Your Customer Experience Must Evolve

There’s one question to ask for a great customer experience as the business changes

It’s typical for a company that gets good reviews and feedback for a long time to take customer experience for granted. It may not be easy to see gradual declines in satisfaction. This can lead a company to think that things are generally fine or that slight dips in ratings are just attributable to a single, explainable and excusable event.

There are a number of reasons for declining customer experience. Changes in leadership, accountability, conflicting priorities and understaffing are common. But one reason that is not often examined is how necessary and well-intentioned operational changes can have slight impacts to the customer experience. These small changes can add up over time and result in an experience noticeably different than before.

Starbucks provides a helpful example of this situation. Starbucks was once a quintessential example for a great customer experience. People would use a Starbucks analogy as a way to describe how another business should be. But today, many would agree the Starbucks experience is not what it once was. Even Howard Shultz claimed that the answer to the company’s financial challenges and missed shareholder expectations lies in the correcting the experience.

Starbucks customer preferences changed

Understanding the recent customer experience decline at Starbucks requires an examination of changing customer needs and behaviors. Coffee shops have always had an evolving role in society. Coffeehouses reigned England for two hundred years (1650-1850). It was the center of business, cultural and political life. Before traditional printed papers, it was the place to get news. Trading companies were headquartered in them. Businesspersons held regular times in the coffeeshop for customers instead of an office.

But by the middle of the nineteenth century, they had little impact on English life. The purpose of the coffee shop changed as a result of daily mail and newspaper delivery, as well as other new work and living conditions caused by industrialization. People still drank coffee, but the value of the coffee shop as a place declined.

This cycle has repeated for coffee shops, taverns and similar establishments in societies over time. For example, these businesses had a larger role in America when people lived in crowded city tenements. They then waned when people moved to houses in sprawling suburbs.

Thirty years ago in America, the idea of getting together for coffee was more universal. A coffee shop was where friends gathered to catch up outside the home and office. Friends, the most popular show in the late nineties, was largely set in a coffee shop. But times change. That wouldn’t be a reoccurring scene in a modern show about young professionals.

There are several reasons for the modern coffee shop evolution. One is the costs of operating a coffee shop with the old model. In many regions of the country, the cost of labor and rent has made it extremely difficult. Coffee shops have had to reduce footprints and staff to make the products available at a price that enough customers are willing to pay to support the business. It means less seating and more automation.

Another is the changing customer demand for sitting down in a restaurant. Dining in a restaurant is no longer people’s preferred way to get restaurant food or beverages. A recent study revealed 57% of diners prefer takeout and delivery to eating at the establishment. Many people still like sitting down in a restaurant, but more and more are wanting to take food and beverages away to enjoy with others at home or elsewhere.

However, the biggest factor impacting coffee shops as a gathering place is that people don’t socialize face-to-face like they used to. Unmarried Americans have reduced face-to-face socializing by more than 35 percent in twenty years (2003-2022). Teenagers have reduced their time together with friends by more than 45 percent. In a typical day, a person with a pet now spends more time actively engaged with it than face-to-face with other humans. If less people want to get together over coffee, the coffee shop environment has less demand.

There are two primary reasons for the accelerated social change since coffee shops reached their recent peak. First, Americans spend more of their social time on screens. Americans still socialize, but it is through texting and social media instead of physically getting together. Data shows a dramatic drop in face-to-face social time starting in 2012, when 50% of people had a smartphone. People used to say, “let’s grab coffee” as a way to catch up. Today, most people are connected on multiple platforms to “catch up” and do so frequently.

The second reason for the reduction in face-to-face socializing is that people are overscheduled and time crunched. People have less leisure time than they did just two decades ago. It is harder to get together when people are managing increasingly busy schedules driven by children’s activities, opportunities constantly pushed to them, and demanding jobs that expect after hours work online. Basic shopping is done online because there is no time. For many people in America, sitting down for coffee in a shop is just not on the top half of their list of social activities.

The coffee shop also doesn’t play as important of a role in today’s professional life. Small business owners used to connect with clients at a coffee shop for short meetings. Those can now be done on a video conference where participants don’t need to travel. Many people that used to drop in and work at a coffee shop with internet now have dedicated home work stations since the pandemic.

Yesterday’s coffee house doesn’t play the same role in today’s lifestyle. People do get together, they sometimes will meet someone at a coffee shop, or occasionally change up their remote work station, but it is much less often. Customer demand isn’t the same and coffee shop businesses have had to adjust their business model accordingly.

Starbucks understood the changing role of the coffee house and evolved operationally to remain profitable and grow. It has invested in mobile ordering, drive-thru options and alternative settings (for example, co-locating in grocery stores instead of occupying a large storefront next to them).

But the result is a different experience with Starbucks for most customers. They take their coffee to go quickly instead of socializing in the coffee shop. Customers do this because it’s their preference, not because Starbucks somehow lost its way in the coffee shop environment.

The misconception of the third-place experience at Starbucks

Starbucks was often described as the customer’s third-place (the other two being home and work). The third-place was a term coined by Ray Oldenburg in his book The Great Good Place that refers to establishments that serve as a community and civic center (as coffee shops and taverns were described in the previous section). Starbucks wanted to be a third-place and marketed itself as such (though it can be argued whether Starbucks ever achieved Oldenburg’s definition for a third-place).

This third-place concept became incorrectly synonymous with the Starbucks experience as customers became familiar with the store environment and had a good experience with the brand. But the environment was not the heart of the Starbucks experience, it was just how Starbucks most frequently expressed the experience and interacted with customers.

In years past, the touchpoints that fueled the Starbucks experience were in the environment. Today, the experience comes from different touchpoints and the experience is different.

It is false to say that the experience declined solely because it went away from its traditional environment with many changes (or that the company needs to return to what it was).  Starbucks needed to make these strategic moves because customer behavior demanded it. The problem resulted from how Starbucks shaped those solutions. Starbucks might have made the right operational changes to align with customer behavior, but it didn’t adjust its customer experience appropriately. Starbucks focused on function, but forgot about form.

The real Starbucks experience wasn’t about being a third-place

To understand the true Starbucks experience, it is important to view it through the 4P Customer Experience™ model. Customer experience is about delivering a core promise in four key delivery areas: People, Process, Place and Product. In his Linked-In letter last year, Howard Shultz himself used a key word that described the core experience customers felt: Uplifting.

Applying this core promise to the 4Ps of Customer Experience™ explains what made the Starbucks experience special. The emotional concept of “uplifting” was the lens for all four Ps. Customers are uplifted when upbeat baristas (people) use their name and “pick them up” with positive conversation. A quick and effortless process is uplifting compared to all the other parts of the day that take work. Coffee is naturally an uplifting product. It smells good and contains caffeine for extra alertness. The store (place) is also uplifting, with inspiring music, good smells, comfy chairs, well designed images and colors, and clean surroundings.  

The third-place, in-person model did not define the Starbucks experience. The sensory responses customers received from being at a coffee shop were simply ways in which Starbucks delivered an uplifting experience in the place during an era where customers wanted that. Since the third-place concept wasn’t really the core promise of the Starbucks experience, it can still thrive without it.

How the Starbucks experience changed

With the old coffee shop experience model, customers had a number of experience touch points in the place. They picked up uplifting signals from materials, colors, sounds and smells. But it also facilitated deeper interactions with the Starbucks employees (people).

Changes such as mobile ordering and drive-thru options turned the experience touchpoints away from the place and made it more about process. At Starbucks, a larger focus of making the process easier and faster (and operations more efficient), meant that the opportunities to create an “uplifting” experience diminished. This certainly happened with less place interactions. Sights and sounds were taken out of the equation.

The process changes also limited the people connections. Customers come inside less often. When they do, it is for less time and a quick transaction. This makes it harder to uplift a customer with talk about the day. A mobile app can keep track of your typical order, but doesn’t make a customer feel seen and valued by another human the same way as a person remembering the drink for a regular. When the company is in the “people business serving coffee” it is hard to do if there are fewer interactions between people.

Other tweaks made in the name of cost cutting, efficiency and standardization contributed to losing the ways people felt uplifted. A sticker with your name and order might be operationally helpful, but having your hand-written name on your cup is personal and uplifting.

The opportunities to deliver a customer experience in two key areas of the 4Ps of Customer Experience (place and people) started to vanish. Starbucks is left to rely on only the product and quick process, which is a transaction, not an emotional experience. This describes the customer experience of a quality vending machine. Vending machines are not uplifting.

In summary, the main reason for the customer experience decline at Starbucks is that the company was overly-dependent on the place for touchpoints to deliver an “uplifting” experience. As Starbucks had to operationally adjust away from the place setting to respond to customer preferences and trends, it didn’t replace those touchpoints effectively with the other 4Ps of Customer Experience™. Removing the opportunities in the place setting means that to create an uplifting experience, new, stronger experiences need to grow with the people, process and product. That didn’t happen. Customers do not feel as “uplifted” in their experience.

What is the answer for fixing the Starbucks experience?

At Starbucks, drive-thru options will remain, mobile interaction is here to stay, and the in-person store experience will continue to evolve. The solution for Starbucks isn’t found in doubling down on the past coffee shop experience.  As Ray Oldenburg stated, “the survival of the coffeehouse depends on its ability to meet present day needs and not those of a romanticized past.”

People still want their coffee and they still want an uplifting experience. They just don’t want what Starbucks has become, nor do they want the 1990s coffee shop experience. It is incorrect to assume that returning to an environment to sit with more comfort and amenities is the way to regain meaningful emotional connections with customers. Better chairs, mugs and condiment bars will not make meaningful improvements in the experience if customers don’t want to come inside because of societal changes. That direction wouldn’t be profitable.

To improve the customer experience, Starbucks will need to find new, creative ways to authentically create an uplifting experience in all 4Ps of Customer Experience™. It must ask if each of the operational changes uplift customers. If they do not, then Starbucks must tweak those changes in a way that does.

This is especially true in the areas of people and place touchpoints aligned with future customer needs and behaviors. The place does not need to be a binary choice between the old sit-down conversation model and the counter to grab an order and run. The employees in the people category do not need to be limited to handing drinks and taking payment. It is essential that customers feel uplifted through personal interactions. That might come in innovative ways that only a real person can engage, educate and execute. Identifying those opportunities will involve placing the uplifting promise at the center of the experience instead of a quicker process.

The Starbucks experience story is a lesson for all businesses

Customer experience is about addressing customer needs (both emotional and rational). As customer and operational needs change, companies also need to adapt and find new methods of providing the authentic experience they are known for.

There are plenty of examples where companies make these operational pivots while delivering the same experience promise. Nordstrom was well known as a premier in-person shopping experience. When customer demand required a shift toward online shopping, Nordstrom didn’t abandon its stores. But Nordstrom did modify the store and ensure its online option offered the same affordable luxury experience promise as the store. The promise was consistently delivered at other 4P Customer Experience™ touchpoints. Even if a customer prefers online shopping, Nordstrom provides different reasons to periodically come in to stores to engage, like personal stylist appointments, makeovers, same-day pickups or easy returns. Some of the salespeople on the floor can be transitioned to roles that creatively and personally engage customers outside the immediate sale. This provides customer value with people even for online shoppers (in ways that automated communication, bots and algorithms are not able to).

It is essential for a company to have a clear understanding of the experience promise it delivers. As market forces shape operational and strategic directions, it is necessary to reexamine how new touchpoints are able to deliver the experience appropriately. Each operational change needs to go beyond asking “how will it benefit the customer?” Instead, the more important question is, “how will it deliver on the experience promise?” This is especially true with implementing new technology like apps or AI into new customer experience changes. Starbucks surely found customer benefits in its operational changes, but didn’t address how each made improvements in uplifting customers.

Customer experience strategies should be revisited periodically, even if customer reviews and profits are strong. Just like one should visit their physician for an annual checkup despite not being sick. But new projects and initiatives should go through a special review and test to ensure the company’s experience promise is able to be delivered. Otherwise, the company will one day wonder where things went wrong and how to take on the difficult task to repair.

Michael Pearce is a managing principal at Hundred Ten, LLC.