The one thing every credit union needs to learn from Starbucks
Have you been in a Starbucks lately? It’s a much different experience than just a few years ago—and not for the better, in our opinion.
Your friendly neighborhood Starbucks used to be the place to be and seen. So much so, Howard Schultz, the former CEO said they wanted Starbucks to be your “third place”—home was your “first”, work was your “second”, and your local Starbucks was the third place where you spent your life.
Being in a Starbucks was an experience. The aroma; the hustle and bustle; the melting pot of customers (and it changed consistently throughout the day); the usually pleasant interaction with the barista. Oh yeah, there was the $7 cup of joe and the 700+ calorie piece of lemon pound cake you never intended to buy but you bought it because it was just too irresistible in that display case!
For the most part, Starbucks was magnificent and a retail establish we wanted to emulate. You couldn’t wait to get there and being there made you feel good and special (the cool kids hung out in Starbucks, right?!). The cost may have put a crimp in your budget, sure, and the calories put a cramp in your diet but few retail and social experiences produced such effusion, garnered such affection. People (me) loved to show off their Starbucks swag and flaunted their daily Starbucks drinks. We were proud and loyal.
But now in 2024, much of that glorious world has changed; the Starbucks world we loved and has been turned upside down and customers are balking big-time. By all financial metrics, Starbucks is bruised and battered—revenue, same store sales, stock price are all down significantly year over year. And now the Wall Street Journal reports activist-investor “sharks” smell blood in the water.
Why such a devastating downturn? Why such negativity and angst and panic? In a recent interview Schultz reluctantly acknowledged he had the answer and, today, we’re proclaiming a lesson that every credit union CEO and leadership team needs to hear and heed.
Schulz blamed Starbucks’ problems on … get ready for it … their mobile app. But not for technological reasons. He blamed the mobile app for driving their customers out of their stores and away from those baristas. The mobile app has caused far too many customers to order their drinks ahead of time, walk in and grab it off the counter and then turn and leave. What? Wait? No yucking it up with the baristas? No temptation to buy the lemon pound cake? No sitting there on your laptop or phone soaking in the atmosphere?
What Starbucks has lost is precisely the single most critical aspect of retail that every credit union executive needs to maximize. But it’s something too many credit unions get wrong. Consumers (members and potential members) want a positive experience and they want to feel good and proud about interacting with your credit union. They don’t just want just service; they don’t want a sales pitch; they don’t want to be generalized into a marketing segment (“You’re Gen X therefore you want to do business this way.”).
When the new leadership team at Starbucks launched their app and decide to maximize the focus on it, I’m sure their intentions were good. “It’ll be easier and faster,” they might’ve said. “We’re making things easier and faster for our customer.” But such a heavy focus on transacting through the app contradicted their critical “third place” philosophy. It was totally misaligned with their strategy of creating great and memorable experiences. It almost completely eliminated the opportunity for their baristas to tempt you with the lemon pound cake.
As a credit union leader and decision-maker, are you driving members away from the golden opportunity to impress them with consistently great experiences? Are you unintentionally sending the wrong message to prospective members that you only want to transact with them through your slick new mobile app? Are you making staffing decisions based solely on efficiency (i.e., current traffic trends) instead of opportunities (i.e., education and deeper relationships)? Do you consistently equip, and re-equip, staff with the skills and behaviors specifically designed to create memorable and amazing experiences, not just good service?
Yes, omni-channel is the way of today and the future. However, too many credit unions we see have tipped the scale to heavily weigh on the side of technology. It may mean them saying, “Use our app and you don’t have to come in or call us.” It could mean saying, “If you do call us, you’re going to talk to a bot rather than a human.” It might also mean saying, “You have to go online to fill out that application because we don’t have anyone here to educate you on whether this loan is the right product for you or not.”
To avoid the destructive mistake that Starbucks leadership made, do these three things today:
- Transform your retail strategies to focus squarely on creating consistently great experiences, not just delivering good, or even great service
- Gain a much deeper knowledge of who your members are at an individual level and how they like to do business with you
- Leverage technology for ease of use, of course, but not at the expense of delivering highly-personal touches that leave your members with highly-positive feelings
As the leadership team at your credit union strategizes for your future vision and viability, there’s much to learn from what Starbucks has done. Our consultants are here to help you minimize the potential pitfalls and maximize the potential successes. We are experts at transitioning your current culture into a world-class experience culture. Let’s talk!
