Starbucks' Howard Shultz Lists 3 Seismic Changes in Consumer Behavior

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In 2007, Howard Shultz wrote a memo to then Starbucks CEO Jim Donald about how the company needed to get back to its core values and mission and make the changes necessary to evoke the heritage, the tradition, and the passion for which Starbucks was known.

In 2007, Howard Shultz wrote a memo to then Starbucks CEO Jim Donald about how the company needed to get back to its core values and mission and make the changes necessary to evoke the heritage, the tradition, and the passion for which Starbucks was known.He came back to the role of CEO in 2008 to restore the health of the business and rekindle the core mission. "I felt strongly that we had to have faith in the foundation of the company. If you want to exceed expectations of customers, you have to exceed expectations of your people first," he said this morning at the World Business Forum in New York City.

Shultz explained that as customers walked away, and the media turned their backs, he didn't want that to define the company. As a result, Starbucks started doing things that were unorthodox, honest, and transparent. "What other company...would close every store in American and retrain 130,000 people? Or take all store managers on a three-day trip to New Orleans to...rekindle the faith and confidence of who we are as people?" Shultz said.

He went on to describe a seismic change in consumer behavior. That is the result of at least three paramount changes:

1) People are not responding to products or services. "No one can deny that consumer confidence is at a low level and they have less to spend. Whether you're selling the most expensive product, every single company must create a value proposition to the consumer. You must provide an entry point to the customer in which they can understand that you as a leader are putting yourself in the shoes of customers and understanding the pressure they are under."

2. We live in a hyper-connected world. As a result of social and digital overtaking traditional marketing, marketers need to think differently. "Every marketing company in the world must understand that traditional PR is absolutely subordinate to what you have to invest in social channels," he said.

Shultz added that he sees a rush to judgment where companies are convinced that these social channels are there to sell products. "The primary reason they exist is to build emotion and trust. Once that reservoir of trust is built, perhaps you can conduct commerce once a quarter, but if you use those channels to constantly sell things you will not succeed."

3) Every company has competition. As a result, Shultz said that there is paramount importance placed on the values of you company. "Those companies that are doing the right thing because they're active in the community and doing things that really help people, will attract and retain great people and build an enduring relationship with the customer," he said.

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