Howard Schultz, the Chairman and CEO of Starbucks, is stepping down from his role as CEO. He is doing so for the following two reasons. First, he wants to lead the development of a new offering. Second, he wants to do more with Starbucks social responsibility programs.
What is this new offering? It’s a $12.00 cup of coffee. The coffee is going to be brewed from spectacularly rare beans and brewed in very small batches. This $12.00 cup of coffee is also going to be brewed differently, like some kind of fusion brew, or something.
At the very same time that this story is making news, it is also being reported that Amazon.com was responsible for 31% of all Thanksgiving weekend spending. If you are a retailer, you felt a sharp pain in your heart. Bezos is the alpha predator, the Great White shark, and he is chomping up everything in sight.
What does this mean for me and you? Here is my take. Markets are being torn in two. Literally.
Things that can be made more transactional are being pulled sharply in that direction. Amazon.com believes that retailers don’t add a lot of value to most purchases, and that people prefer the convenience of buying what they want and having it delivered straight to their doorstep (in some cases, same day).
Who is suffering because of Amazon’s ascendance? Walmart. The problem with a transactional model now is that technology can enable competitors to be even more transactional.
Don’t lose hope here. Stay with me. For every action, there is an equal and opposite reaction.
Where greater value can be created, things are being sharply pulled in that direction. I pay $2.35 for a large cup of Starbucks coffee. I have paid more for their special reserve coffees. Coffee is one of my very favorite things on Earth, and I believe that it is worth paying more for that experience. Many of you will read this newsletter on an Apple device, one that had a higher price than the alternatives available to you.
There is a market for people who will pay for something much better than average. There are people who want to pay more for something exceptional. The people willing to pay more in one area, may choose to transact in other areas.
This is important because most of us aren’t going to benefit by trying to be more transactional. If you think it is difficult to win clients with a higher price, try winning clients when you are not different than your competitors. More still, trying running a business with razor thin margins. Being exceptional in some way that is meaningful to the clients you serve is a better–and safer–long term strategy.
- What makes you worth paying more to obtain?
- Which way are you being pulled, and what does that mean for your future?
Comment to send me your thoughts, ideas, and stories. Forward this email to someone who might benefit for thinking about their strategy going forward. Ask them to join us here each Sunday by signing up at www.thesalesblog.com/newsletter.
Do good work this week, and I’ll see you back here next Sunday.
P.S. Last Thursday I turned in the manuscript for my second book. That book is going to be released on August 8th, 2017, less than 10 months from the release of The Only Sales Guide You’ll Ever Need. If you haven’t picked up TOSG, you are falling behind! Look for two emails from me this week, one for individuals who want to join my FREE mastermind coaching program around the book, and a second for bulk buy offers for companies that want to arm their team with the mindsets, skill sets, and tool kits to succeed in 2017.