It’s funny, I happen to think McDonalds’ coffee tastes better, not to mention it’s cheaper. But the experience of going into a Starbucks is better. If feels chic, sophisticated, and enjoyable.
For Starbucks, the experience they provide is their strategy. From the very beginning, CEO and Chairman Howard Schultz saw this as the opportunity. The suede couches, slow music, and exquisite interior design all contribute to the experience.
Friendly baristas at the cashier play an equally important role. Starbucks’ keeps employees so cheerful by simply treating them well — offering health benefits and stock options, making the company one of the best to work for (CNN) and yielding one of the lowest turnover rates in the industry (businessweek).
The company is just as empathetic to its customers as it is to its employees. Recognizing the human factors in this business model is fascinating, as it would hardly swing with investors on paper: ‘We’re going to spend lots of money building fancy stores and paying our employees exceptionally well so more people buy our coffee.’
‘But you can get coffee anywhere. People want the best quality coffee for the cheapest price.’ As traditional economic theory would have it.