Bringing Passion to Starbucks, Travelocity

Two companies are trying to take employee engagement and customer service to new levels. Your small business can learn a lot from them

by Carmine Gallo

On Monday, Jan. 7, Starbucks (SBUX) Chairman Howard Schultz returned (BusinessWeek.com, 1/7/08) to a position he hadn't occupied since 2000—chief executive officer of the coffee giant. On his return, Schultz was blunt, telling analysts the company had lost sight of its mission and would rededicate itself to "laser-like focus on the customer experience."

In the past couple of years, I have had conversations with many inspiring leaders, including Schultz, in an effort to identify the language of motivation as practiced by today's business leaders.

In Monday's memo to employees (BusinessWeek.com, 1/7/08), Schultz repeated what he had told me earlier; the relationship customers have with Starbucks employees sets the company apart from other coffee shops. (In addition to other coffee chains, Starbucks faces competition from Dunkin' Donuts and McDonalds (MCD), which have begun offering their own lines of upscale coffee products.)

Customer Service Comes First

Prior to our discussion, I had read Schultz's book, Pour Your Heart into It. Schultz is passionate about what he does; in fact, the word "passion" appears on nearly every page. But it soon becomes clear he is not as passionate about the coffee as he is about the people who make the Starbucks experience what it is. You see, Schultz's vision was not to build a coffee shop, but instead to build a company that treats people with dignity and respect. When I reviewed the transcripts from my time with Schultz, I was struck by the fact the word "coffee" rarely appeared. Schultz's vision had little to do with making great coffee and everything to do with employees offering exceptional customer service. This vision remained consistent during an interview last year with CNBC's Donnie Deutsch:

Schultz: Starbucks is the quintessential experience brand and that brand is brought to life by our people…we have no patent, no secret sauce whatsoever…. The only competitive advantage we have is the relationship we've built with our people and the relationship they have built with the customer.

Deutsch: You're talking about your competitive advantage but you haven't mentioned the word coffee.

Schultz: We're in the people business. Of course we sell coffee as a product, but we're in the people business. It's all human connection. We've been able to crack the code at creating an environment where people are treated well, they're respected, and they're valued. Customers come in and can see it's a different kind of environment, almost an oasis.

Although Schultz will outline specific reorganization strategies at a later date, it's clear his employees will play an important role in "reigniting the emotional attachment with customers."

The Best Incentive

The one thing all small business owners, entrepreneurs, managers, and business leaders can learn from Schultz is that respect for employees will translate into better customer service, which ultimately leads to a stronger bottom line. Engaged employees—those who are committed to the vision and values of their organization—generate higher sales and customer loyalty. According to the work of professor James Oakley at the Krannert School of Management at Purdue University, there is a direct link between employee happiness and customer satisfaction and between customer satisfaction and improved financial performance. Oakley explains, "The best tool managers have for improving employee satisfaction is communication."