CHAPTER 18
The Best Way to Build a Brand Is One Person At a Time

What comes from the heart,
goes to the heart.

—SAMUEL TAYLOR COLERIDGE, TABLE TALK

In early 1988, during Starbucks’ first winter in Chicago, I remember standing in an elevator and seeing customers carrying our cups, the distinctive green logo hidden behind their fingers. The brand name Starbucks meant nothing to them.

Six years later, when we opened our first store in Manhattan, a line formed immediately for espresso drinks; by 8:30 A.M., it snaked out the door. Why did so many New Yorkers choose to come to Starbucks that day?

Across North America, as we entered city after city, we attracted near-capacity crowds. In Atlanta, in Houston, in Toronto—each time we entered a new region, no matter how many miles from the nearest Starbucks location, people lined up on Day One. It wouldn’t have made sense to advertise in our new markets; we couldn’t have handled any more traffic than we got.

Our brand had achieved visibility and favor across the United States and Canada, but would it appeal in Japan? In August 1996, I flew halfway around the world to find out. Starbucks International was about to open its first store in Tokyo, on a visible corner location in the high-fashion Ginza District. Once again, we spent no money on advertising. What could the name Starbucks possibly mean to the Japanese? Tokyo has a coffee shop on almost every corner, not to mention a competitor with more than 500 stores. The odds against success were formidable.

On opening day, I was wilting in the 95-degree weather and almost 100 percent humidity. I had no idea Tokyo could be so hot. Yet from the minute the store opened until it closed, customers lined up forty to fifty people deep for a taste of Starbucks coffee. Men in dark business suits, women with elegant silk scarves, students with backpacks, all stood patiently in the unforgiving heat. Some of them ordered a blended Frappuccino, just a year after we invented the drink. We had been warned that, culturally, the Japanese refuse to carry to-go food or beverages on the street. Yet many customers were walking out the door proudly carrying their Starbucks cups—with the logo showing.

I stood there watching with Howard Behar, architect of our international expansion. He turned to me with tears in his eyes. The Starbucks brand had the same power in Tokyo that it had in New York and Seattle. It had taken on a life of its own.

STRONG BRANDS CREATE A

POWERFUL PERSONAL CONNECTION

We never set out to build a brand. Our goal was to build a great company, one that stood for something, one that valued the authenticity of its product and the passion of its people. In the early days, we were so busy selling coffee, one cup at a time, opening stores and educating people about dark-roasted coffee that we never thought much about “brand strategy.”

Then one day I started getting calls. “Can you come and tell us how you built a national brand in only five years?” It was unusual, people told me, for a brand to burst onto the national consciousness as quickly as Starbucks had. In some cities, it seemed to catch on overnight. When I looked back, I realized we had fashioned a brand in a way no business-school textbook could ever have prescribed.

We built the Starbucks brand first with our people, not with consumers—the opposite approach from that of the crackers-and-cereal companies. Because we believed the best way to meet and exceed the expectations of customers was to hire and train great people, we invested in employees who were zealous about good coffee. Their passion and commitment made our retail partners our best ambassadors for the coffee and for the brand. Their knowledge and fervor created a buzz among customers and inspired them to come back. That’s the secret of the power of the Starbucks brand: the personal attachment our partners feel and the connection they make with our customers.

I’ve learned a lot about great brands from Jamie Shennan, the Starbucks board member who has devised marketing strategies for Procter & Gamble, Anheuser-Busch, Pepsi, and General Foods. He invested in the company in 1990 because he believed Starbucks was already becoming a powerful brand. Great brands, he says, have a distinctive, memorable identity, a product that makes people look or feel better, and a strong but comfortable delivery channel, which in Starbucks’ case was the store. To succeed, you need to be in a category large enough to be robust and vibrant and to have a clear and original vision. All of these factors are essential, he says, but they fuse only if the management team can execute well. Jamie thinks Starbucks can eventually become as widely known as Coke around the world.

Most national brands in America are marketing-driven. Although my background is in marketing, that hasn’t been the engine that drives Starbucks—at least not in the traditional sense. In the ten years after 1987, we spent less than $10 million on advertising, not because we didn’t believe in it but because we couldn’t afford it. Instead, we’ve been product-driven, people-driven, values-driven.

If you look for wisdom on brand marketing, most of what you’ll find is based on the Procter & Gamble model. That is, you go after mass markets with mass distribution and mass advertising, and then focus on grabbing market share from your competitors. That’s the basic way of life for mature products in established markets. If Pepsi gains a point or two, Coke loses. The same is true of cars and cigarette brands. The big packaged-goods companies spend many millions of dollars and design highly innovative ad campaigns with the goal of gaining a few percentage points of market share.

At Starbucks, we have a different approach. We’re creating something new. We’re expanding and defining the market. We didn’t set out to steal customers away from Folgers or Maxwell House or Hills Brothers. We didn’t go for the widest possible distribution. We set out, rather, to educate our customers about the romance of coffee drinking. We wanted to introduce them to fine coffees the way wine stewards bring forward fine wines. Just as they might discuss the characteristics of a wine grown in a specific region or district of France, we want our baristas to be able to intelligently explain the flavors of Kenya and Costa Rica and Sulawesi.

Starbucks built up brand loyalty one customer at a time, communicated through our people, in the setting of company-owned retail stores. Today, even managers of big consumer brands are starting to realize that if you can control your own distribution, you will not find yourself at the mercy of a retailer who may or may not understand your product. It’s an enormously effective way to build an authentic brand, but it’s certainly not the easiest way.

About 80 percent of the coffee sold in the United States is purchased on supermarket aisles. But from the beginning, we left these traditional channels to others and concentrated our efforts instead on our own retail stores in highly visible, high-traffic downtown sites and residential neighborhoods. We located in lobbies and on the going-to-work side of the street. We attracted people and got them to try our whole-bean coffee by first romancing them with espresso drinks.

Our competitive advantage over the big coffee brands turned out to be our people. Supermarket sales are nonverbal and impersonal, with no personal interaction. But in a Starbucks store, you encounter real people who are informed and excited about the coffee, and enthusiastic about the brand. Which brand name are you most likely to remember?

Today, there’s a lot of marketing rhetoric about adding value to products. At Starbucks, the value was there from the beginning, in the coffee itself. When your average sale is only $3.50, you have to make sure customers come back. And ours do—on average eighteen times a month.

Starbucks certainly wasn’t the first company to build a reputation through retail stores. Hundreds of local specialty retailers in cities everywhere do the same thing. Your local pizza shop may take pride in its unique spicy sauce. Or you may know a Chinese restaurant that has authentic dim sum, with a great chef from Hong Kong. Or you may frequent a local bookstore because the owner will special order obscure books for you. The point is, you know from experience, or from word of mouth, that they’re the best in town.

Traditionally, local retailers have always thrived by differentiating themselves from the competition and by winning loyal customers with products or services or quality unobtainable nearby. What’s extraordinary about Starbucks is that we used that model to become a national company and then leveraged our brand reputation beyond our stores, to wholesale and food-service channels as well as to new products sold through grocery stores and other outlets.

Starbucks’ success proves that a multimillion-dollar advertising program isn’t a prerequisite for building a national brand—nor are the deep pockets of a big corporation. You can do it one customer at a time, one store at a time, one market at a time. In fact, that may be the best way to inspire loyalty and trust in customers. By word of mouth, with patience and discipline, over a period of years, you can elevate a good local brand to a great national brand—one that remains relevant to individual customers and communities for years.

AUTHENTICITY MAKES BRANDS LAST

In this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are stronger because they are built with the strength of the human spirit, not an ad campaign. The companies that are lasting are those that are authentic.

Take Nike as an example. Few people remember that Phil Knight disdained advertising for years, preferring event promotions and athlete endorsements. He built Nike’s reputation on the basis of authenticity, focusing on how its shoes improved athletic performance. Long after running shoes became a fashion statement and street wear, Nike continued to highlight technical superiority. Long after Nike became known for its megamillion-dollar award-winning TV ad campaigns, the company still embraced its legacy as the shoe of choice of the best athletes.

By contrast, take Gloria Jean’s, a coffee company started near Chicago, which began franchising nationwide in 1986. By late 1991, it was ahead of Starbucks, with 120 stores, compared to our 110. But Gloria Jean’s never developed the loyalty Starbucks did, and ownership ended up changing hands several times. One reason is that the company franchised the concept in more than 100 cities across the country, and each isolated franchise failed to create strong loyalty among customers. More fundamentally, though, the company never established a word-of-mouth reputation for authenticity and quality.

Mass advertising can help build brands, but authenticity is what makes them last. If people believe they share values with a company, they will stay loyal to a brand.

THE STARBUCKS BRAND

IS MORE THAN COFFEE

The number-one factor in creating a great, enduring brand is having an appealing product. There’s no substitute.

In Starbucks’ case, our product is a lot more than coffee. Customers choose to come to us for three reasons: our coffee, our people, and the experience in our stores.

Romancing the bean. Nothing matters more in our business than the taste of the coffee. We are fanatical about buying the highest-quality arabica coffees in the world and roasting them to the desired flavor characteristics for each variety. It’s become a benchmark for us; everything else we do has to be as good as our coffee.

We make much of the romance of coffee buying, telling the story of how Dave Olsen and Mary Williams travel to origin countries and talk to growers. But ultimately, the point is not the mystique but the performance in the cup.

Coffee is easily ruined. Even if you buy the right beans, they can go stale on the shelf, be under-or over-roasted, brewed improperly, or served lukewarm. We are fastidious about making sure nothing goes wrong any step of the way.

Behind the scenes, our retail partners go to great lengths to ensure our coffee stays fresh and flavorful. We keep the beans in vacuum-sealed bags or dark drawers to minimize the harmful effects of air, light, and moisture. We grind them to a precise level of coarseness or fineness depending on how they’ll be brewed. Then we measure the proportions of coffee and water according to exacting standards. If a barista-in-training takes less than eighteen or more than twenty-three seconds to pull a shot of espresso, we ask him or her to keep trying until the timing is right.

Because 98 percent of coffee is water, bad water can ruin the taste of even the best coffee beans. So, behind the counter in every store, where most customers can’t even see it, we even have a special water filtration system. Each of these careful steps adds to our cost of operation, but they make a difference customers can taste and guarantee a standard of flavor and quality that is consistent from store to store and region to region.

Romancing the customer. Dave Olsen has a saying: “Coffee without people is a theoretical construct. People without coffee are somewhat diminished as well.”

And Howard Behar has another: “We’re not in the coffee business serving people. We’re in the people business serving coffee.”

It’s our partners who pass on to customers their knowledge and passion about Starbucks. If we greet customers, exchange a few extra words with them, and then custom-make a drink exactly to their taste, they will be eager to come back.

So much of the retailing experience in America is mediocre. At the dry cleaner or the supermarket or the bank, you’re reduced to a number, or a credit card, or a personal identification code. You’re just one transaction in a file of consumers that come before you and after you.

But when you meet with an experience at a higher level, where you are treated positively, where someone goes out of her way to make you feel special, where you’re welcomed with a smile and assumed to be intelligent, the experience stands out.

Because we entrust the Starbucks brand to the hands of the baristas, it’s vitally important that we hire great people and imbue them with our passion for coffee. We do that through a training program whose sophistication and depth are rare in retail.

For years, Starbucks spent more on training our people than on advertising our product. We’ve continually refined the twenty-four hours of training we offer to each hire. Every new barista has to take some basic courses in Coffee Knowledge (four hours), Brewing the Perfect Cup (four hours), and Customer Service (four hours), as well as classes in basic orientation and retail skills. From their first day, we try to immerse them in our values-centered culture, showing them the importance of treating customers and one another with respect and dignity. Our trainers are all store managers or district managers themselves, with on-site experience. We train baristas to make eye contact with customers, to anticipate their needs, to explain the different coffees simply and clearly, and to compensate dissatisfied customers with a Starbuck coupon that will get them a free drink.

Each time we open stores in a new market, we undertake a major recruitment effort. Eight to ten weeks before opening, we place ads to hire baristas and start their training. We send a Star Team of experienced managers and baristas from existing stores and use a buddy system for one-on-one training.

We also encourage a dialogue with customers by providing comment cards in each store. Typically, we receive about 150 responses a month. About half the comments are negative, 30 percent are positive, and the remainder are questions or requests. The number-one complaint is about long lines. Some customers identify with us so strongly that they write lengthy, eloquent letters, whose tones range from the sublime to the horrific. One man wrote a three-page, single-spaced epic about a tense drive to the hospital with his pregnant wife, and how a latte had eased the stress. To respond thoughtfully to such comments, we asked one of our longest-tenured employees, Barbara Reed, to set up a customer relations function in 1992. She had joined the company in 1982 as a barista, managed the Pike Place store for many years, and worked as a district manager in Canada, so she was familiar with the realities of customer service at the store level.

Romancing all the senses in the store experience. At Starbucks, our product is not just great coffee but also what we call the “Starbucks experience”: an inviting, enriching environment in our stores that is comfortable and accessible yet also stylish and elegant.

More and more, I realize, customers are looking for a Third Place, an inviting, stimulating, sometimes even soulful respite from the pressures of work and home. People come to Starbucks for a refreshing time-out, a break in their busy days, a personal treat. Their visit has to be rewarding. If any detail is wrong, the brand suffers. That’s why we love the saying, “Everything matters.”

In effect, our stores are our billboards. Customers form an impression of the Starbucks brand the minute they walk in the door. The ambience we create there has as much to do with brand-building as the quality of the coffee.

Every Starbucks store is carefully designed to enhance the quality of everything the customers see, touch, hear, smell, or taste. All the sensory signals have to appeal to the same high standards. The artwork, the music, the aromas, the surfaces all have to send the same subliminal message as the flavor of the coffee: Everything here is best-of-class.

What’s the first thing you notice when you approach a Starbucks store? Almost always, it’s the aroma. Even non–coffee drinkers love the smell of brewing coffee. It’s heady, rich, full-bodied, dark, suggestive. Aroma triggers memories more strongly than any of the other senses, and it obviously plays a major role in attracting people to our stores.

Keeping that coffee aroma pure is no easy task. Because coffee beans have a bad tendency to absorb odors, we banned smoking in our stores years before it became a national trend. We ask our partners to refrain from using perfume or cologne. We won’t sell chemically flavored coffee beans. We won’t sell soup, sliced pastrami, or cooked food. We want you to smell coffee only.

The sounds that fill our stores also contribute to the brand image. Until recently, our signature music has been classical or jazz instrumentals, but lately Timothy Jones has started to vary the musical mood with opera, blues, reggae, even Broadway show tunes. But music is only one element of what you hear. After you place your order, you’ll usually hear the cashier call out the name of your drink, and then hear it echoed back by the barista. The hiss of the espresso machine, the clunk-clunk as the barista knocks the coffee grounds out of the filter, the bubbling of the milk steaming in a metal pitcher, and, at the bean counter, the swish of the metal scoop shoveling out a half-pound of beans, the clatter as they hit the scale—for our customers, these are all familiar, comforting sounds.

To match the warm feel of the cup in their hands, we have to pay attention to everything the customers touch: the style of the chairs, the edges of the countertops, the texture of the slate floors. Even cleanliness is part of the store experience, and it’s one factor we monitor regularly, using “mystery shoppers” who pose as customers and rate each location on a series of criteria.

We build the romance of coffee into the visual design of every store. Many include displays of coffee beans at different stages of roasting, from the green raw beans to the cinnamon roast used for most canned coffee to the dark Starbucks roast—with an explanation of why we believe in roasting dark. Our latest store design brings the coffee beans out from their drawers and into large metal hoppers, a feature that piques people’s curiosity and gets them asking questions.

We keep our look fresh by designing colorful banners and posters to evoke specific moods during different seasons, enriching the Starbucks brand with visual impact and interest. We receive hundreds of requests from customers for copies of their favorite posters, the most popular of which included an early one of Sumatra tigers and three original images of the siren we commissioned for our twenty-fifth anniversary from artists known in 1971 for their psychedelic imagery. We even use the cups themselves to carry messages, including three “chapters” of our history printed on cups during our twenty-fifth anniversary celebration.

The way merchandise is displayed also reflects on the brand. We pore over every detail and have great debates about whether or not to offer various products: Do bags of polenta reinforce or harm the brand image? Wristwatches? Jelly beans? We even work directly with Italian artisans to create original designs and hand-paint our mugs.

Authentic brands do not emerge from marketing cubicles or advertising agencies. They emanate from everything the company does, from store design and site selection to training, production, packaging, and merchandise buying. In companies with strong brands, every senior manager has to evaluate each decision by asking: “Will it strengthen or dilute the brand?”

CAN YOU REALLY BUILD A

BRAND BY WORD OF MOUTH?

In Seattle, it took fifteen years for great whole-bean coffee to catch on. It took five years for espresso drinks. Yet, somehow, we underestimated how much time we would need to capture imaginations in other cities.

When we went into Chicago in 1987, we were so confident that we had developed a captivating formula that we took it for granted that customers would automatically come flocking. What we hadn’t taken into account, however, was that our word-of-mouth reputation had not preceded us. Few people outside Seattle knew what Starbucks stood for.

From that experience, we learned that it wasn’t enough to simply open our stores and assume customers would come. We had to create advance excitement in each city we prepared to enter. How could we get people to start talking about Starbucks the day we opened our first store in their neighborhood? With each market we entered, we learned new techniques, so that by 1994 and 1995, when we rapidly accelerated the number of new market openings, we had developed a multi-pronged approach.

Jennifer Tisdel, our vice president for retail marketing since 1992, organized a market entry strategy that began by hiring a local public relations firm to help us understand the heritage and concerns of a given city. Early in our store-opening sequence we always picked a flagship site, a very visible location in a busy part of the city, to build a high-profile store, such as those in Dupont Circle in Washington, D.C., and Astor Place in New York’s Greenwich Village.

At the same time, our creative people designed artwork that celebrated each city’s personality, whether it was Paul Revere and the name Beantown for Boston, twin coffee cups for the Twin Cities, a peach-shaped coffee cup for Atlanta, or New York’s Statue of Liberty drinking coffee. We used the artwork on commuter mugs, T-shirts, and invitations for our partners and customers.

Unlike most other retail stores, coffeehouses are places where people naturally come together, so we try to integrate our stores into the fabric of their local communities. For each new market, we planned at least one big community event to celebrate our arrival, with the proceeds going to a local charity. In Boston and Atlanta, Kenny G gave benefit concerts, to which we invited local leaders.

Before each opening, we assembled a list of people who could serve as local “ambassadors” for Starbucks. We started by asking our partners if they had friends or family in that city, whom we then invited to pre-opening or Grand Opening events, along with local shareholders, mail-order customers, and sponsors of CARE or other causes we support. We sent them each two free-drink coupons with a note asking them to “Share Starbucks with a friend.” We held tastings with local reporters, food critics, chefs, and owners of well-regarded restaurants. To give our baristas a chance to practice, we let them invite their friends and family to pre-opening parties, where the coffee and pastries were free, with a suggested $3 donation to a local nonprofit group. Finally, we’d throw a Grand Opening party, usually the Saturday after the store opened, sometimes with thousands attending.

Community events and sponsorships became an ongoing part of our marketing work, in part to build awareness but also because we believe it’s the right thing to do. In addition to our support of CARE, we try to be sensitive to local issues, with our main emphasis on supporting AIDS programs; children’s causes, especially children’s hospitals; the environment, with a focus on clean water; and the arts, especially jazz and film festivals. For the past several years, 300 to 400 Starbucks partners and customers have marched in Seattle’s annual AIDS walk. We have also developed a partnership with Doernbecher Children’s Hospital in Portland that included selling specially designed commuter mugs; sponsored film festivals in Toronto, San Francisco, and Seattle; and raised money for Rhode Island’s Save the Bay project. These activities, only a few of hundreds we’ve sponsored, grow directly out of our Mission Statement, which states our commitment to “contribute positively to our communities and our environment.” Not only do these sponsorships create goodwill, but they also have a positive effect internally, making our partners proud to be associated with a company that gives back.

In the weeks after each opening, we often set up a reward system to thank our customers for their repeat business. Starting in 1993, we issued passports that entitled customers to a free half-pound of coffee once they had taken a world tour by trying coffee beans from different origin countries. In other cities, we invited them to try five different beverages, after which they were given a free local market tumbler.

We also offer company-wide printed in-store materials, which provide information for customers interested in learning more about coffee. Each store carries a display of brochures, including The World of Coffee, which details the different tastes of each type of whole-bean coffee we sell; The Best Coffee at Home, on how to grind and brew whole-bean coffee; and A Quick Guide to Starbucks Specialty Beverages, with diagrams explaining such drinks as cappuccino and caffè latte.

In addition, we publish and distribute Coffee Matters, a monthly newsletter focusing on the romance and culture of coffee through the ages. We use our annual reports to tell our story as well, from sections on “romancing the bean” and the “art of roasting” in 1992 through the innovative and unusual design of our twenty-fifth anniversary annual report in 1996. Another key contributor to brand-building has been our mail-order catalogue, which allows direct communication with customers. Our 800 number provides them with immediate access to coffee experts who can knowledgeably discuss the difference between Sumatra and Sulawesi, Gold Coast and Yukon blends.

With the rapid pace of expansion, our marketing people in Seattle can no longer monitor local needs and interests as well as people in the field. In response, we have decentralized our marketing efforts, with twelve partners in four zones scattered across the United States, handling store openings, events, and sponsorships for their regions and helping ensure our company-wide efforts are relevant on a local level.

Because Starbucks delivered a higher standard at a time when so many other retailers were lowering expectations, it has emerged as a beacon in the retail business. A typical customer might say, “Wow! I come in here and I’m treated so well. And when I come back the next day, they know my name and they know my drink! And there’s a seat here, and I’m listening to jazz, and I can close my eyes and have five minutes of rest away from work and away from home. I can do it every day, and it’s for me, and it’s only a dollar fifty or two dollars. I can’t afford a vacation to Hawaii, but this is something I can treat myself to! And I can afford it every day.”

Enthusiastically satisfied customers like that are the power behind our word-of-mouth strategy. If every new store can evoke that kind of reaction, the Starbucks brand will stand for a meaningful, personal experience no matter how ubiquitous we become.

BRAND-BUILDING OUTSIDE OUR STORES

Today, the Starbucks brand is outgrowing the walls of our stores. Increasingly, people are encountering our coffee on airlines, on cruise ships, in bookstores, in supermarkets. That broader exposure has forced us to rethink our brand positioning.

Aside from restaurants and airports, we long refused to let anyone sell Starbucks brand coffee. To protect the brand, we especially refused to make it available at drugstores, convenience stores, or gas stations. In 1993, though, Nordstrom agreed to sell our coffee. With its reputation for top-quality clothing and superior service, Nordstrom was the kind of strategic partner who, we felt certain, would enhance, not dilute, our brand. Later, when we picked supermarkets to locate kiosks in, we aimed to find ones with the top reputation in their markets, such as Quality Food Centers in Seattle.

Now that we have such new products as ice cream and bottled Frappuccino, both of which are sold in supermarkets, an innovative approach to graphics is even more crucial. Our Frappuccino bottles evoke the milk bottles of yesteryear, but are decorated with a pattern of stars and swirls that promises an unexpected taste. When we reached bottling capacity constraints, we had to consider putting Frappuccino in an aluminum can. It was a tough call, since cans connote mainstream soft drinks. But once again, we created a great design in keeping with the brand equity of Starbucks and the sub-brand of Frappuccino.

Perhaps the most intense internal debate we have had regarding product design came over our ice cream packaging. One group argued that since Starbucks was entering unfamiliar territory, we should use the well-known brand graphics and sell the ice cream in white packages with the green logo, or in the familiar terracottaand-charcoal colors of our coffee bags, with the steam pattern. Ice cream was enough of an innovation; we should pick something familiar and proven for packaging.

But another group argued that we ought to seize every opportunity to push the brand further with a new design that was bold and fresh and as playful and fun as eating ice cream. Using the existing design, they feared, would be admitting, “This is as good as we can get.”

Ultimately, the innovative, playful approach won out. We adopted a bolder look developed by Terry Heckler, with a field of swirls and stars against a background of browns and oranges and yellows. I saw it as a chance to step out, instead of just stepping in place.

The Starbucks brand image has even affected the design of our offices. In 1997, when we redesigned our building and named it Starbucks Center, we wanted it to reflect a new sense of playfulness. When we took down the SODO sign on the clock tower of our building, we replaced it with the head of the Starbucks siren, peeking out over the top of the building. Now everyone visiting our offices, which were once unmarked and invisible from the street, will be treated to the sight of a tall tower topped by a pair of eyes and a starred crown.

Even though few of our customers ever visit our offices, our redesign reflects a new spirit that Starbucks is taking on as we move beyond our retail base. As fanatical as we remain about coffee and the store experience, we also want people to realize that Starbucks has a sense of humor and a playful side, a well-rounded personality with both exuberance and irreverence, one that can connect with people at many levels and in many moods.

ELEVATING THE BRAND TO A NEW LEVEL

By 1995, the Starbucks brand faced an identity crisis. Although we had built a reputation based on world-class coffee and a meaningful connection with people, the field was getting so crowded that some customers couldn’t differentiate us from scores of competitors. Distracted by our size and ubiquity, they missed the point about our quality and commitment to community.

Clearly, word of mouth was no longer sufficient to get our message out. As long as we didn’t clearly state what we stood for, we left room for confusion about our intentions.

We’ve always relied on our coffee to speak for itself. Gradually, though, we realized that we had to be more proactive in telling our story. Walking down the street you may pass two or three coffee places. How are you to know which one serves the best espresso drinks? How can you tell which one roasts its own coffee and sends its buyers all over the world, searching for the best beans? By the mid-1990s, we needed a better way to articulate our story and to weave it into a more comprehensive image, one that encompassed our soul and vision.

Great brands always stand for something far bigger than themselves. The Disney name connotes fun, family, and entertainment. Nike signifies superior athletic performance. Microsoft aims to bring a computer to every desktop. I wanted to raise Starbucks to the next level, to make it stand for something even more than a great cup of coffee and a warm, inviting atmosphere.

As we grew larger, it became clear that we needed a dedicated brand champion, someone whose responsibility it would be to clarify and elevate the Starbucks message. I had always taken a direct and active role myself in marketing and merchandising, because they are so closely integrated into the value of everything we do as a company. But by 1994, I was looking for a new senior marketing executive, and I wanted it to be someone who had already taken a brand to national, or even global, prominence. I left the top marketing position empty for eighteen months while we searched for the right person.

It proved to be a difficult job to fill. The right candidate had to be someone classically trained in marketing, who could both unveil the brand personality of Starbucks and bring it to life, working with the other departments of the company. It had to be someone who had both a creative mind and the ability to execute a strategy. In addition, I wanted someone I could learn from, someone who was considered to be the best and the brightest in brand development and marketing. The future of the Starbucks brand, I knew, would be in this person’s hands.

In February 1995 I found Scott Bedbury in a cabin in snowy central Oregon, writing a book about unlocking the creative process in business. He had worked as Nike’s director of advertising from 1987 to November 1994, the years when “Bo Knows” and “Just Do It” became part of America’s vocabulary. Having just gone independent, he had written me a letter, offering to work as a marketing consultant. I had a different plan in mind.

“Yo!” he answered the phone, thinking it was his wife.

“Is that Scott Bedbury? This is Howard Schultz.”

“Oh, hi!” he greeted me, and then laughed. “You won’t believe this, but I just wrote a passage about Starbucks in my book.”

He read me the piece, an entire page filled with good insights. He sounded young, bright, hip, energetic. He talked fast, the ideas spilling over one another. I invited him to Seattle so we could meet face to face.

Less than two weeks later, Scott was in my office, trying to sell himself as a consultant. He dressed in an impeccable casual style, as he always does, and his blue eyes flashed as he talked. He looked even younger than his thirty-seven years, like someone who would be in tune with the styles and needs of the twenty-something generation. He talked with excitement about his new consulting business and about the three other potential clients he had lined up.

Within five minutes, I turned the tables on him. “I really don’t need a consultant,” I told him. “What I need is someone to be our head of marketing.”

He was taken aback. He had already planned his life out for the next twenty years. But he eventually accepted, and by June he had moved his family to Seattle and was beginning to think about a long-term marketing strategy for Starbucks.

Scott immediately found himself challenged by the fact that Starbucks is not only a brand but also an importer, a manufacturer, a retailer, a wholesaler, and a direct-mail business. No company that he knew of had done all five and survived. But he found some surprising similarities with Nike, too. Like Nike, Starbucks had entered a low-margin commodity industry and transformed its product into a cultural symbol. And I was surprised to hear that Nike, too, had started out by building its brand one customer at a time. Phil Knight initially hired running zealots to sell Nike shoes at track meets out of the trunks of their cars.

When Scott had joined Nike in 1987, it was in transition, just beginning its leap to national advertising. It had great athletic footwear but had never tried to appeal to anyone other than men and runners and basketball players. Scott helped Nike “widen the access point” to its brand to include women and “weekend warriors” looking not for a personal best but merely for the fun of physical exercise. Nike held tight to its core identity as a shoe for athletic performance but poked fun at itself and its loyalists, at basketball role models, amateur joggers, even dog-walkers. Its commercials and print ads hit an emotional chord that resonated far deeper than advertising normally does. Many are still remembered, five to ten years later.

When Scott arrived at Starbucks, he had more innovative ideas than any of us could keep track of. He was particularly intrigued by the idea that Starbucks needn’t be confined within the four walls of our stores, and his imagination spun it even further than we had imagined. We should bring coffee to where people enjoy it most or want it most, he said, as long as we can ensure its quality. We had on staff thousands great baristas, many of them aspiring artists or musicians, who could get out onto the streets to proactively meet the needs of our customers.

Scott believes that Starbucks should be a “knowing” company: in on the latest jokes, the latest music, the latest personalities, up to date about politics, literature, sports, and cultural trends. He plans to shake up what some see as the predictability of Starbucks with ideas that are vibrant and innovative.

Until Scott joined, Starbucks had spent only a small percentage of our revenue on advertising. To someone used to Nike’s $250 million worldwide marketing budget, our few million dollars seemed paltry. I wish I could have handed Scott a war chest of cash for advertising the day he walked in the door, but high coffee prices meant we had to temporarily put some costly projects on hold. In spite of that restriction, we went ahead and began the process of creating a voice to express our brand personality. The media dollars would come later.

Even before Scott had been hired, we had made the decision to find a new advertising agency. We selected four top-notch agencies and asked them each to prepare a presentation. That summer, a team of us first met with all four, and I explained my goals for Starbucks. They did market research with consumers and Starbucks partners before making their presentations, and they uncovered a disturbing theme: The key threat to the Starbucks brand was a growing belief among customers that the company was becoming corporate and predictable, inaccessible, or irrelevant.

The vehemence of those feelings shocked me. As CEO, I had deliberately kept a low profile, in order to keep the focus where I felt it belonged: on the coffee and our stores. But when I heard that some people viewed us as a faceless corporation, I knew I had to take a more visible role in explaining who I am and what my goals for Starbucks are.

Ironically, once a company is big enough to advertise heavily, it has to disarm people who are suspicious of size and ubiquity. Clearly, we had not told our story well enough. We needed to communicate who we are: a passionate, entrepreneurial company dedicated not only to providing great coffee but also to enriching everyday moments for millions of people.

Picking an agency was a tough choice, since all four had great creative ideas. I let Scott decide, and he went with Goodby, Silverstein & Partners, the award-winning San Francisco agency that created “Got Milk.”

I told Scott and the Goodby people that I wanted Starbucks to become part of people’s lives, to enrich them with a sense of discovery and hope. It should be human and real. Our advertising should tell people who we are and what we do.

Once we had signed with Goodby, Scott plunged into our own market research, hiring an expert from Nike, Jerome Conlon, to lead the effort. Jerome had been at Nike for fourteen years, including ten as the head of consumer insights. The two of them embarked on the Big Dig, a three-stage, nine-month research project, beginning with focus groups in three cities. They watched through one-way mirrors as customers and potential customers were asked about their perceptions of the coffee and the Starbucks experience. Why do people come to Starbucks? How do they envision an ideal coffeehouse? Scott was especially interested in hearing the opinions of young, college-aged people, tomorrow’s coffee consumers, many of whom preferred offbeat local coffee places.

Again, we got blasted by some of the opinions we heard. Customers in their thirties and forties and whole-bean lovers are generally happy with the Starbucks experience. But twenty-somethings want more from a coffeehouse. They want a place that’s funky and unique, not necessarily well-lighted and efficient. What matters to them is a place to hang out at night, not a quick to-go latte on the way to work.

The research helped us realize that customers have different need states, and that we have an opportunity to try to meet them in different ways in different stores. During the day, a college student may want somewhere to study with a cup of coffee. During the evening, that same student may prefer a place to meet with friends, free of the heavy influence of alcohol, that offers great music but also a chance to talk. On her way to work, a middle-aged attorney may want to buy a quick double latte at a drive-through, but at mid-morning she may need a table and relaxed atmosphere to discuss business with a client over coffee. The challenge we faced was to maintain, if not strengthen, the relevance of a brand that attracted such a diverse group of consumers.

The research forced us to rethink our marketing strategy. We see ourselves as the respectful inheritors of the European coffeehouse tradition, with all its connotations of art, literature, and progressive ideals. We can strengthen and enrich the Starbucks experience by drawing from this legacy and finding parallels in contemporary America, as we did when we began offering high-quality books recommended by Oprah Winfrey in 1997. We need to continue satisfying our core customers at some locations but also “widen the access point” to appeal to those who want a stimulating Third Place in which to gather in the evenings.

National advertising poses a dilemma for a company like ours. With more than a thousand stores across the United States, we need to speak to people in many cities at once. But by its very nature, national advertising fuels fears about ubiquity. How do we reach a national audience while still being respected at the local level? We worked for months on a master plan, rejecting many concepts along the way.

However we approach our customers, we have to do so with respect, intelligence, humor, and energy. You can’t hold the attention of people today unless you treat them as you would a respected friend of the family. In our case, these friends are our customers. The brand connects our partners, our customers, our products, and our core values the same way a family does.

Goodby has begun helping us craft an image that is simple, elegant, soulful, and uplifting, focusing on the emotional benefits we all look for in a coffee break, while embodying the playful and humorous spirit Goodby is known for. They are seeking to balance the successful corporate giant against the personal, human interaction our customers have every time they take time out to go get their favorite coffee.

A hint of Goodby’s approach can be seen in these proposed advertising statements:

“We’ve got coffee down cold”—for our summer 1996 promotion of both ice cream and Frappuccino.

“Today, someone’s writer’s block will evaporate in the steam of a cup of Kona and the great American memo will be written.”

“One sip of an icy Frappuccino creates a private personal cold front all around you.”

We aim for the unexpected, the offbeat, the clever. Coming up with just the right message and tone has proved much harder than I imagined. My highest aim is to have not just our advertising but the entire Starbucks experience provide human connection and personal enrichment in cherished moments, around the world, one cup at a time.