Anne Saunders, the Starbucks "generosity experiment" and other marketing innovations

Anne Saunders is VP of Global Brand Strategy at Starbucks.  Yesterday, she was named a "top ten" marketing innovator by Advertising Age. 

AA notes the things for which Saunders and Starbucks are so justly famous, especially the creation of a robust brand with a tiny budget and almost no conventional advertising.  (This year, Starbucks will spend 1% of its sales on marketing.)

Some of Saunders' innovations are grass roots options like serving PTA meetings or sponsoring beach cleanups. Clearly, she was also the beneficiary of the extraordinary meaning making, brand building qualities of Starbucks' "third space"  retail.

But Saunders also created innovation out of naturally occurring experiments that have occurred at Starbucks.

In the fall of 2005, a Starbucks barista in California gave a drive-through customer a free cup of coffee.  (She was apologizing for having got an order wrong.)  The lucky customer was struck by a moment of generosity and decided to pay for the person next in line.  This luckly customer did the same for the customer behind her, and an articulated act of generosity ran for 9 transactions until someone decided to take the coffee and run. 

This reminds me of Levi-Strauss' discussion of patrons in a french restaurant.  Two men, perfect strangers sitting at separate tables, treat one another to a glass of wine.  Nothing changes (both men consume the same amount of wine) and everything does (perfect strangers acknowledge one another). 

In the case of the French restaurant, we are looking at a "tit for tat" reciprocity: I do for you what you do for me.  In the Starbucks' case, we are looking at something more open-ended (in the anthro lingo: "generalized").  My gift does not "return" to my benefactor.  It goes to someone who may or may not reciprocate it.  There is an element of risk.  I give to you, without any quarantee that you will give to someone else. 

Reciprocity is a powerful device.  It creates or helps substantiate a relationship.  Generalized reciprocity of the Starbucks' kind is still more powerful.  It has a way of transforming the customer from just another schmoe into someone new.

The person who gives without any guarantee of return is a paragon of generosity, someone who feels their generosity instead of risking it.  This is someone who is, in the Western and not only the Western scheme of things, a little god-like. After all this Starbucks customer just got a free coffee!  If they want to, they are free to break faith.  They can take the coffee and run. Those who decide to perpetuate the gift with a special kind of generosity.  And this stands as a special measure of their spirit and their goodness. 

Clearly, Starbucks generosity picks up on something at work in our culture, the "random acts of kindness" theme that is still operative well after the 1960s have come and gone, and even as the "new age" sensibility struggles to sustain itself in a time of post 9/11 severity.  It also plays out that "pass it on" theme for which, I believe a movie was named.  Finally, it plays out that idea that we don't need to know the recipients of our generosity, and that, indeed, there was something charming about not knowing the recipient of our generosity.   Apparently, we like to participate in and help build networks where the nodes are unknown to one another.  Strange. 

Ok, here's what Starbucks and Saunders chose to do with their stroke of good forture, that naturally occurring moment of Starbucks generosity. According to AA, "The marketing department created a coupon that told the story and asked recipients to hand the coupon to a friend or co-worker to invite them to have free cup of coffee." 

This is good but I wonder if there isn't another opportunity.  Why not give the barista the opportunity to hand out free coffee as if they were passing along someone else's generosity?  Sometimes, the recipient will take the coffee and run.  But sometimes they will step up to the opportunity and pass the gift along, with all the benefits to Starbucks and themselves that this entails.  "Oh," says the next customer, "some thing odd and interesting and sort of charming just happened."  The hum drum of daily life is relieved a little.  The growing hum drum of the Starbucks is relieved a lot. 

I like the way this strategy gives the barista something to work with.  As it is, many baristas appear to be engaged in a "too cool for school" demonstration played out in a drama called "how slow can I go."  The generosity play allows them to give coffee to people and see what happens.  Will the recipient pay for the next customer or not?  We can guess that baristas will compete to see who is best at choosing recipients who will pass it on. The world on the other side of the counter suddenly got a lot more interesting and engaging for them.  If this helps them speed up, or brighten up, by even 10%, Starbucks will pay for those free coffees many times over.

There are lots of cautionary notes here.  It is not entirely ethical to create the impression that a free coffee comes from someone else when in fact it comes from Starbucks.   But notice that what we are doing here is seeding the world with generosity. Presumably, one Starbucks' gift will generate several others that are real acts of generosity.  Surely, this small deception may be forgiven on the grounds that it creates a larger social good. 

Some people will balk at taking a gift from a perfect strangers on the Miltonian grounds that there is no such thing as a free cup of coffee, and because they may have indebted themselves to a creep.  This will have to be addressed, monitored and finessed. 

There is also the danger that this will become predictable and the further danger that it will become a mechanical system to be worked.  And corporations have a history of taking good ideas and making them banal through the repetition and mechanization.   A system of this kind will have to take touch. 

What I really like about this is the anthropological revelation, nothing changes (everyone gets their coffee) but Starbucks has found a way to make my purchase work to your benefit, and our purchases work to everyone's benefit.  Starbucks' renews itself, the social world gets a little more interesting, and life takes on a new generosity, drama, and dynamism. 

This is brand building for the cost of a cup of coffee!

References

Mitchell Moore, Meg.  2006.  The Innovators: Anne Saunders.  Advertising Age. October 4, 2006.  here. (subscription required)

McCracken, Grant.  2003.  Tag, we're it!  The blogs sits at the intersection of anthropology and economics.  January 5, 2003.  here.

Comments

[Kevin Behringer]

I agree that these are great stories and Starbucks has done great things for both the business world and the coffee world. But, I think that singing their praises too loudly is not completely deserved.

For example, I don't know if it was the same incident, but at least a similar program to the one you cite of giving out a coupon to give to a friend was completely bungled by Starbucks when they realized people were copying the coupons. They simply stopped honoring them. Caribou Coffee on the other hand, picked up the ball.

Then, there's the situation with Double Shot Coffee in Tulsa, OK (http://www.doubleshotcoffee.com/index.html). Starbucks is trying to bully them into changing their name because it "infringes on the Starbucks brand." Sure, they have a cold drink named Double Shot, but it is also a commonly used phrase in coffee circles for the number of shots you want in your drink.

These are only a couple examples, but I think that they speak to the fact that while Starbucks is a great success story, they have gotten away from the business practices that got them there.

[Grant]

Kevin, thanks for the bigger picture. Best, Grant

[Peter]

Acts of kindness and generosity to strangers are only remarkable in a self-focused culture such as ours. In other cultures, for example, nomadic desert societies, these acts would not be seen as strange. Fortunately, not everyone in modern western culture views all of life through a lens of naked self-interest, as witnessed by the Open Source Software movement.

[Grant]

Peter, agreed, but that self focus has brought us riches (if you will forgive me another Miltonian moment). Thanks, Grant

[dilys]

Hello, Peter, let's not romanticize distant cultures. In the Balkans, when I put out a lavatory paper roll in the, ahem, post-Socialist undersupplied ladies' room, the next "patron" took it away with her, so she'd have plenty the rest of the day. And I go to church with lots of Arabs. Believe me, the generosity is lovely and only after you've been defined as part of the tribe. Strangers get bargained up! It's no accident the Open Source movement originated in the prosperous societies (the US, was it?)

But my point, having indulged that reaction, runs otherwise. The key to prosperity is the *motion* of the flow of goods and currency. I often think, if I pay my grocer $50, and he pays the laundry $50, and the laundress pays her doctor $50, and the doctor pays her son's tutor $50, and so on ... it's *the same total $50;* the flow is everything.

Generosity for the heck of it as described by Grant just adds even more motion that need not wait for an immediate exchange. Not to mention the good feeling that multiplies.

And I think commercially *pretending* it's a "pass-it-on" stinks. Better a coupon that tells the story and then fudges a little: "And in that spirit we want you to..." I catch them inventing a heartwarming imaginary scenario to involve me in, and they're my economic history.

[D. Archer]

To the extent that other businesses and people might benefit from similar acts of generosity, it's worth saying that Starbucks deals in low cost, high volume products. Is there a way to tender an act of generosity to a customer, or someone else, if you sell electronics, furniture, software, or other products or services that are expensive, low volume, and indvisible?
In short, to what extent are generosity and reciprocity scalable?

[Kevin Marks]

Snopes covers the emailed coupon. http://www.snopes.com/inboxer/nothing/starbucks.asp Deferred reciprocity is a common feature in hunter-gatherer societies, and the idea of "don't pay it back, pay it forward" is a modern variant. Harnessing this via coupons is harder, as it undermines the iterated tit-for-tat with known parties that is the ESS.

[Grant]

D. Archer, good point, even when the product in question is a washing machine, the "reciprocal" could still be a cup of coffee or something equally portable. Best, Grant

Kevin, yes, we are a miracle of perfect strangers. Thanks, Grant

[M E-L]

"It is not entirely ethical to create the impression that a free coffee comes from someone else when in fact it comes from Starbucks." It's also a potential disaster. The beauty of the "Starbucks moment" came from its _authenticity_. Try and fake that, in this age of the Blog Panopitcon, and you'll get burned. See for instance Court TV's attempt at an "authentic" story that turned out to be a fake, hawking their TV show:

http://www.snopes.com/love/revenge/emily.asp

[Grant]

M E-L, I think the thing to do here is to give out a free coffee. If someone asks, it's from Starbucks. If they don't ask, they are free to assume what they will. I wasn't advocating deception, but arguing against it. Best, Grant

[M E-L]

OK, I misread "Why not give the barista the opportunity to hand out free coffee as if they were passing along someone else's generosity". Sorry 'bout that.

[M E-L]

Looks like they read your blog...

http://adage.com/article?article_id=113059

[Calle & Company]

Not to rain on the parade, but if this is/was an innovation then why has Starbucks stopped growing and why are they closing 600 stores today? The last time the stock peaked at around $40 was May 5, 2006 and it never bounced back. It's around $18 now. Innovation is something that takes a company like Starbucks back to the day when the stock sold for around $22, grew to $44, split than repeated the same cycle all over again.