Why Starbucks Doesn’t Do Commercials. Part 1

Here I am. Rehashing a talk I did over a decade ago. Why? You might ask.

Because it’s more relevant today, than when I first gave it in 2006. The best part of the question is that it has always made people curious about the answer. People would come to hear the answer or listen to my CD in their car––yes my CD. After all, it was 2006. In fact, people were so curious, that 2 years later 350 attendees showed up to hear about it. Even though the workshop next door had girls dressed like Hooters waitresses to attract people to come in and hear them. We thought we were doomed. I mean, who’s going to come here some guy talk about Starbucks over Hooters girls?! Apparently everyone.

So Why Doesn’t Starbucks do Commercials? The short answer is. They don’t have to.

While you and I are out fighting for attention in the marketplace, trying to use every “trick” in the book. Starbucks simply created a new category for coffee consumption. Which was revolutionary. Before they came on the scene it’d be ridiculous to pay $4-6 bucks for a coffee that you could get for free in the breakroom at work. What was once a functional lifeless experience to kickstart your morning became something entirely different.

Starbucks earned the right to be the place where almost everyone starts their day. They made sure that at the top of the day, they were top-of-mind. This was not luck, or from slick advertising, no. It was designed that way. Not overnight. But certainly over time. From 1971 to now, to be exact.

Now some of you listening might be racking your brain and saying, wait a min., I remember seeing a starbucks commercial. The point is, Starbucks doesn’t rely on them to sustain their market share. Sure, they might promote a new product in the grocery store. Send you a beautiful email here and there. But, Starbucks never has to remind us to stop by. They have become a part of our culture. We gladly set meetings there, drop by after the gym, or even make it our place of business. Why? Because they have the best coffee? Nope.

In case you thought Starbucks was successful because of their superior product. Think again. In fact, it doesn’t even seem like they have done much to try and improve the taste of their coffee in years. Sure, they’ve got every seasonal drink known to man and certainly make up drinks in the off-season, but the coffee is relatively the same.

In a blind taste test, Starbucks comes up after McDonald’s and even Dunkin Donuts. But even Dunkin’s catchy slogan, “America runs on Dunkin” can’t touch the power and allure of Starbucks. When was the last time your friend or co-worker asked you to meet them at Dunkin Donuts? Never. Why? Because it’s not cool to meet at a Dunkin Donuts. It’s not a place that you catch up or do business.

This is important. You see the reason why we often choose a product is often not the product at all. Let me say that again, the products you buy are frequently not the products you need. They are not the best products, and sometimes not even the most convenient products. But they are the products you want. But why do we want them?

The reason we are willing to go out of our way, to pay more, to wait in line, or to set up an app simply to order coffee is because of the story we tell ourselves about Starbucks. The hustle and bustle of the morning rush is how we feel, the fast pace, super friendly baristas that someone magically remember our names make us feel special. When we’re there, we’re friends, co-workers, business professionals and we order our drink. All of this together adds what’s called Perceived Value. That’s why we pay 400X the amount for a cup of sugary or otherwise standard coffee.

It’s the same reason why used Apple products sell for more than competitor products even on Craigslist. Why Taylor Swift sells out stadiums. And why your neighbor would rather shop at Target instead of paying less at Walmart. The experience. The perceived value. Whatever we believe about those people and places becomes true. It’s the way a product, service or person makes us feel.

But your Dad says “you can get a more powerful Windows PC for half of the price of a Macbook.” But, you prefer the packaging or the ecosystem or it just makes you feel like an artist. You like the experience. And experience is the key to Perceived Value Creation. When you decide to charge for your product. And you set a price. That’s the moment you decide what you or your product are worth. This is not math. This is at the heart of your business and the value it promises to your next customer. If you are just doing the math. Cost of Goods + Profit = Price. Then you are McDonald’s.

So the question for you becomes, what is the collective experience that your customers are having at every touch-point of their journey? Think through the entire life cycle. Where are you delighting and surprising them? Is your experience one worth talking about? Is it worth repeating, making into a habit, a part of your ongoing life experience? Whether it’s a car you buy every few years or a cup of coffee that you buy every day, consider the experience.