By Richard L. Russakoff
rich@bottomlineconsultants.com
November 17, 2008
In February Starbucks reached the conclusion that the consistency and quality of their product/experience was slipping. As a result they made the decision to close all 7,100 stores throughout the world and hold a three-hour training session beginning at 5:30 local time. This reinforced Starbuck commitment to two of their guiding principle,
1. Everything Matters
2. Surprise and delight.
In July Starbucks announced their plan to close 5% of their U.S. stores and 75% of their Australian stores. These were locations and locales the company deemed to be unprofitable. They acted decisively and made one big move. They knew they would take heat from Wall Street and they did. Wall Street stated in essence, that Starbucks was no longer the fair-haired child who could do no wrong. Well in fact what they did was right. They were ahead of the curve regarding the economic meltdown. They made a sound business decision to cut their losses sooner rather than later.
They embraced an important Bottom Line Up rule, that when you control your money, you control your future.
At a time when being in a strong cash position is vital to every company, Starbucks is offering through Costco five $20 dollar gift cards for $80 dollars. The sales of these cards even at discounted rates and the fee to Costco will help strengthen Starbucks cash position. They certainly have the margins in their products to make the offer. Whatever success the promotion generations will be cash upfront sitting in the bank.
I believe these are three actions that Starbucks took that will continue to make them great.
Follow the lead of a great company focus on:
Revitalizing your staff to create a great customer experience
Eliminating unnecessary operations that are draining your cash
Creating ways to generate upfront cash
You too can follow a star to the bucks.
