WHY STARBUCKS CAN SELL DRINKS AT DOUBLE THE PRICES OF THEIR COMPETITORS

Starbucks knows its coffee-drinking customers much better than any of its competitors. How else do you explain why Starbucks customers happily purchase its products at inflated prices, and yet their stores are always full of contented patrons?

If you know me at all you know that I'm a huge Starbucks fan, it's my go-to place to work and relax. But I don't like coffee!

Often as I make my way to a Starbucks coffee shop (Starbucks operates 372 stores in Thailand, most of them located in Bangkok), I can't help but notice the other empty coffee shops within the exact same mall. The difference is stark and anyone interested in marketing or improving their own business should be looking at this phenomenon and trying to understand what's going on here.

The stores of Starbucks competitors in the same mall look great and their drinks taste great too, probably in some cases even better. Why then are Starbucks still able to do so well in the face of so much competition?

The answer to that question can apply to your tennis business and by understanding a few simply Starbucks marketing strategies you can dramatically improve your tennis business and improve your profits as well.

Starbucks Lesson #1 -

IT'S NOT ABOUT YOU, IT'S ABOUT THE CUSTOMER 

I'm always amazed and slightly disappointed when I meet coaches who use their business to boost their own ego. For them, it's important to show the players and the parents of the players how knowledgeable they are and what an impressive background in tennis they have.

When a coach is constantly involved with boosting their ego it will adversely affect the quality of the training. The reason is that the focus of the practice session is not on the pupils, the focus is on the coach!

There are several things you notice on a personal level when you enter a Starbucks store.  The first thing you notice is that the staff are trained to interact with you on a personal level. They're also smart and they don't make mistakes with your order. 

I recently visited a new Starbucks in Bangkok for the first time. As is the custom the barista asked for my name and wrote it on the side of the cup. Fast forward two weeks later when I walked into the same Starbucks store and was greeted by name by the same barista, who also remembered my drink of choice, a hot Green Tea Latte. That's incredible to me! I'm not sure how they can recall the names and the drink preferences of each customer but it's very impressive and makes visiting a Starbuck store a very personal experience.

Starbucks Lesson #2 -

WHAT DO YOUR CUSTOMERS WANT AND NEED?

I mentioned earlier that I'm not a coffee drinker. It's true, I tried coffee for the first time when I was 21 years old and never tried again. I just don't like the taste. So why is Starbucks my preferred place to go almost every day? Because they provide me with several things that make my life better. 

Firstly, I work on my laptop almost every day writing articles and instruction pieces on tennis. Sometimes I need a change of environment away from my home to keep me inspired and motivated. Each Starbucks store here in Bangkok has a slightly different design and feel, but they all have a similar cozy and inviting ambiance. It's all part of the Starbucks brand. 

One of the things Howard Schultz, the founder of Starbucks understood before anybody else was that people didn't just go to a coffee shop because they wanted to drink coffee, they also wanted ambiance, they wanted a coffee shop. By simply combining decent coffee and a great environment he created a winner.

As I work on my laptop each day I also need two other important ingredients, somewhere to charge my phone and laptop as I work (there's an outlet for every chair in the store), and wifi for the whole day (Starbucks provides me with 12 hours of free wifi after logging in). Starbucks wants you there each day and wants you to stay!

To help you with your online work, Starbucks
has installed power outlets at every chair

Contrast that to a locally owned Bangkok coffee shop owner who recently made national news headlines because she kicked a student out of her coffee shop for 'taking too long', and for using her coffee shop as a place to work. 

The people of Thailand publicly debated for several days on who was right and who was wrong. Was the owner correct for insisting she couldn't allow the student to use the table for so long and potentially miss out on other customers or was the student correct in believing that by purchasing her drink she was entitled to use the table for as long as she wanted?

The thing the owner of the coffee shop failed to understand was that people don't just go to coffee shops to drink coffee anymore, they are now destinations, and that many more people are using coffee shops as their workplace as the world 'goes online'. Howard Schultz knew that in the 1980's when he took over the Starbucks brand. 

The small privately owned and operated coffee shops that still imagine that they are simply places to drink coffee are slowly losing market share and going out of business.

In the tennis business, the majority of tennis training facilities are still providing the same format of tennis training for their communities. But is there a chance you could re-invent yourself and become the Howard Schultz of tennis?

You need to ask the same types of questions that Howard Schultz must have asked himself nearly 50 years ago. What does the customer want? If you find the exact answer to that question your business will explode (and the answer is probably something very different to what's happening now, but once found, will seem ridiculously simple).

Every Starbucks store you visit will provide the same
cozy ambiance, it's something you can count on

Starbucks Lesson #3 -

CUSTOMER INTERACTION MATTERS

Nearly 5 years ago I was working in Manila, Philippines. During one of my first evenings there I entered a Starbucks at a shopping complex called Eastwood. 

As I was being served the barista asked me where I was from and I replied that I lived in Thailand. We chatted briefly about Thailand and when I collected my drink I noticed that he had written on the side of the cup 'Enjoy your drink Paul 5555'. In Thailand instead of using "lol", we use '5555' to signify laughter on social media. It was a nice touch and each time I went back there that barista and I would chat briefly about Thailand. 

When Starbucks remembers your name, the type of
drink you like, and the way you like it, it creates 
goodwill and repeat business.

Look at your tennis business and decide whether or not you are putting in that degree of special effort to get to know your students and their families. 

Successful customer interaction on a very personal level helps your business in two important ways;

1. Your students are more likely to stay with you (loyalty)
2. Your students are going to tell others about your business (viral marketing)

Developing the loyalty of your students and potentially having your students market your coaching on your behalf will most certainly have a positive effect on your bottom line.

Starbucks Lesson #4 -

SUBSCRIPTIONS AND UP-SELLING

Starbucks merchandise is not cheap, but because of
the great brand they can charge high prices for anything in their store

In the tennis business, we should receive our income from our students at the beginning of the month. This is called a subscription-based income because the students are paying us each month and continuously, just like our cable TV, and our membership to a local club.

Starbucks wanted the same benefits of having everyone on a 'subscription' also so they came up with a membership card that customers can top up with money and use for future payments. If you buy enough drinks using the card they will also give you a free drink as a form of reward. Having money already deposited on your card means that you're unlikely to buy your coffee anywhere else but a Starbucks outlet. They have you on subscription!

Our economy is moving more and more towards a Subscription-Based Economy. In the past 7.5 years, the subscription economy has grown by 350%!

Why not look also at your business as if it's a tennis version of Netflix? Can you provide your present and prospective customers with a comprehensive menu of ways they can get involved in your program and stay with you? This is where you can have a lot of fun creating programs that people in your area want to participate in.

Another tool for you to utilize is in coming up with special offers and in creating promotions that involve such things as discounts, rewards, incentives, and up-selling. 

Starbucks does a great job of creating promotions around a simple cup of coffee or a cake. They are the masters of enticing you to add a cake to that coffee you ordered or in getting you to buy one more cup of coffee so that you get the third cup for free. How active are you in creating options and incentives to entice tennis enthusiasts in your area to join your training?

Remember the other empty coffee shops in the mall near me? Don't be like them. Create reasons for players to buy lessons and participate in your program.

This privately-owned coffee shop is just 10m away from a Starbucks,
but nobody goes there. Starbucks have out-hustled
them with their superior marketing 

Cheaper prices and plenty of spare seats, but no customers

Starbucks also does a great job of merchandise in their stores. They are taking advantage of the Starbuck community to produce and sell high-end paraphernalia around coffee drinking, and it's not cheap! This is another form of up-selling whereby you enter a Starbucks store wanting to relax with your drink, but end up also purchasing a trendy pink and green coffee flask worth US$30 for your friend's birthday. 

Starbucks takes merchandising seriously. They consider themselves 
more than a coffee shop

Is there a tennis-related product or additional service (stringing) at your facility that you can sell? You could go into a partnership arrangement with a local sports store to either sell their products at your facility or simply directing your students to their store in town. In both cases, income can be made by taking a commission on the goods sold.

You may consider offering a stringing service and either do it yourself, or get a commission on any racquets you send to the shop for stringing.

CONCLUSION

The strange thing for me to understand is not why Starbucks is so successful, that's quite clear. But it is difficult for me to understand why so many coffee shops other than Starbucks are struggling to see what they have to do to survive. Surely all an owner of a competing coffee shop has to do is spend an hour in a Starbucks store watching why their customers go there, what they do when they are in there, and why these customers keep returning!