Third Place and the Starbucks empire: the customer experience at the heart of strategy
In this article, you will understand what the term ‘third place’ means and how Starbucks has made this philosophy an asset to reach global success. Check it out!
The term ‘Third Place’ existed long before Starbucks. Sociologist Ray Oldenburg coined the term in his book The Great Good Place (1989). He described why community settings like cafes, bars, and beauty salons are essential for social connections, inclusion, and even democracy.
In the mid 90s Starbucks incorporated this philosophy into its retail design and business strategy: “We want our stores to be the third place“, as their new policy states. But, what does that mean?
The third place is a complex mix of purpose and a customer experience strategy. Read on and find out how the third place philosophy propelled Starbucks to lead customer experience globally.
Updated on: August, 11 (2022).
What is the Third Place?
The sociologist Ray Oldenburg argued that, for a healthy existence, citizens should live in a balance of three kingdoms: life at home, workplace, and even social places. The latter would be the third place.
In Oldenburg’s theory, while work is a formal and structured social experience and home is a private experience, the third place is more relaxed environments. Environments where people feel comfortable and return to again and again to socialize and enjoy the company of acquaintances and strangers.
The Third Place
A good third place is full of conversation and generates spontaneous relationships between people from different social and economic backgrounds – it is essential in building strong communities, creating empathy, and maintaining a vision of yourself as part of something bigger.
Oldenburg saw these spaces shrink in the United States during the post-war decades, as residential areas — suburbs — became devoid of public meeting places, and lives became more competitive and private.
The third place can be churches, cafes, gyms, beauty salons, main streets, bars, breweries, bookstores, parks, community centers, and gift shops – cheap places where people get together, and life happens. In simple terms, they are the living room of a community.
Where does the fame of Starbucks’ good experiences come from?
When we talk about experiences, Starbucks is a successful and widespread case study. We can easily identify wonderful branding, competitive products, great community building, and a strong value proposition to charge the customer a 9-dollar coffee.
This fame is even the subject of a best-selling book The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary, written by Joseph A. Michelli (2006).
What are the pillars of Starbucks’ Customer Experience?
According to Michelli is his book, Starbucks’ success is related to the following business strengths:
• Reaching out to entire communities
• Listening to individual workers and consumers
• Seizing growth opportunities in every market
• Custom-designing a truly satisfying experience that benefits everyone involved
But, where does this fame come from? Quick recap.
When Starbucks — which started as an independent store in Seattle — began to expand in the 1980s, it tried to replicate European-style corner espresso bars, small counters where people stopped for a quick coffee. Then customers started asking for places to sit and more food options.
And how does the Third Place relate to Customer Experience?
In the early 1990s, Starbucks relied heavily on Oldenburg’s third-place philosophy for its customer experience strategy. In 2002, in his book Celebrating the Third Place, Oldenburg classified the “popular coffee shop chain” as a facsimile of a third space, citing its “high volume and fast turnover operations that present an institutional environment at an intimate level.”
The tone used by the theorist was a little ironic, since, at “industrial” levels, the cafeteria chain bases its customer experience in the third place. He and several other thinkers consider it critical that the private sector should provide third-party spaces in cities since communities establish their own third space, and not through the push of a commercial expansionist.
In any case, the way Starbucks designs its stores, and its service serves as a “prosthesis” of the third place for medium and large cities, increasingly lacking in public spaces for congregating and socializing.
How The Third Place Promotes The Customer Experience
Considering Oldenburg’s theory and Starbucks’ successful business model, more and more, customer experience strategists consider the idea of the third place, which includes carefully experience designing.
Below are a series of fronts in which the third place promotes the customer experience.
In the third place, the idea is to make customer service not only satisfactory but excellent.
The level of possibilities for socialization and relaxation are high so that when a customer enters the commercial premises or the virtual space, they instantly feel relieved of the “mandatory environments” that they “need” to attend (work/school/home).
Tip: try Service Design.
There is no excellent experience without monitoring the actual behavior of customers/users. An excellent third place trains their teams based on active observation.
Starbucks has a policy of applying ethnography techniques to train its employees. That is, people learn by observing and practicing hands-on, receiving constant feedback from their customers.
Tip: try Jobs To Be Done.
Managers must answer the following question, “What would I like?” to transform their physical or virtual spaces into a third place for their consumers. “Walking a mile in the shoes” of users is part of the culture of enterprises that want to transform themselves into a third place and generate a superior experience for their customers.
Tip: try an Empathy Map.
All this, of course, is achieved methodically. A third-place doesn’t happen overnight. To create a third place, companies like Starbucks use methods and practices like Design Thinking – a problem-solving process, rooted in empathy – and customer experience tactics.
CX Strategy, Customer Experience & Purpose At The Core
How far will your company go to deliver the best possible experience?
Coffee growing is directly affected by climate change. But what can a coffee chain that depends on beans to fuel its core business count on?
According to latest news, the next step for Starbucks to become the next generation third place is turning their parking spaces into a “gas station” for electrical vehicles (EVs). We’re not kidding.
By 2030, there could be 26 million electric cars in the U.S. And, despite the fact that a clean environment ensures coffee plants will have somewhere to grow, it’s an astonishing strategy to make Starbucks a mandatory stop in a few years — and sell coffee in the meantime
Starbucks hopes to lure the next generation of drivers by creating the perfect place to recharge. We can even imagine this campaign slogan: “Fuel for you and your car”. But we’re not done yet.
Starbucks also joined Volvo in a bigger project: build a belt of electric stations based in the parking lot of its establishments, from Denver to Seattle. This is huge.
Starbucks CEO: “The third place needed now more than ever”
Lastly, it is essential to point out that the third place is not static. In 2019, Starbucks announced that it would enter a cycle of changes to “reinvent” it’s positioning as a third place.
It seems Starbucks was predicting something. A few monthes later, during the outbreak of the COVID-19 pandemic, we saw the third place theory threatened due to a total social reorganization (the emergence of dark kitchens, for example, was a clear example of this).
At the same time, the CEO & president of Starbucks, Kevin Johnson, wrote a letter to the world’s largest coffee brand fans in a message of hope and comfort to his community that touched on the health issue Oldenburg talked about so much.
Thirds places are all about meaning. They are not necessarily fixed places; they are, above all, a philosophy, an organizational culture. Also, they must adapt to the particularities of each place where they are present.
As you see, brands like Starbucks are willing to go the extra mile for purpose and experience. Are you?
In our latest ebook, we explain how to put your customer 1st, as Starbucks always does. Click in the link and get your free copy. Who knows, maybe your company will create the next third place?