Which Customer's Voice Matters Most?
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A brewing discussion about Starbucks’ new coffee flavor highlights a challenge facing innovation-seeking incumbents: Which customers should we listen to?
As part of a broader effort to reinvigorate the company, Starbucks recently rolled out a mild-tasting coffee called “Pike Place Roast.” It has quietly moved away from offering bolder-tasting coffees, such as its Sumatra brand, particularly in the afternoon.
Starbucks brought Pike Place Roast to market in response to complaints from Consumer Reports and others that its coffee tasted bitter or burnt. A small group commercialized the brew in six months—an astonishingly short period of time in the food industry.
While Consumer Reports and the mass-market has cheered, a vocal group of core Starbucks loyalists panned the coffee—one reviewer on a Starbucks Web site designed to solicit customer feedback called it a “fundamental, grievous error”—as watered down and away from what makes Starbucks distinct.
Incumbents seeking to create new growth often face a version of this dilemma. Should we listen to our best, most loyal customers, or should we turn our ears towards customers we’re not serving well, or even to customers we are not serving at all?
Like many things in innovation, our belief is that wise companies turn this “or” question into an “and” statement. Companies have to have the ability to listen to and serve their best customers while simultaneously finding out how to listen to and serve dissatisfied customers and customers who don’t consume anything at all.
Think about how Apple has broadened its iPod line since introduction. It didn’t just increase capacity of its core player to appeal to technically sophisticated consumers who wanted to jam every song onto their players. It also made more aesthetically pleasing players (the nano line) to target less-technical consumers and smaller, cheaper players (the shuffle line) to target consumers more concerned with price or portability.
Just listening to your best customers can be dangerous. After all, your most satisfied customers have little incentive to tell you to do things fundamentally differently in the face of disruptive trends in your market. Alienating those customers is the wrong move too, because loyal customers are the profit engines of most companies.
It’s a tough trick, for sure, particularly when your company, like Starbucks, essentially follows a single business model.
One thing Starbucks could consider doing is allowing individual store formats to organize in different ways depending on the local customer mix, or even creating sub-brands. The Gap, for example, has its Old Navy, Banana Republic, and Piperlime brands to connect with different customers.
While bean counters might argue that this approach would involve duplicative overhead, it could also allow Starbucks to better connect with different groups of customers, helping to power the growth it so sorely needs.
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Scott D. Anthony is the president of Innosight, an innovation consulting and investing company with offices in Massachusetts, Singapore, and India. He has consulted to Fortune 500 and start-up companies in a wide range of industries. During 2005–2006 he spearheaded a yearlong project to help the newspaper industry grapple with industry transformation (Newspaper Next).
Comments
A further thought.
Launching products at the "edge" that may appeal light or non customers does not necessarily have to be seen as an affront to the incumbent core customers, it should be viewed as, and indeed marketed as another example of the enterprises willingness to experiment in pursuit of meeting custopmer needs. Not all experiments work, most do not, but in most cases, even your most rusted on customer will applaud the effort.
Allen Roberts
- Posted by Allen Roberts
July 2, 2008 12:52 AM
Starbucks was created in a time of significant changes in the approach to business, it is a product of a paradigm shift in marketing from price-product orientated strategies to value orientated ones - and now in a possible downturn, what was accepted in the new paradigm as added value, becomes in the parlance of the old school of selling, simply a "mark up". Since there are many analogies with the housing market and equitable value and many a cautionary tale - those wishing to embark on such ventures should adopt a mixed model or have serious contingencies - the ultimate losers are investors and of course all the employees.
- Posted by Stephen Pain
July 3, 2008 3:52 AM
This post discusses a fundamental issue on listening to customers that is important to any company - whether you are making coffee or cars - which is how to avoid a big mistake when choosing which customer feedback to adopt.
One of the key elements that makes Starbucks "Starbucks" is snob appeal. The very fact that some people don't appreciate the "boldness" of their brews is what sets Starbucks drinkers apart - they are different. When the unitiated turn up their noses at the "burnt" flavor, it makes the initiated feel more special. They are part of the society of bold coffee drinkers.
I believe this applies to many industries, and I agree that sub-brands are the way to go (can anybody say Starbucks Mellow Blends?)
I do wonder if Starbucks hasn't gone way beyond their core coffee snob audience with all of the pre-mixed sweet coffee drinks anyway, but I believe the point is still valid. Great topic.
I have a bit more on my blog at www.mbtmag.com/plmblog if you are interested or care to comment. I am new to posting here, so please forgive any lack of etiquette in placing the URL.
- Posted by Jim Brown
July 7, 2008 9:28 PM
Very interesting question. The customers to listen to depends entirely on what you are trying to do.
If you look at what Pearl Jam are doing, they are focussing only on their existing customers. They are in an industry which has been dogged with the problem of piracy and falling CD sales. In such a time, they are showing as much loyalty and care towards their fan base as they are showing to them. For the record, Pearl Jam's last 10 albums have all made bumper profits for them.
In Starbucks' case, I think they definitely listened to the wrong people. Why fall into the "me too" syndrome ? Starbucks is iconic and icons move by different rules. They have to stick to what has made them a favourite in the first place.
Having said that, they can still win new clientele by offering them the customization. Presently they offer customization in virtually every aspect of drink e.g. temperature, no of shots, milk, sugar, size etc then surely they can offer the roast as a choice too.
- Posted by PG
July 29, 2008 11:55 AM