How Starbucks built its competitive advantage

Make it personal

Starbucks filled a psychological need so efficiently that no other company has been able to match it. It managed to connect so well with their customers that it made them want to identify with the company.

This was achieved through little things, from personalized friendly service, to creating a connection in the moment when one hand reaches over the counter, to handing over a cup of coffee to a waiting outstretched hand.

This connection not only keeps its clientele coming back every day, but also makes them feel valued and want to be an integral part of the franchise.

Starbucks has managed to provide a brand experience that spreads beyond the product offered, as it also offers legendary customer service and unique drink names, thus creating amazing rendezvous points while giving Starbucks a cutting edge over its competitors.

Know your product

Starbucks employees have intimate knowledge of the products that they serve and understand their beverages down to a science.

They are well aware of the exact difference between a cappuccino, a latte, and a mocha coffee.

At Starbucks, a latte is a shot of espresso with steamed milk (3-5 seconds) and a thin foam layer, while a cappuccino cup is a shot of espresso, half steamed milk (6 to 8 seconds), and half foam.

Employees know that they need to monitor temperature when the milk is being steamed and drinks need to be served at a perfect temperature of about 165 degrees Fahrenheit, and no more than 180 degrees.

While other coffeehouses apply personal improvisation as the standard technique in making and serving coffee, every Starbucks barista is required to master and prepare a perfect cappuccino before they can become certified.

With such a superior product, it is no wonder they have moved miles ahead of local and international firms that compete with them.

Understand your customer and make them king

From the moment you walk into a Starbucks restaurant, they make it their top priority to ensure you are served in less than three minutes, and if they are very busy, in less than five minutes.

Starbucks baristas also understand that their customers will always want freshly made coffee, and endeavor to guarantee that they never serve a pot that has been waiting for more than 30 minutes.

They religiously follow a strictly-timed regime.

This also applies to iced tea, iced coffee, and pastries, so that everything coming out of their kitchen is fresh.

In this way, Starbucks customers feel respected, as they know that they are getting value for their money in the timeliest fashion.

With a full staff and two registers, a Brooklyn Starbucks store can serve an astounding 220 customers in an hour, and this is in one of the busiest locations yet.

Having taken such good care of their customers, it just comes natural that they receive such great loyalty from them.

Value your employees

Any Starbucks barista who works at least 20 hours every week becomes eligible for a health insurance policy.

From the moment they become certified, they undergo more than 30 hours of specialized training on everything about coffee, and this includes subjects that vary from the very origins of coffee beans, to Frappuccino techniques.

They are trained on customer service and making a good first impression, brewing and tasting, offering the Starbucks coffee experience, as well as learning espresso bar basics, beverage preparation, Point of Sale, customer service essentials, beverage essentials, food warming, and coffee roasting and packaging.

In order to prove in practice that it treats its employees as partners, Starbucks offers them stock options.

This makes them feel that they work for a company that they own a part of, thus ensuring that every barista has a friendly smile on their face every time they serve a customer and also reducing employee complaints and making the working environment as pleasant and welcoming as possible.

It is not without reason that Starbucks has been named one of the best companies to work for.

They have set the very highest standards

Starbucks stores have definitely mastered the art of preparing their clients’ favorite drinks.

Selected stores have a top of the line single brew clover that probably makes the very best coffee you will ever have the honor of tasting.

Once Harold Schultz had the clover in a small coffee shop in New York, he immediately knew that it would be the best coffee he ever tasted.

They acquired the company that manufactures the clover in the year 2008 and began to introduce this revolutionary machine in their stores all around the country.

They have also upgraded their espresso machine to Swiss-made Mastrena.

It consistently produces the highest quality shots of espresso that are second to none.

It is easy to pull to produce a precise shot of espresso, and is shorter, hence allowing employees to easily interact with clients.

Starbucks are proud of their diversity of products

Any Starbucks store claims that they can produce more than 80,000 varied combinations, all of which a certified barista can make at a moment’s notice.

Of course, this means intensive training and a Beverage ID code is written with a marker on each cup.

However, when you are venturing into an industry where you need to be better than everyone else, having a barista who can manage a complex number of orders without mixing them up is a valuable asset.

Starbucks stores have definitely established the reason why they are the best at what they do within their huge diversification of served beverages.

Identify your target market correctly

This should probably have been at the top of the list, however the one thing Starbucks have done extremely well is to identify their target market and develop a product for each market.

They know they have customers who prefer simple premium coffee, and those who like the specialty beverages that they provide.

They have identified that they have young clients who want to experiment with their drinks, and the old-timers who already know exactly how they like their coffee.

The application of marketing demographics has played a big role in grouping their clients, according to their various income levels, professional and managerial positions.

Even market niches with a strong focus on customer service and/or environmental protection have been taken into account, in order to provide the best customer experience possible.

They have gone out of their way to safeguard they develop a product literally for each of their clients, making sure that none of them feel unattended to.

They have even incorporated products for children served at about 135 degrees Fahrenheit, which is a pleasant way for kids to enjoy the full flavor of coffee.

Strong corporate social responsibility on environmental protection issues and community involvement

Starbucks believes that the community and the company have to co-exist.

They have engaged in numerous programs to support the community including running the Young Action program which supports the young generation to improve their community and educates coffee farmers about better production methods and financial systems.

This has greatly helped the farmers to improve the quality of their products hence ensuring they can sell their product for better prices and increase their income.

Other projects Starbucks stores are involved in include, helping children all over the world gain access to clean water, founding C.O.A.S.T. to recover the Gulf Coast and providing funding for educational programs in China.

Starbucks has always remained an ethical organization

Starbucks follows ethical standards in terms of product quality, customer service, progressive personnel policies and interaction with its environment.

They have always made it their goal to confirm that all their actions are beyond reproach.

Even in cases of potential conflict of interest, or situations where being ethically upright is made difficult due to a tumultuous economy, they have handled them straight away, not letting them develop into a bigger problem later on.

Incorporate flexibility, innovation and new technology

While most coffee shops will demand cash or a valid credit card, Starbucks now allows its customers to pay using their blackberries and their iPhones.

Starbucks cards can be installed on the phone and available funds can be used to make payments for the customer’s favorite cup of coffee.

Starbucks have made the areas and atmosphere in their stores very conducive for customers who are having business meetings to sit and discuss their affairs without much of a hustle.

The Free Wi-Fi and lack of restrictions on laptop use have made this top coffeehouse chain a class above the rest.

Starbucks’ CEO has made it a fundamental building block for his iconic brand to always incorporate new and innovative ways to improve its service.

This spirit of innovation is not just limited to introducing new products to the market, but also improving communication with clients, and implementing cost-cutting strategies into their business operations and planning.

This approach helps them to redefine and refine the company’s core values, continually adapt to changing customer needs and protect their unique competitive advantage.

As a result, their closest rivals, such as McDonalds or Dunkin Donuts, can only hope to achieve the level of customer appreciation that Starbucks currently enjoys.

Bonus: Adaptability to changing market conditions

Just like the majority of businesses, Starbucks has experienced challenges especially after the American recession of 2008.

They were forced to employ cost-reducing measures, such as price campaigns in selected stores to lure customers away from other major coffee shop chains.

This has resulted in losing a share of its regular customers.

Regardless of those changes causing minor discomfort, Starbucks is still the “third place” between work and home.

Starbucks provides a great escape in their inviting and convenient store atmosphere, and serves something that you are sure to enjoy.

Every time you enjoy a cup of your favorite Mocha or Latte from Starbucks, not only can you be assured that every little detail on that cup is top quality, you can also comfortably say that you are taking a drink from the world’s best coffeehouse.

References

Starbucks Website

11 Things Starbucks Does Better Than Almost Any Competitor

100 Best Companies to Work For-Starbucks

What Makes Starbucks One of America's Best Companies

Committed to Transparency—People, Planet, Coffee