Pride comes before a...

Whenever you scoff at something, beware. Pride has a funny way of kicking you in the teeth when you aren’t looking.  A healthy sense of self-righteousness can set you up to feel stupid, as I did last week.

I was doing a little shopping at a local Fred Meyer when I came across a couple products I had not seen before.  On first glance, they seemed ridiculous.

Diet tonic water?

Isn’t that sort of like selling “cholesterol-free” peanut butter?

The second thing that caught my eye was the fat-free half and half.

Yes, that’s fat-free half and half.

Half and half gets its name from being half cream and half milk. If something is half cream, it cannot be fat-free. What did they substitute for the cream? Corn syrup and some other chemical agents (er, ingredients).

Obviously, with fat-free half and half, the food companies are catering to the weight-obsessed crowd. They’re trying to pass something off that substitutes corn syrup for cream as healthier for you (“It’s okay, go for it. It’s fat-free”). I scoffed at the idea of drinking fat-free half and half, and grabbed a carton of the real stuff, right next to it.

Or at least that’s what I thought. The part of the story where pride kicks me in the teeth is that when I got home to unload the groceries, I pulled out the carton, only to find that I had grabbed one of the fat-free ones! I had grabbed the name brand without looking too closely at it, assuming it was the real stuff. Ugh.

Oops.

After mocking the thought of fat-free half and half, I had fallen into its trap (the taste and quality difference was obvious, by the way). I’m not sure whether this was a case of complete absent-mindedness or just a case of “pride cometh before a fall.” Either way, I felt ridiculous. Next time, I’ll be a little less self-righteous and a little more careful about what I pick up off the shelf.

Expensive Water

Tweet

One of the phrases you hear in the service industry is “the customer is always right.” I disagree. Without a doubt, there are some customers who are wrong. However, retail businesses need to remember they are in the image business and try to build goodwill with both current and future customers whenever they can. Sometimes they succeed, and other times they fail. Here are a couple examples:

Today, I was sitting in a café that I regularly frequent when a woman walked in the front door and asked the barista, “How much is a cup of water?”

Without hesitating, the barista answered, “It’s seventy-five cents for the cup.”

The woman appeared to be hoping the water would be free, so unsurprisingly, she did not buy it. With a curt “thank you,” she turned and walked out the door. As a frugal consumer myself, I don’t blame her. I would balk at paying that much for a cup of water.

Trying to figure out how annoyed the woman was, I watched her as she returned to the parking lot, where her husband was waiting for her with a stroller (and, I assume, a small child).

From my perspective, the barista should have given the woman a cup of water. A woman walking around the neighborhood with her husband and a stroller likely lives nearby and could turn into a repeat customer. The barista’s response was an example of being “penny wise, pound foolish.” The cost of a cup is insignificant compared to what a loyal customer would spend in the future. However, I doubt the woman comes back anytime soon.

Somewhat ironically, a man came in a few minutes later, pleading for help.

“I know that restrooms are only for customers, but could I please use the bathroom?” he politely begged.

The barista nodded in assent and pointed him to the back of the store. This time, she didn’t figure it was necessary to hold the line on the rules.

The stories illustrate what Seth Godin would call  the “scarcity mindset” versus the “abundance mindset.” In the first case, the barista acted as if the cups were scarce and that by giving one away she would hurt the business. She missed an opportunity to help the woman (and maybe create a loyal customer). The second time around, the barista bent the rules to be generous with the customer, even if he did not buy anything. He was careful to thank the barista on the way out, and it appeared he was leaving with a good impression of the café.

Each of the two customers came in asking for essentially the same thing (something for nothing). The barista had the opportunity to build goodwill with both people who came into the cafe, but only did with one. She might think that being successful 50% of the time is good enough, but there are a lot of cafés out there competing for business, and whether or not “customers are always right,” they certainly think they are.  Treat them well—your business will prosper.

I Miss the Mob - a lesson in entrepreneurship

The cover of Anything You Want, Derek Sivers' new bookTweet

Today I came across a video that I thought you might enjoy. To give you a little background, Derek Sivers, the founder of CD Baby, has just written a new book about entrepreneurship that is being published by the Domino Project. CD Baby is a company that helps independent musicians manage their music sales. Anyone can upload their songs to the company’s servers, and CD Baby will managed the distribution of that music, either as a CD or as a digital download. Sivers founded the company in 1997, and it became very successful, selling millions of albums.  He sold the company a couple years ago and has since moved on to start new ventures to help more aspiring musicians.

I hope to read his book sometime, but today I wanted to share with you a video that he put on the site promoting his book. It has a pretty funny take on the differences between entrepreneurs who are in business because they love what they do and professional businesspeople who are only in business to make money.

The video is relevant to Portland, a city that has not yet lost its fun spirit. In my discussions with roasters, baristas and café owners, many of them have told me that while making money is important to them, they are happy to be doing something that they enjoy.

Thanks to all who realize that there is more to business than just dollars and cents. You help keep Portland interesting. 

Coffee, Rumor and Innuendo

Tweet

Last Friday, I posted a link to what I said was a sign of the impending rapture—that Stumptown Coffee was in negotiations to be bought out by Starbucks. There was absolutely no truth to the rumor whatsoever, so you can imagine the surprise I felt today when I went online to read the latest coffee news and one of the first things to come up was a story claiming that Stumptown had been sold (though not to Starbucks).

Todd Carmichael, the founder of LaCombe Torrefaction, an East Coast-based coffee company, wrote an article for Esquire that Stumptown’s Duane Sorenson had “sold his life’s work to the highest bidder.” Needless to say, this caused quite a stir in the coffee blogosphere and Twittersphere. Could it really be that Stumptown, Portland’s most famous coffee company who seemed to be everything but corporate, could be ‘selling out?’ What would that mean for Portlanders who cannot stand the idea of supporting a “corporate” coffee company? The idea seemed an anathema to many people.

There were several reasons to be skeptical about the article’s accuracy. Carmichael likes to make fun of the hipster coffee culture, as evidenced by this article, so it is not surprising that he took a shot at Stumptown. Also, the tone of the article and lack of evidence in it, lead one to believe that Carmichael, whose company is a direct competitor to Stumptown, does not like the fact that Stumptown is expanding on the East Coast and was looking for a way to give his rival some bad publicity among the anti-corporate crowd.

In response to the news, Willamette Weekly dug up a document showing that Stumptown Coffee Corporation, which is a separate entity from Stumptown Coffee Roasters, did apply for an  amendment to authority with the Oregon Secretary of State at the end of April. The new agent for the company is Alexander Panos, a managing director at TSG Consumer Partners, a private equity firm based in New York. In other words, there was a small bit of evidence behind the rumors.

However, the document does not address any questions about any relationship between Stumptown and TSG. It is impossible to tell from that document what Stumptown’s plans are, and Carmichael’s speculation is premature, unless he has other information. Esquire, if it wants to be taken seriously, needs to make sure there is more evidence before an article like this is published, especially when the author has a financial stake in a rival company.

Update: In the latest news this afternoon, also from the Willamette Weekly, Stumptown responded to the article, saying that it did open itself up to some outside investment to help fund its expansion, but that Duane Sorenson, Stumptown’s founder, is still in charge. Therefore, Portlanders can relax—Stumptown has not sold out. You do not have to worry about losing another local chain to corporate America.

Update 2 (June 2): Stumptown did allow for some investment by Panos (Sorenson still controls the company) and the plan is to expand into Chicago and San Francisco. The NY Times has the story here.

Update 3 (June 6): Willamette Weekly is today reporting that Stumptown sold 90% of the company to TSG, though it seems like the source is Carmichael. It's hard to know what to believe. . . You can read the story here.

My question is, if Stumptown had sold out, so what? It is Sorenson’s company, after all, and the last time I checked, we still live in the USA, where capitalism is the economic system. If someone wants to build a company and sell it so that he or she can fulfill other dreams, that should be his or her right. There is nothing especially noble about starting a company and staying with it until you die. Times and people change—we have to accept it. Unless, of course, the news is just a rumor or a blogger’s attempt to be funny.

Selling Frappuccinos in the UK

Below, I have embedded an ad from a campaign that Unruly Media is running in the UK for Starbucks. I would like to hear your opinion. Beneath the video, I have given mine.

One of the challenges for any company is to decide if it wants to go for fast growth and large profits, sacrificing a few of its values along the way, or if it wants to remain true to its roots, even if it has to sacrifice some economic gains. For most businesses, profits come first. This is especially true for public companies, where there is tremendous pressure put on management by the shareholders to go for growth and profits. I think you can guess which path Starbucks chose.

Starbucks began as a place that wanted to be true to the coffee and the café experience. Now it boldly sells milkshakes, with whipped cream and caramel sauce.

To be honest, I like the graphics, the bright colors and the crisp audio of the spot. It has a sharp feel to it. The business school-trained part of me thinks it’s a fine ad, and I know that Frappuccinos have some of the best profit margins at Starbucks, so I understand the reasons for the campaign. At the end, however, watching this ad reminds me why Starbucks took the “Coffee” out of its new logo. How about you?

[Disclosure: Unruly Media, an advertising company, asked me to write an editorial about the ad. Feel free to pass it on to anyone you know in the UK]

I know I’m getting older, but. . .

I received a letter in the mail today that kind of surprised me. The letter was from the AARP—formerly known as the American Association of Retired People, a lobbying organization that advocates for people over 50—and it contained my new membership card (see photo below). Now, I know that Portland is a place where “young people go to retire,” but this is a little ridiculous (I’m 34). Isn't this kind of like McDonald's marketing Happy Meals to 6 year-olds? You know, get them hooked early...I think I’ll tell the AARP to try again in twenty years.

What the . . .?

Tired of paper transit tickets? (updated)

Today, I want to step away from coffee for just a moment. One of my favorite things to talk about is entrepreneurship, and I have something I would like to share with you.

When I’m out traveling around the city, I prefer to walk or take public transportation. Walking around, you really get the feel of a place, and on the bus or the train, you don’t have to stress about traffic.

Since I take the bus and the train pretty regularly, I can say with confidence that it would be nice to be able to pay for tickets using an app on my phone, especially when riding the bus. Even better, the phone would serve as a ticket itself.

Tri-Met (Portland’s public transit agency) doesn’t have a system like that yet. However, a couple of my classmates from Portland State’s MIM program are trying change that. Nat Parker and Michael Gray have started a company called GlobeSherpa to develop mobile phone apps, and their most promising app at this time is called TransitSherpa, an app that acts as an electronic ticket management system for Tri-Met. I’ll let Nat explain:

Their company is currently in negotiations with Tri-Met to make the system a reality, but they need some funding to speed things up. Tomorrow evening, at 5:30pm, Nat and Michael will be at the Backspace café/pub competing in the second-to-last round of the Oregon Entrepreneurs Network’s Seed Oregon competition, a competition that helps start-up companies with funding and guidance. The winner is determined by popular vote of the audience, so the more supporters TransitSherpa has, the better chance it has to win. The winning company gets to present at the Angel Oregon conference in March, where it could acquire the funding it is looking for.

If you think that a Tri-Met ticket app is something that you would rather have sooner than later, come by Backspace tomorrow evening at 5:30 and support TransitSherpa. It costs $25, which I know is kind of steep, but it’s supposed to include some kind of food and drink spread. In addition, Nat has promised me that he’s going to be especially entertaining during his presentation.

You might wonder if I get anything out of this advertisement for them. Nope. I’m just spreading the word for them and trying to speed up the process of creating a Tri-Met ticket app. It’s 2011, and the time for e-tickets is here. Let’s help TransitSherpa make it happen.

No más

Update: GlobeSherpa won by two votes! Congratulations and good luck at the next round.

Be Nice to Your Guitar (and Your Customers)

This morning I listened to a live webinar put on by John Bernard of Mass Ingenuity. He spoke about how the combination of social media, cloud computing and the millennial mindset (not wanting to wait for anything) are combining to change the ways companies interact with their customers in ways so profound that it is difficult to comprehend the changes how the new marketplace works. He said that we have moved from the era of mass production into the era of mass customization, where products and services are more tailored to customers’ needs. He especially mentioned how meeting customer needs through good service is more important than ever.

Bernard cited United Airlines’ baggage handling service miscues in the case of musician Dave Carroll as an example of how companies should not respond. In case you haven’t heard, Dave’s $3,500 Taylor guitar was destroyed during one of his trips on United Airlines and he went through months of troubles with the company to try to get them to rectify the situation. Things finally turned his way after he wrote a song (complete with music video) about his troubles that became a huge hit on YouTube. There are actually three videos in the whole series. Here’s the first one:

It’s true that some people write bad things about a company just to advance their own agendas. In the past, the companies might be able to ignore them and the problems would go away. However, with the speed that information gets passed around these days, it is imperative that businesses monitor what is being said about them in social as well as traditional media (that reminds me, I need to Google ‘Caffeinated PDX’ to see if there’s anything being said about it. Hold on a minute, I’ll be right back. . . . . Okay, we’re good for now). While it is impossible to know everything that is being said about your company, you must take care to monitor the problems and put out any fires before they get going too strong.

Although I question Bernard’s claim that this one incident with United led to an $180 million reduction in market capitalization for the company, his point was a good one. Customers have more power to expose companies’ misdeeds than in the past, so companies must be more alert and responsive than ever. Of course, those of you with your own businesses already knew that, right?

Tweet

It's Hard to be Julia

I think I’m in the wrong line of work. Reportedly, Julia Roberts pulled in a million plus for shooting an ad for Lavazza’s automatic espresso machine—without saying anything. All she does is sip an espresso and smile. Here's the commercial—Don’t worry if you don’t understand what the Italian actors are saying. From the look on her face, I don’t think Julia does either.

Apparently she really does have a million dollar smile. That means that mine ought to be worth at least a cup of coffee (maybe even a vacuum pot). I think I’ll have my agent call Lavazza’s marketing department. . .

In other celebrity coffee endorsement news, George Clooney and John Malkovich team up to sell Nespresso.

A longer version of the ad is here. George and John aren't doing so badly for themselves either.

Rant-Choked on Consumerism

Ahhh, the holiday season is upon us! I noticed this a couple weeks ago when stores, eager to take advantage of the mild economic recovery, began putting up Christmas decorations—before Halloween! Memo to store owners: putting up your Christmas junk that early doesn’t make me want to buy stuff, it just annoys me. I imagine I’m not the only one who feels this way. Each year the shopping season gets earlier and earlier. Will there soon be Columbus Day Christmas sales? How about Labor Day? We could just make Christmas a year-round holiday. What do you think about making red and green our national colors and the Visa card our national symbol? Ugh.

I’m not big fan of the holiday season to begin with, but I usually spend my time writing about other things. So what prompted all of this ranting? Well, we got the new Bed Bath & Beyond catalog in the mail today. Judging by the looks of things, Americans’ Christmases will once again be filled with lots of useless items that people don’t need. It appears our addiction to cheap imports is not waning. Here are a few of the things that, according to the BB&B marketers, you just MUST have.As seen on TV

Click to read more ...

Coffee is NOT on the Way Out

Janet Morrissey wrote an article for Time this week that implied that young people are not going to drink coffee in the future because they drink Red Bull or other energy drinks instead. I disagree, and judging from the comments, so do many others. According to the article, the heavy marketing that energy drink companies have done to give energy drinks a ‘party drink’ image is a sign that coffee’s future is not bright.

There is no question that the energy drink companies have been pushing hard to reach college campuses. At PSU, there is a vehicle parked somewhere on campus at least once a week where young, good-looking people hand out free energy drinks to students. And I admit to being surprised when I read about the twenty-something PR consultant who said he didn’t drink coffee because it tastes bad (He drinks Red Bull, and he complains about the taste of coffee?).

 However, if you spend much time in coffee shops, you see young people everywhere. When I worked at Starbucks in Boston, we had a large group of regulars that came over every day from a nearby high school (sometimes twice!). The cafés around PSU are jammed every day with the 18-24 year-olds that are mentioned in the article. I stopped in at the PSU library the other day and was surprised to see a new coffee bar in the lobby. This evidence leads me to believe that coffee is not doing too badly in the under-30 crowd.

If you want to make the case that this age group won’t be drinking more Folgers in the future, that’s different. After all, this is the generation that came of age during the golden era of Starbucks. Of course they’re not going to accept the taste of pre-ground or freeze-dried coffee that has been stored in a can for six months! However, predictions that young people will not be drinking coffee in the future are like predictions that bell-bottoms would never be seen again after the 1970s. They make for a good story at the time, but years later, people look back at and laugh about them. In twenty years, we will be able to look back and this one and laugh too.

[note: Portlanders will be proud to hear that Stumptown was mentioned in the article as a place where younger people do have a good coffee experience (at the Stumptown Ace Hotel in New York City)].

Sì, la bellezza ha un gusto

Going to business school, you get to learn all kinds of fun stuff, especially if you haven’t spent much time in the corporate world. Our first term of the MIM program we took marketing from Brian McCarthy, a former GM of marketing at Microsoft. His class was lots of fun and very informative, and it really opened my eyes to how companies try to reach customers. The biggest challenge that all companies have is trying to get people to try their products. Then they try to create some type of emotional bond with their customer. Most people are creatures of habit, and once they find something they like, it is hard to get them to try new things. You could say that marketing is the science (or art) of overcoming that resistance to change.

Ever since taking Brian’s class, I pay more attention to ads and commercials. I try to figure out what they’re trying to communicate. For example, I will see a commercial for Chevrolet pickups and try to dissect it. What is it trying to say? Chevy Trucks (a more “manly” word than pickups) are tough, reliable and American. The message goes beyond the products being sold and moves into the realm of emotions and values.

One of the projects we had to do for class was to develop a marketing plan for some type of product. We could either choose to market our own business idea or we could take some company’s product that we liked and pick a country outside the US in which to market it. I chose to write a marketing plan for Illy coffee in China, probably because I was drinking a lot of Illy coffee at Park Avenue Café at the time.

One of the things I came across when I was creating the marketing plan was the following commercial (it’s much better if you play it with something that has good speakers and turn up the sound):

Elegance. Style. Art. Beauty. The finer things in life. These words describe what comes to mind when I watch that commercial. I was captivated when I saw it. The music (Atlantico by Roberto Cacciapaglia) was dramatic, the images were beautiful and graceful and the tagline, La bellezza ha un gusto (literally “beauty has a taste”), captured the spirit of both Italy and the company. Italians care deeply about the quality of the food and drink they consume, and their companies are well-known for their beautiful design (think Ferrari, Ducati, Gucci).

In the marketing plan, I wrote that the commercial would resonate in China too. The people in both countries have a strong appreciation for beauty. Italy and China are also the home of two of the world’s most important ancient civilizations and if done right, a campaign of “East meets West” over a cup of Illy could be very effective.

One question about the commercial is whether it ended up selling more coffee or not. I have no idea, but at the very least it provided me with some entertainment for a while. Two years later, I still haven’t forgotten about it, so Illy was effective at reaching at least one customer. My question is, does it capture your attention like it did mine?

Starbucks in the News

Starbucks has been in the news a lot this last month. I don’t want to be accused of advertising for the company, but with 16,000 stores worldwide, the Seattle-based coffee giant is probably the most important coffee chain in the world. To ignore it would be doing you a disservice. After all, many cafés watch what Starbucks does very closely and then try to mimic or improve upon it. What starts in Starbucks may later be seen at your favorite local café.

VIA

At the beginning of the month, Starbucks released its flavored VIA instant coffee (available in vanilla, caramel, cinnamon spice and mocha). Yes, that’s right, the company who rose to prominence by educating customers about high-quality whole-bean coffee, now sells flavored instant coffee. Am I the only one who winces when he walks down the bulk coffee isle at the grocery store and gets a whiff of the caramel-flavored coffee sitting on the shelf? Some of those aromas are so strong they make my stomach queasy. The flavored VIA had better be nothing like those coffees. When I try it, I will let you know.

Mind you, I am not anti-instant coffee. If people want to drink instant coffee, that’s their business. One of the things one of our professors in business school told us was that if your product saves people money or if it saves them time, you have a winner. VIA does both. It’s cheaper than going to Starbucks to buy a mocha every day and drinking VIA is a lot quicker than stopping at a Starbucks too. In addition, as reported by the company, sixty percent of its customers drink flavored coffee and eleven percent of American households buy it. Maybe the company is onto something. 

Click to read more ...

Artists Hit the Right Notes

It was a beautiful crisp fall day here in Portland yesterday. After rushing to get a week’s worth of laundry done, I needed to get out of the house and go look for stories (and of course, some good coffee). When I walked outside, I noticed two things: First, it was much cooler outside than the day before—fall is here—and I was glad I had elected to wear my fleece. Second, I could hear an outdoor concert taking place at the PSU campus. That piqued my interest, and I decided to go listen for a while.

It’s pretty common to have lunchtime concerts at PSU. They usually take place once a week, weather permitting. I’m not sure who decides what group gets to play on stage in the commons, but the concert series is a great opportunity to perform and be heard by anywhere from several hundred to a couple thousand people. Up and coming bands who are looking for exposure can put their music out into the public eye (ear, rather) and see what kind of reaction they get. As you can imagine, the talent level and quality of the music varies greatly from week to week.

I have listened to many of these concerts over the past two years, and I like to watch how the crowd reacts to each band. Most of the time, people sit down for a couple minutes and then move on (if they even stop in the first place). Once in a while the band is good enough that the crowd grows over the hour, but most of the time the people don’t stay around for long. They’ve got too much to do, and the music is not compelling enough to keep them around (Hmm. . . sounds kind of like blogging). Sometimes you can tell that a band has brought a core group of followers—they stand up close to the stage and dance or applaud wildly after each piece.

Click to read more ...