting moment message is something every brand should have,” he says. It all boils down to “finding the emotional value proposition of a business,” he adds. What’s yours?

3. Fit into Their Lives

“You can’t just wait for the customer to come to you,” says Michelli. Instead, determine your customers’ “lifestyle and position your business or your product in their lives.”

As mentioned earlier, Starbucks has emerged as a third daily destination between work and home for many consumers. The company accomplished this, in part, by creating a relationship with practically each and every person that walks up to the counter.

One way Starbucks wends in way into daily life is its mobile app. It delivers personalized offers and a dash of gamification to keep people engaged. “They use my relationship with them,” says Michelli. “Now they can push relevant offerings to me.”

4. Take a Stand

Businesses these days are reluctant to back a movement or chime in on societal issues for fear of alienating customers. As a result, they “create very little passion about them,” says Michelli.

He points to Howard Schultz, the outspoken Starbucks CEO who took politicians to task for their foot-dragging on job creation efforts and helped spearhead the Create Jobs for USA program. He minced few words in his defense of his company’s supportive stance on marriage equality during a recent shareholder meeting.

As a result, Starbucks stands as a pro-jobs company that celebrates a worker’s contribution to the economy and works to foster an inclusive culture. Customers are quick to give the coffee chain their business “because they feel like they belong somewhere,” adds Michelli.

Don’t just jump on the cause of the day, he cautions. Resist the urge to jump on bandwagons and avoid extreme positions that are guaranteed to offend. The key is to stay true to your company’s principles, articulate them authentically and back them up with practices that reflect your stance on the issues.

Above all, “be real about what matters,” says Michelli.

Pedro Hernandez is a contributing editor at Small Business Computing and InternetNews.com. Follow him on Twitter @ecoINSITE.

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