#535 - Being Gaslight by Starbucks Pricing

Speaker A: The Starbucks really offer a premium experience.

Speaker B: We're going to be talking about the news from the Starbucks CEO today. This one's going to be a little bit of a goofy episode because I'm honestly stunned as I read this headline. But before we dive in. Hello, hello, hello. My name is Blake Bins. I'm the host of the Good Advice podcast. And you come to the place to learn how to run business better. There's no fluff on the podcast. We get straight to it. No, uh, you know, book theory and academic stuff on business, just the stuff that actually works. So, hey, if you're tuning in for the first time, we typically have a quick ad from a business that sponsored today's episode. Let's check that out and we'll be back soon.

Speaker A: Do you ever feel like your payment processor is robbing you blind? For some of us, it's not blind. We look at the amount of money that's going to our payment processor month after month. And a lot of times we ask ourselves, is there a better way? Uh, I'm making good money, yet so much of it isn't actually ending up in my pocket. In the world of payment processing, in many cases, it's a cashless world. So you have to have a payment processor you can really trust. I personally am a big fan of Brad Norwood, who's the owner of PrimePaymentsUSA.com Brad's a business owner himself. He knows all the challenges that come with running a business. More importantly, he knows the value of an individual customer. See, some of these bigger businesses, they're all about scale. They're all about bringing in as many customers as possible. But do they know your name? Do they know your business? Do they know what's important to you? In many cases, the answer is no. And in worst cases, they're just looking to get as much money from every transaction that you work hard for, which really doesn't feel too good. So you gotta reach out to Brad Norwood today and understand how he's doing business and why it can save you money month after month. More importantly, you might even ask him about his zero fee payment processing that he's offering to a select few of people. Go to primepaymentsusa.com and start putting the money that you worked hard for back into your pocket.

Speaker B: What are we doing? What are we doing? I, uh, read this headline. This stunned me. This absolutely stunned me. And I'll pull it up real quick. Let's see here. So Starbucks, uh, CEO defends $9 coffee, says it's not a $10 coffee, and you get a premium experience. Now, I went to the interview after I read this, and because I wanted to know, did he actually say this? And you'll be glad to know, yes, he did say this. And I. I honestly, you know, uh, I'm not. I. I'm not going to warm up into this. I want to get just straight to it. I honestly, I read this, and I thought, are you high? Like, this is insanity. I mean, this is absolutely pure insanity. I watched the interview, and basically the CEOs being interviewed, and the CEO, by the way, this is the same CEO who commutes to work via a private jet. Okay, let me say this again. This is the CEO who commutes to work with a private jet. True story. And there was some controversy about that, I think at some point. Uh, I don't remember, like, the. He wasn't allowed to commute anymore. And then now he is allowed to. I mean, just understand the insanity of. None of this makes sense. None of this makes sense at all. But here you have, uh, this guy's on an interview. The person interviewing him says, hey, well, I mean, you know, the economy's. It's feeling kind of rough. Um, you know, you got a cup of coffee that costs $9. You know, what's, What's. What's going on here? What do you think about this? Like, what do you have to say to these customers who are feeling like, the squeeze of the dollar? And I was honestly, my first thought was, this guy needs to hire a PR firm. Uh, get a. Get a PR manager in some way, please. Because his response was wild. He said, um, you know, for some people, definitely, it's a bit of a splurge said. But I think there's other people who. They say, well, you know, it's not $10, it's under $10. And, um, it's worth it because it is a premium experience. Guys, am I living under a rock? Like, am I? Am I. Do you ever find yourself, like, talking to someone and, like, you're explaining something that happened to you, and then they explain, like, you think they're going to validate you. And then, like, as you're midway through the story or, like, you know, you're wrapping up explaining what happened, you realize, oh, I'm the weird one. Like, Like, I'll tell you a quick story. I had a, um.

Speaker A: I was having breakfast.

Speaker B: Breakfast with someone. And across the way was this breakfast joint called a. Like, we were in a restaurant, and then out across the street, we could see another restaurant. And the guy I was with motioned that. And the restaurant was called the Toasted Yolk. The Toasted Yolk, you know, and he goes, oh, that's embarrassing. And I go, uh, what, what's embarrassing? And he motioned to the business, and he goes, that's so the business name. That's so embarrassing. And I go, what's. What's embarrassing about it? And he goes, well, they, they misspelled yoke. And I go, uh, no, they didn't. He just has like this moment of he's like, have I been misspelling yoke wrong my entire life? Which in his, to his defense, in his credit, there, there's two words that sound exactly the same that mean different things. One's an egg yolk, which is Y, O, L, K. And then there's, uh, Is there like an O? Is it like an ox yolk or. I don't know the history of yoke, but I think that one is Y O, K, E. So I, I understand the confusion there. It's not a big deal. But I just remember his face of like, just stunning realization of like, dude, have I been misspelling this wrong my whole life? So, you know, here's the deal. I'm going to give Starbucks the benefit of the doubt for a second. I've been in conversations where, you know, like I said, I'm, I'm talking about something and the person doesn't seem to get it. And then I'm like, am I the idiot? Like, I think I'm the problem. You know, maybe, maybe I've been blissfully unaware of this premium experience. And, you know, I honestly, I'm not looking to knock Starbucks. Really. I'm not looking to like, knocks. Ah, knocks, knock. Uh, any particular worker at Starbucks? I've never had, um, a bad experience. You know, it's not like you walk into a fast food joint and it's dirty and like someone, someone in the back of the fast food place, like, meanders up to the register and, you know, they're like, oh man, it's a customer. What do I do? Especially now, by the way, so much of these fast food restaurants are just like menus, like digital menus, that I feel like it's incredibly rare to ever interact with anyone in the store. Which is again, mind boggling to me. It's also, by the way, why you see restaurants, restaurants, uh, fast food places like Chick Fil coffee shops like Seven Brew, who've specifically gone against that model because they know they actually do have an inkling on what a premium experience really looks like. But I've never been in a Starbucks where I'm like, wow, that was a premium experience. And I'll just pause for a second, and I'm going to point out something that I think is really a bit of a point of frustration for me. You know, I work with a lot of businesses, and I have worked with many newer businesses or younger, uh, businesses in the sense of, like, they've only been in business for a couple of years. And I'll just pause for a second to explain that. One of the biggest pitfalls that I see in businesses is people who think that basic politeness is a boon to their business. They think that basic politeness is excellent customer service. So what'll happen is I'll talk to someone and I'll say, hey, so somebody, like, what's. What's great about your business? Like, what makes you different from your competition? And they say, oh, we give great customer service. Okay, well, what does that actually mean? And as you, like, dig into it, you realize, oh, you know, you don't. You didn't. You had that really stupid customer and you didn't cuss them out. Good job. You know, you had a frustrating customer and you kept your cool and you were polite, and you solve the problem. So therefore, we give great customer service. I have to be honest, like, in my almost 40 years of life, rarely have I ever had a mean customer service experience where someone was, like, genuinely mean to me. 90% of the time. People are perfectly pleasant, impolite to varying degrees. Obviously, you know, you have the hourly worker who's making minimum wages, certainly not as upbeat, uh, and merry as, you know, maybe the salaried employee. So understanding. You know, there's obviously a little bit of a range there, but it's rare that I've had a mean experience is what I'll call it. So I think it's funny to me. So I just think it's interesting that there are business owners who, they think that that's what to hang your hat on. But when you think about it, you're offering just what everyone else offers. So again, going back to Starbucks, I've never had, like, a rude experience, but I certainly haven't had a premium experience. Um, you know, I. You go in, you order your coffee. Um, that's pretty much it. You know, I mean, they have a little tiny sandwich, breakfast sandwich for, like, you know, $8. That's about half the size of your hand. So they have, like, other things you can get that are a bit expensive. But I've Never thought, wow, that was a truly meaningful experience. Now I have had to give them credit. I've had, I have had. I can think of a friend of mine who, um, someone, the, the person in the drive thru got his name and then he came back a couple days later and the guy was like, hey Kerry, good to see you. And the, my friend Carrie was like, oh, wow, I like that this person remembered me. That's pretty cool. Like, hats off to the, you know, I like that. That's, that's great. I don't think there's anything wrong with that. But a truly premium experience, what are we talking about here? Like really, like this is ins. Uh, I mean this, I'm, I'm literally getting gaslit by corporations today. I mean it just, it blows my mind. You get a cup of coffee, it's mass produced, okay? And that's not, that's not even necessarily a knock on Starbucks. It's just the, it's just the, it's the literal, uh, design of the business. If you're going to provide millions of pounds of coffee across the world, you're going to have a system of scale that's probably not going to have the highest quality bean. I mean it's, it's just common sense. But also I've, I frankly, I think the coffee usually tastes pretty burnt. Um, probably the best coffee I've ever had at Starbucks is when like you tell them to do the degrees to, to, to um, make the coffee ad and you have like the custom mods and you know, then you're like, oh gosh, I'm that person. But I just, I just, I can't think of a time where I've been like, wow, that changed my life. And I've been to Starbucks hundreds of times. I mean like before there was an onyx near me or some of these more like local coffee shops. I grew up going to Starbucks, so I'm not, it's not like I've never been there but like in 20 years, 20 plus years, I've never had a premium experience. So, you know, we, we've, it just would be like if CC's got. God love CC's, it would be like CC suddenly raised their prices to $15 for the all you can eat buffet. And they said, we just, you know, we don't think it's too expensive because we know people love the quality ingredients of our food. Again, I'm not knocking, it's just that when you go to CZ's, you know what you're getting? You're getting cheap, tasty pizza. You know, it's not the best ingredients. You know, it's like my wife and I, when we were first married, we were in the grocery aisle and I grabbed a can of, uh. Don't judge me on this. I grabbed a can of SpaghettiOs. I got, I got the nostalgia bug. You know, my mom used to make it for me. So big deal that I'm, you know, a, uh, late 20s something, year old, getting my can of SpaghettiOs. And my wife, she looks at the back and she's like, babe, this is horrible for you. Do you see all the stuff that's in this? Like this. Which, by the way, on the can, they say it says, I don't know if they still do this, but I haven't bought it in forever. But they used to have something on the can that was like 80% of your daily vitamins or something. I don't know. Uh, you know that arrest development meme where he's like, you should check that math again. I don't know if that, that math's right. Very much appropriate for this sticker that's on the can. But it's like something like 80% of your daily vitamins. And so I remember, like, showing it to Joy, and I was like, I mean, look, I get all my daily vitamins just from this one can. And sometimes I, uh, even eat two cans in a day. And, you know, she's horrified. She's like, babe, I have to help you. But she's on the back of it. She's like, look at everything. All this junk that's in here. And I'm like, babe, that's what I pay for. I. I want the junk I want. That's right. I, uh, I. I know what I'm paying for. You know, I know what I'm paying for when I go to CC's. So, you know, unfortunately, my wife, she's had a decade plus to work on me and elevate the eating slightly. But I mean, it, it just. Imagine if you went to CC's and it was $15. And the CEO was like, yeah, we just. Again, the premium experience, guys. It's a premium experience. Your jaw would hit the floor, you'd be like, are you nuts? And I just, Man, I just. Everything is so expensive right now. And you have. I talked about last, uh, week, week before the Doritos. That's $7 a bag. I mean, what. It's just crazy to me, the cost of things. And not just the cost of things. The shrinkflation of Things. This is a whole nother podcast episode. But I came across, I'll have to share this. On social media. I came across a list of, um, like the most popular examples of shrinkflation in the last five years that you probably don't know about. And I mean, I was stunned. I was really stunned, honestly. Just the number of things that I didn't realize had gotten smaller and not smaller. Like by barely any, I mean like 20% smaller. Or like if it came with four cookies, now it comes with three cookies. Like that kind of stuff. Um, you know, it's just. And I think what's interesting about this whole conversation is like, it's really weird to me, the people who white knight and defend some of these corporations who, you know, it's weird. Like I get these comments on social media that are like, uh, I don't know, it's like people who are like, personally hurting, like, coming to the defense. It's like I attacked them. You know, like I posted about Doritos and somebody commented, like, just defending PepsiCo. I, it was interesting to me. I just thought, you know, they don't need you, they don't need you to defend them and they also don't care about you. And so I know in the same way I'm going to put out content on Starbucks and someone's going to comment and be like, hey, you know, try running a corporation for once in your life. And it's like, okay, um, I will say over the years I have had people on the podcast, I've talked about other businesses that are larger corporations who just don't do business this way. You know, you have to understand that there, these corporations, they have a certain percentage of growth and a certain amount of profit. That is, these are their main KPIs for their business. And it's part of our system of economy where if a company is not showing growth year after year, I mean, it's totally unsustainable. But if it's not showing year, year after year after year growth, then it's seen as failing. So you have companies that are doing a wild range of things in order to keep those profit margins and keep that growth, um, happening for the business. Uh, and again, it's just, it's insanity to me. It makes no sense. I have to wonder what's going to give? Like, seriously, I just have to wonder. Um, it just, it really, it doesn't make sense to me. I just don't see a world where people are gleefully rushing to Starbucks to buy a $9 cup of coffee. And I'll just say this too. It wasn't that long ago that coffee was $5. Seriously, it was not that long ago. Maybe, I mean, maybe I'm just getting older and like the years are just like blurring together, but it's not that long ago that a cup of coffee was $5 and. Cause I have the Patreon for the podcast. Uh, when I was setting the price for the Patreon, I said, you know what, I'll do $5. I'll do the price of a cup of coffee. You can go back and listen to old episodes. I've said, hey, if you wanna support the podcast, support the Patreon. It's the same price as a cup of coffee. And I mean, now it's like, it's just, I mean, uh, do I raise the Patreon prices? No, I, I'm just, it just blows my mind. It just really does.

Speaker A: It blows.

Speaker B: It makes zero sense to me at all whatsoever. Um, and again, I just have to wonder what's going to give? I mean, ask yourself, are you making twice as much money as you were 10 years ago? How much more money are you making? 30%, 50%, 70%? And yet we're seeing prices reach crazy heights in unsustainable heights. And I just wonder, what does this mean for the average person legitimately? What does it mean? You know, and we, we have this conversation, by the way, a lot with my own customers. When we talk about price point. It's one of our main points of conversation. And the, the especially like around the economy. And the takeaway is never, oh yeah, the economy's tough. Have the lowest price. That's never what we talk about. It's almost always okay, if you're going to charge a premium price, what is a premium experience for your customer? That's why we talk. Unreasonable hospitality, dude. I had a customer who emailed me the other day who wanted to get some, um, security stuff for his website and said, man, you know, what's it going to cost me to have to do this? And I said, dude, we got it covered. You don't have to pay for it at all. Like we got, we, we eat the cost of that. And he was like, wow, this is great news. And I was like, yeah, I mean it's, that's what I like my customers to hear, you know, I mean, I had another customer who, um, they were basically grandfathered in to us managing their Google business profile. And the customer, great customer, long term customer, and didn't realize that we were just Doing that for free for him. And he said, well, you know what? What do I need to pay you for that? And I said, don't worry about it. I said, we got it. You know, I'm happy. You've been a long, long customer. I'm happy to keep that going for you. It's not a big deal. Now, uh, you know, I'm probably oversimplifying this, like, into levels of perks. And I'm not even talking about perks. You know, I'm not talking about, like, here's your coupon. Here's your loyalty card. I'm just talking about experience. What is the experience that someone has when they do business with you legitimately? What's the experience? And this is a very difficult conversation for some business owners because I have found, unfortunately, there are business owners who are desperately disconnected from the customer. Deeply disconnected from the customer. They are living on another planet. I had, and I'll give an example of this, less about a customer, but I had someone I worked with who, um, she had a key team member quit. Uh, probably the most important person on our team quit. And we were talking about it, and I was just trying to understand, and I said, you know, tell me more about this person who quit. And we had a long conversation about basically all of these pain points and moments of tension that the owner had had with this employee. And the sticking point had come down to, um, a wage increase. And the boss said no. The owner said no. Well, the employee quit. And I think also, by the way, I think if I'm remembering correctly, uh, the employee had asked for vacation, and the boss had also said no to that. So the employee quits. And so, you know, I think I'm kind of like, leading towards this conclusion. I'll say. So, you know, after this long conversation, I say, so, so tell me, why do you think this person quit? And she goes, oh, well, we had a great conversation. You know, she. She wants, like, more flexibility, and, uh, there's a other great job, yada. Yeah, Basically, the way she described it was like, oh, it's just, you know, there's no bad blood. It just happened because of X, Y, Z. And I just remember being like, are you serious? No, she quit because of everything we just talked about. Like, it's so obvious. Like, how do you not see it? She. She quit for exactly what we just talked about. What kind of person would work for a place like that where you can't get the wage increase, you can't get the vacation, you get all these extra things, you Know, I mean, just think about it. And I have found this is unfortunately the case for many people. It's the same conversation where you talk to the business owner and they have maybe three or four products or services or what have you. And you ask them, well, hey, tell me, what do your customers love? What's like, their favorite product? And they say, oh, they love this product. Oh, my gosh. They go crazy for it. And you're like, okay, well, let's look at, like, our revenue numbers. Nobody's buying that product. You look at the revenue. Zero purchases. I mean, very little purchases. You know, it's 90% elsewhere. And so you go back to the boss, you go back to the business owner and you say, wait, you told me people love this. Like, what's, what's the deal? Because I don't see anybody buying it. Oh, no, no.

Speaker A: It's just.

Speaker B: It's just, you know, they're still, uh, we're still working up to it. We're still getting the word out. But people who do buy it, they love it. And then you start to ask more questions. Well, who. Who rolled out this product? Who came up with this product? Oh, uh, it was me. I did. Oh, so you the owner? That's okay. Yeah, now I'm getting it. In fact, this reminds me of, uh, oh, man, what's it called? Kitchen Nightmares with Gordon Ramsay, where he'd go to a restaurant and, like, no one's eating there. And he asked the restaurant owner, like, what do you think people think of the food? And they're like, oh, they love it.

Speaker A: They love it.

Speaker B: And he, like, looks around, he's like, okay, because no one's here. So do they love it? You know, um, and I'll just end with this too. I also remember I was working with a business where they had, um, surveys from their customers or, like, feedback, uh, forms. I can't remember what it was called. Basically, like, whenever a customer made a purchase, they would leave a survey. It wasn't public facing, it was directly to the business. And basically the customers would give a ranking from one to five. Um, so the customer had a pile of. They had four piles, uh, of these feedbacks, these reports. They're very simple, like evaluations. And I say, what you got there? And the woman, she goes, uh, these are our fives. These are the people who gave us fives and all the great things we did. And then here's our fours, and then here's our threes. And I go, well, what's the last pile? And she goes, uh, oh, These are our twos and ones and we don't read these. And she laughed, which probably make it a joke. They probably do read it. You know, morbid curiosity. They probably do look at it at some point. But also I wouldn't be surprised if they really, truly didn't read it. I think that as business owners, we're very good at seeing things the way we want to see it, in believing the things we want to believe instead of looking at the real honest evidence. Um, you know, and I've even sometimes not even like the bias of the person. It's just that it's hard sometimes to get authentic feedback. I had a, um, service that I was offering probably six or seven years ago, probably about five years ago, and before I offered it, it was like a monthly coaching thing. Before I offered it, I called a bunch of people and said, hey, is this something that you would pay for? Like, I was trying to validate and get like an idea. And my perception on validation has changed a lot over the years. Um, especially in the startup space, I very rarely see anything as validation other than money down. It's just very difficult for me to see it otherwise. And the reason for that is because I spoke to a bunch of people, I said, hey, if I roll this as, uh, would you think you would pay for it? Do you think you'd find it valuable? Oh, my gosh, a hundred percent affirmative. I mean, I did not have a single person who did. I did not have one person who told me that it was a bad idea. Hang on, I'm getting, I'm getting lost in my, in my double negatives here. Every single person told me it was a great idea and that they would buy it. I said, absolutely, absolutely, I will. So I rolled out this service. Not one person bought it. And even the people that I reached out to who were like, absolutely, nope, never bought it. Which is funny because, like, I've actually had, like, I've worked with other businesses where we've seen this happen firsthand. I mean, I even worked at the, um, consulting company I was at previously. They rolled out, which was like a leadership management company. They had rolled out this special, like, leadership program and they had gotten all these verbal affirmatives of people being like, yeah, we're going to sign up for it. Nobody signed up for it. So, you know, again, it's very difficult for people to be honest about their business, to be honest about their brand. And man, you just got to get serious about it. If you're going to say you have a premium experience, you Better hope that that is an absolutely honest truth for your business. If you say it's premium, it should just be obvious. It should be obvious. And, um, I don't know. Starbucks is not in my list of the most premium experiences that I've had. Um, you know, in fact, I can. I can think of very few. Uh, I'll share a local one real quick and then I'll be done. Um, there's a steakhouse here called Oak. Uh, truly a premium experience. Absolutely a premium experience. I had an incredible experience. The food was good. I mean, food was great. Honestly, uh, was not the best food I've ever had in my entire life. Great food, though. It generally, generally genuinely was the experience, though. I mean, absolutely. I'll be back. I mean, they. They pampered us. Like, there was a point where I was like, are y' all losing money on us? Like, this is. This is crazy. Like, we're getting brought so much extra food. And like, it just. It was truly a premium experience. And you know what's funny is I was talking to. I think he was like, maybe the, the night manager or the general manager. I don't know who it was, but I was making small talk and just saying this was such a great experience. And, um, this is what this person told me. I don't know if this is actually true, but we were making small talk and I said, you know, your. Your restaurant really reminds me of a book called Unreasonable Hospitality, which this Michelin chef. And he goes, oh, yeah, yeah, our. Our owner is great friends with him. He modeled. He's modeled our restaurant after that guy. And I was like, okay, it makes total sense. It makes absolutely total sense. When a place gives you a premium experience. It should be obvious. So is it obvious for your business? Something to think about. Hey, thanks for listening to today's podcast episode. Uh, if you want to support the podcast, we have a Patreon for as little as half the price of a cup of coffee. $5 a month. You can support the podcast. I wish I could say you get all these amazing perks. I really. There are none. Um, you know, you're just supporting the podcast. So I appreciate. And I appreciate those of you who support the podcast long term. And for those of you who support the business, thank you so much. And also especially a shout out to our business partners who sponsor the podcast and support the podcast. And, you know, they get their shout outs at the start of each episode. So thank you to you as well. And ah, having said that, that's today's good advice. Episode. Catch you later.