Pick of The Week, Starbucks+iTunes

Wanted to pass this along to you as a tax-day bright spot: Starbucks & iTunes Bring Complimentary Digital Music and Video Offerings to Customers with Starbucks “Pick of the Week” More Than 1.5 Million Downloads Every Week Driving Discovery of New Music and Music Videos
Starbucks (NASDAQ:SBUX) and iTunes today announced Pick of the Week, a new program offering coffeehouse customers a chance to discover complimentary new music and music videos each week. Pick of the Week featured artists include a great line-up with Carly Simon, Duffy, Counting Crows, Adele, Sia, Hilary McRae and many more.

Each Tuesday, more than 7,000 Starbucks company-operated locations in the US will stock a new Pick of the Week download card redeemable on the iTunes Store (www.itunes.com) for a complimentary song or music video hand-picked by the Starbucks Entertainment team and iTunes. The first Pick of the Week, available starting today at participating Starbucks locations, is Counting Crows’ new song, “Washington Square.”

“With Pick of the Week, Starbucks will leverage its trusted curatorial voice in music and entertainment through its partnership with iTunes to provide our customers with a world-class digital discovery experience,” said Ken Lombard, president Starbucks Entertainment.

“Pick of the Week provides an incredible way for Starbucks customers to discover great new music and videos for free on the iTunes Store,” said Eddy Cue, Apple’s vice president of iTunes. “With the world’s largest online catalog of music and video there is truly something for everyone.”

In October 2007, Starbucks and iTunes teamed up to launch Song of the Day, which offered Starbucks customers the opportunity to pick up a new complimentary download hand-picked by Starbucks Entertainment and iTunes each day for a month. Customer response to Song of the Day was unprecedented and resulted in more than 6 million songs downloaded. Realizing that a large audience hungry to discover new music and entertainment content had been tapped, Starbucks and iTunes worked together to create an ongoing version of the program to drive discovery and sales for great artists.

Once Pick of the Week cards are distributed, customers will then have up to 60 days from the date they are available to redeem their complimentary digital entertainment offering on iTunes.

Pick of the Week is the next phase in a partnership between Starbucks and Apple which began with the launch of the Starbucks Entertainment Area within iTunes in October 2006 and the launch of the iTunes Wi-Fi Music Store at select Starbucks locations in October of 2007. The iTunes Wi-Fi Music Store at Starbucks lets customers at participating Starbucks use the Wi-Fi network to wirelessly download music onto their iPhone, iPod touch or computer with no Wi-Fi connection fees or hotspot login.

The iTunes Wi-Fi Music Store at Starbucks is currently available in select Starbucks locations in the New York, Seattle and San Francisco metropolitan areas on its way to a national service rollout. Starbucks also offers the exclusive Now Playing feature on the iTunes Wi-Fi Music Store, which allows customers to instantly preview, buy and download the music currently playing overhead in participating Starbucks locations.

Onward

Customer Training Night?

Over at Starbucks Gossip –an outstanding site (although I take exception with their tagline) that may be more about the community of customers, partners, fans and haters/cynics than we could have created ourselves–this comment was brought to my attention:

“Maybe [Starbucks] should have a “customer training night”. Customers can attend and be taught how to properly order a drink useing the correct slangs, symbols and phonetics.”

That sounds like a great idea. What do you think? Once a year, quarter or month? With 87,000 different possible combinations of drinks, we’ve got a lot to cover. Let’s get started…

Keep The Tips

Official company release on tipping to address mischaricterization in media:

Recent litigation has resulted in misunderstanding among some of our customers and partners (employees) about tipping in Starbucks stores. Our tip policy allows hourly partners (baristas and shift supervisors) to receive their fair share of customer tips. Shift supervisors are not managers and have no managerial authority. Even the California Court recognized this distinction.

Listening

At the annual shareholder’s meeting last week we announced an initiative to listen to you better by creating our first online community, MyStarbucksIdea.com. It takes the Starbucks Experience outside the store and enables customers to play a role in shaping the company’s future. The reactions have been mixed, from supportive to defensive and all the spectrum in between. To be clear, this isn’t the only initiative bent on listening and broadening the debate from esoteric sites to a larger community of Starbucks stakeholders.

For SocialNet Communities, check out some of the ones created by and for the community:

• Addicted to Starbucks (70,000+ groupies as of this post)
• I Heart Starbucks (14,000 strong)
• Starbucks Partners (5,000+, 170,000 to go)
• And more

Thank you for keeping the conversation and connections going, which is ultimately more of the Starbucks Experience in The Fourth Place.

Onward, Howard

March 19 Annual Shareholders Meeting

Eleven weeks ago, I made a personal commitment to every one of our customers and partners (employees) to reaffirm our place as the world’s coffee authority. By embracing our heritage, returning to our core – all things coffee – and our relentless commitment to innovation, we will reignite the emotional connection we have with our customers and transform the Starbucks Experience. I am confident that the ground-breaking initiatives we’ve announced today demonstrate our laser focus on living up to that commitment. We know that this is just the beginning, but we also know that there has never been a more exhilarating or promising time in our history.  Continue to  learn more  about our initiatives including  the  acquisition of  an innovative  brewing system.

The Starbucks Experience Begins with Training

As part of our ongoing efforts to transform the company and renew our focus on the customer, we have announced an historic in-store education and training event for our more than 135,000 store partners across the United States. We will close each of our nearly 7,100 company-operated stores in the U.S. on Tuesday, February 26 at 5:30 p.m., local time, to conduct a nationwide hands-on espresso training experience, designed to energize partners and transform the customer experience. Stores with evening hours will re-open at 8:30 p.m.

Our unprecedented level of commitment to and investment in our people will provide them with the tools and resources they need to exceed the expectations of our customers. We believe that this is a bold demonstration of our commitment to our core and a reaffirmation of our coffee leadership.

The comprehensive educational curriculum for all U.S. store partners will provide a renewed focus on espresso standards that will help ensure the exceptional quality of every beverage. As a result, baristas will be better prepared to share their passion and knowledge with customers. Customers will be able to truly enjoy the art of espresso as Starbucks baristas demonstrate their passion to pull the perfect shot, steam milk to order, and customize their favorite beverage.

This unique in-store education event signals the company’s focus on transforming the Starbucks Experience for both our customers and our partners. We hope that any customers inconvenienced by the early closures will see this as an investment that will have long term benefits. Starbucks partners will have an opportunity to connect and deepen their passion for coffee with the ultimate goal of transforming the customer experience.

I am really excited about this and the impact it will have on you and our customers. And don’t be surprised if I stop by one of the stores during this time!

Onward,

Howard

What I Know to Be True

As I sit down to write this note (6:30 a.m. Sunday morning) I am enjoying a spectacular cup of Sumatra, brewed my favorite way – in a French press.

It has been three weeks since I returned to my role as ceo of the company I love. We have made much progress as we begin to transform and innovate and there is much more to come. But this is not a sprint – it is a marathon – it always has been. I assure you that when all is said and done, we will, as we always have, succeed at our highest potential. We will not be deterred from our course – we are and will be a great, enduring company, known for inspiring and nurturing the human spirit.

During this time, I have heard from so many of you; in fact, I have received more than 2,000 emails. I can feel your passion and commitment to the company, to our customers and to one another. I also thank you for all your ideas and suggestions … keep them coming. No one knows our business and our customers better than you. I have visited with you in many of your stores, as well as stopping by to see what our competitors are doing as well.

It’s been just a few days since my last communications to you, but I wanted to share with you

what I know to be true:

• Since 1971, we have been ethically sourcing and roasting the highest quality Arabica coffee in the world, and today there is not a coffee company on earth providing higher quality coffee to their customers than we are. Period!

• We are in the people business and always have been. What does that mean? It means you make the difference. You are the Starbucks brand. We succeed in the marketplace and distinguish ourselves by each and every partner embracing the values, guiding principles and culture of our company and bringing it to life one customer at a time.
  

• Our stores have become the Third Place in our communities – a destination where human connections happen tens of thousands of times a day. We are not in the coffee business serving people. We are in the people business serving coffee. You are the best people serving the best coffee and I am proud to be your partner. There is no other place I would rather be than with you right here, right now!

• We have a renewed clarity of purpose and we are laser-focused on the customer experience. We have returned to our core to reaffirm our coffee authority and we will have some fun doing it. We are not going to embrace the status quo. Instead, we will be curious, bold and innovative in our actions and, in doing so, we will exceed the expectation of our customers.

• There will be cynics and critics along the way, all of whom will have an opinion and a point of view. This is not about them or our competitors, although we must humbly respect the changing landscape and the many choices facing every consumer. We will be steadfast in our approach and in our commitment to the Starbucks Experience – what we know to be true. However, this is about us and our customers. We are in control of our destiny. Trust the coffee and trust one another.

• I will lead us back to the place where we belong, but I need your help and support every step of the way. My expectations of you are high, but higher of myself.

• I want to hear from you. I want to hear about your ideas, your wins, your concerns, and how we can collectively continue to improve. Please feel free to reach out to me. I have been flooded with emails, but believe me, I am reading and responding to all of them.

As I said, I am proud to be your partner. I know this to be true.

Onward …

Howard

P.S. Everything that we do, from this point on (from the most simple and basic), matters.

Master the fundamentals. Experience Starbucks

P.S.S. Continue the conversation in public by posting your thoughts and comments below.

Voicemail to Partners

Here’s the voicemail to all Partners announcing my transformational agenda and return as CEO:

Hello partners, this is Howard Schultz. Today, Starbucks is announcing a series of strategic initiatives to increase shareholder value and capitalize on our significant U.S. and international opportunities.

Going forward, we will be refocusing our entire organization on the Starbucks Experience, by going back to our heritage and what made us so successful in the first place; putting the customer back at the center of everything we do.

The execute this transformation, the Starbucks Board of Directors has asked me to return as your chief executive officer, in addition to serving as chairman, effective today. This is not an interim role for me. I’m in it for the long-term and I promise to be decisive and do all I can to lead Starbucks to new heights.

Jim Donald will be leaving the Company and let me just pay special tribute to Jim who has been a passionate and tireless advocate of the company. I’m grateful and I thank him for his significant contributions and I wish him nothing but the best in the future. He’s been a business partner and a dear friend and I’m sorry to see him leave and I think it’s clear to say that his contribution to our Company cannot be overstated.

The success of Starbucks rests on the emotional connection we have with each other and with our customers. It also rests on how we implement our strategy and innovate to stay ahead in a competitive marketplace and tough economic environment.

I think recently we have become victims of our own tremendous success. We are emerging from a period in which we have invested heavily in infrastructure ahead of the growth of the company and, although necessary, it has lead to bureaucracy that has both slowed us down and cost us money. We now shift our emphasis back to consumer facing initiatives, betting aligning our back end costs with our business model.

In refocusing our Company, we are going to play to our strengths – to what has made Starbucks and the Starbucks experience so unique; ethically sourcing and roasting the highest quality coffee in the world, the relentless focus on our customers, the trust we have built with our people, and the smart, entrepreneurial risk-taking, innovation and creativity that are the hallmarks of our company.

To this end, in the coming months you will be seeing internal changes and exciting new developments at Starbucks.

We’ll share the specifics as soon as we can. But in general, I can tell you that our transformational agenda will have three objectives:

- To improve the current state of the U.S. business

- To re-ignite the Starbucks experience through driving improvement and change in all areas that “touch the customer”; and

- To build for the long term; this has two distinct pieces;

- Realign our organization and streamline the management of the organization to support customer focused intitiaves and

- Accelerate our International success story and growth even further

In closing, let me say that we are truly in this together. Every partner plays a critical role. I am asking that each of us focus on carrying out our responsibilities in the best way possible, and help to create welcoming and distinctive places that are truly a “third place” for customers and the communities that we serve.

Let me just say to everyone who is listening, I am sincerely excited and energized by the challenges and the opportunities we have. I am here for the long term. I’m here to help every one of you succeed and to restore the company to the greatness it has been.

But our success is up to you, not only me, but all of you and all of us. We know what we need to do to win and we will do so.

Thanks for all you do and all you have done and for contributing so much to Starbucks and to all those people who work so hard and tirelessly behind the scenes who contribute to so much.

Thank you very much. All the best.

Howard

Transformation Agenda Communication #1

Twenty-five years ago, I walked into Starbucks first store in Seattle’s Pike Place Market, and from that day forward we have taken the road less traveled. Working with an exceptional group of people and summoning all the courage we could muster, we created a new kind of place – one that served the kind of coffee that most people had never tasted, an environment that didn’t look like any other store, and hiring people who were fanatically passionate about coffee and celebrated their interaction with customers. To do this, we focused every ounce of our beings on creativity and innovation.

Over the years, together we have built one of the most recognized and respected brands in the world. When we went public in June 1992, we had 119 stores. We now have more than 15,000 stores and a significant and growing presence in 43 countries, serving 50 million customers a week. These customers have placed their trust in us, and for them and for each other we need to ensure that our future is as exciting as our past.

If we take an honest look at Starbucks today, then we know that we are emerging from a period in which we invested in infrastructure ahead of the growth curve. Although necessary, it led to bureaucracy. We will now shift our emphasis back onto customer-facing initiatives, better aligning our back-end costs with our business model. We are fortunate, though, that the challenge we face is one of our own making. Because of this, we know what needs to be done to ensure our long-term future success around the world.

Transforming the Starbucks Experience

The Board decided that I should lead this transformation. Given this, effective immediately, in addition to my existing role as chairman, I have returned as chief executive officer for the long-term. Jim Donald is leaving the Company. I want to pay tribute to Jim’s leadership. He was a passionate and tireless advocate for Starbucks, and his contribution to our company cannot be overstated.

Looking ahead, the reality we face is both challenging and exciting. It’s challenging because there are no overnight fixes. Rather, our success will come in the rigorous execution of several new strategic initiatives – that capitalize on our heritage to drive our successful future. And our reality is exciting because there is so much opportunity ahead for Starbucks.

Our new transformation agenda includes:
- Improving the current state of the U.S. business: by giving our store partners better training and tools, launching new products – some of which will have an impact as significant as Frappuccino® products and the Starbucks Card – and introducing new concepts in store design, among other enhancements to the Starbucks Experience. At the same time, we will slow the pace of our U.S. store openings and close a number of underperforming locations, so we can renew our attention on store-level unit economics and be laser-focused on flawless execution.

- Re-igniting our emotional attachment with our customers by restoring the connection our customers have with you, our coffee, our brand, and our stores. Unlike many other places that sell coffee, Starbucks built the equity of our brand through the Starbucks Experience. It comes to life every day in the relationship our people have with our customers. By focusing again on the Starbucks Experience, we will create a renewed level of meaningful differentiation and separation in the market between us and others who are attempting to sell coffee.

- Building for the long term, which has two distinct pieces: re-aligning Starbucks organization and streamlining the management of the organization to better support customer-focused initiatives by ensuring our support and planning functions — from back-end IT systems to store operations — are most effectively dedicated to the customer experience. This will help us to make smarter decisions about new products and initiatives and bring them to market more quickly than ever in our past.

- Expanding our presence around the world, by building a profitable business outside the U.S., and capitalizing on the enormous, untapped potential for our brand. We will redeploy a portion of the capital originally earmarked for U.S. store growth to the international business. Though we have 5,000 international stores today, we are just at the beginning.

Taken together, these initiatives will help drive our enduring success. And they will come with changes in our organization…some big and some small. I will be decisive in making them. Right now, I can tell you they will include a realignment of our leadership structure, as well as a series of actions to reduce costs and reallocate resources to customer-focused initiatives.

But even as we execute this transformation, there are certain integral aspects of our company that will not change at all. These include our commitment to treating each other with respect and dignity, providing health care and Bean Stock for all of our eligible full- and part-time partners, and our commitment to our community efforts, our ethical sourcing practices and encouraging our coffee suppliers to participate in our CAFE practices program in our origin countries.

Stay Tuned
I know that you may have a number of questions. Attached is a brief Question and Answer document that answers some of them. And you have my commitment that there will be more information to come over the next few weeks and I will keep you informed. Specifically, I will be meeting with the leadership of the Company in the near future to discuss our transformation agenda, and in the coming weeks we will communicate these details with you, including your role in it.

In the meantime, I want to thank you for your dedication to Starbucks and for your commitment to earning the trust of our customers every day. Our success is up to us. We know what we need to do to win, and we will do it.

Onward,
Howard