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My blog allows you read posts as often as you want, for as long as you want. Aren't you grateful? Of course not. Unlimited access is typical.But what if it weren't? What if some blogs only allowed you to read two posts per day, so that you had to keep coming back day after day to read more? Would you suddenly notice that mine were different? Actually, you still wouldn't. Infinity is so far from two that they're in different categories. One's a hard number, and the other's barely even a picture.
But if other blogs allowed you two reads per day, and mine allowed you two dozen, you'd think I was generous. Especially if the top of my page said, "You're welcome to read up to 24 posts today." Nevermind that this practice would be inane in the context of the actual blogosphere-- as you may have already guessed, I'm not really talking about blogs.
Starbucks has announced that it will be providing 2 free hours of consecutive wireless internet use per day to customers who use their Starbucks cards at least once a month. Translation: if you have a Starbucks card, which is free, and you drink at least one cup of coffee per month, you can go into any Starbucks in the world (by the end of 2008) and use the internet for 2 straight hours without being hassled by baristas or blocked out of the network.
There are a ton of benefits for Starbucks doing this-- it strengthens the brand, forms ties with AT&T, draws customers in so they'll smell the coffee and drink more, and on and on.
But more than that, it sounds generous. Two hours is such a generous offer that it might as well be unlimited.
Might as well be. I'm not complaining; if it were unlimited, we wouldn't be compelled to stay for three hours instead of two. No, I'm actually applauding Starbucks for their carefully crafted message.
It's the same message you get from Google's Gmail when you visit the site for the first time (not logged in). There's a number on the side of the page-- always rising-- that tells you the exact capacity of the Gmail inbox. It tells you the ever-loftier ceiling on the data you can store on Google's servers. It's virtually unlimited.
That's the big message. At first when I contemplated this, I thought, "I'm only using 4% of my Inbox capacity, as surely most Gmail users are. Why not simply call it unlimited? They certainly can afford to remove all limits for storage, since none of us is going to suddenly pack the servers with a data glut once we get unlimited space."
I save almost every email I get, and I take my jolly time at Starbucks, and I still don't come close to the limits they've set. I don't even have time to abuse unlimited surf time, nor do I have the data necessary to abuse unlimited data capacity. None of us does. Evidently, the limits aren't there to curb abuse.
You know what I suspect? I think the limits are arbitrary, but purposefully low. Starbucks limits your internet so you'll be aware that internet access is costly (but they make the limits lenient so you'll be blown away by their margin on the competition [whoever that is]). What Starbucks knows is that if their internet service is unlimited, then it's barely a feature of their store at all; it makes them just like the public library. "Sure," you'd say, "they'll give you free wireless. But so will my University, and theirs doesn't come with the obligation to buy coffee." Tuition, maybe, but not coffee.
Instead, they impose arbitrarily selected, unprofitable limitations because their drawing lines helps you compare them to the rest of the pack, who draw more restrictive lines. Placing loose boundaries, which don't truly restrict your behavior, causes you to realize how far ahead of the competition they really are.
The Starbucks page I linked to before mentions that users without a Starbucks card can pay $3.99 for a full two hours of internet service. That price barely matters, except as a margin for comparison. Holiday Inn's lobby-level internet cafe, for example, charges 20 cents per minute of use for their own guests-- six times as much as Starbucks charges for unregistered users who don't even have to buy a cup of coffee. At the cost of internet access these days, neither business is paying a mathematically significant degree of overhead. But again, I wouldn't have the opportunity to say "six times as costly" if Starbucks wireless were free.
Free is, in some cases, ignorable. "Cheap" is ignorable, too. But cheapest by far is remarkable.
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16 RESPONSES TO "THE GENIUS OF STARBUCKS' NEW WI-FI STRATEGY"
Some good points, Susan, and thanks for speaking your mind.
You're probably right that they're limiting the time partially for loitering control.
You may be overlooking two things, however:
1) Wireless internet is a commodity; it's so low-cost that charging for it is always for some other reason than paying wireless overhead.
2) The "commoditization" that Schultz warns of is exactly what would happen if Starbucks' wireless internet were available at all times to all people. They'd take the experience for granted.
I always go to Starbuck because I like to write and do works on my laptop outside. I would easily drink a cup of coffee per month and can afford the Starbuck card (anyway, it is free..LOL)
But I really hate it when they want to limit only 2 hours for the Internet use. So, if I drank 2 cup of coffees per month, am I eligible for 4 hours use? And is it like redemption thingy, like after I used the 2 hours connection, I have to drink another coffee to redeem 2 hours more the next day? I just wonder at what kind of stunt they are pulling. Kind of like Strategy A: we get sales of 10 cup of coffee more per month, Strategy B: we get each of the stupid people (I really do not know how many) to buy 1 more cup of coffee each month.
I really hope they would not implement that kind of control. I love Starbuck for the environment and the fact they are everywhere as I would not want to drive 10 km to get coffee. The coffee is great, but not the best so far. I prefer San Francisco’s actually.
Anyway, the reason why they do this maybe due to 2 reasons:
First, from what I read in “The Undercover Economist” book, we are actually paying premium price for our coffees at places like Starbuck because of they are providing us with the environment. It does not cost them very much to make the coffee actually. So, I guess they are trying to say to us that we are not paying enough for the coffee because the coffee price actually includes the place where we are sitting (up to how many square feet we occupy), air-conditioning, the nice music and most of all, the Wifi-connection, which was introduced much later. So, it is another way of saying, we should pay for the Wifi connection because when they calculate and come out with the price for the coffee, they have not taken wifi-connection into consideration. So, assuming I am Starbuck top executive, I would think, how do we make our customers pay for the Wifi? If we increase the price for the coffee when the coffee price worldwide is not increasing, customers will f**k us. So, we have to be “creative”
Second, I think it is a strategy from preventing people like me who hanged out in Starbuck for more than 4 hours with just one cup of coffee (yes, I am cheapskate but at least I buy at least one cup. Size of Venti some more, what do they want?). Of course, by being there for more than 2 hours, the only thing they lose is another customer who can order a cup of coffee more and sit at the place I am sitting. Place rental is always not cheap.
And remember the letter the Starbucks chairman, Howard Schultz sent out to warn of "the commoditization of the Starbucks experience". He mentioned about “Push for innovation and do the things necessary to once again differentiate Starbucks from all others.”
Now, what an innovation Starbuck comes out with?
Starbucks if finally becoming conscious of the fact that they expanded entirely too quickly and sacrificed many of the values that made them ridiculously successful in the first place.
Now they're making an effort to re-strengthen their brand identity and this is certainly a step in the right direction for all the reasons your post alludes to.
So... how's NY?
I found this post interesting:
"Third places" - where people once gathered to converse (coffee shops), they now gather for solitude.
http://allaboutcities.ca/old-and-new-third-places/
As a librarian, I have to throw in my 2 cents. Most libraries have free wi-fi. Also, libraries are becoming more and more relaxed about allowing food and drink in the library. Some super-sweet libraries have coffee shops in the library (very Barnes and Noblesque).
When I was in undergrad and grad school, I was poor (wait, I still am.. hmmmm...), and having to purchase a coffee each time I needed to use wi-fi was not an option.
It is wise of Starbucks to get closer and closer to free especially since entire cities are getting free (well, it'll come from tax $) wi-fi.
I haven't yet Wi-Fi-ed at Starbucks with the AT&T deal. I do remember being peeved at having to shell out $9.99 for the day to use wireless at S'bucks provided by T-Mobile. I tend to use two locations in the Hub of a mass of wireless networks, and there's almost always an open one available, or my favorite location, close enough to the library to use the BPL's system.
Supposedly in the next year, Boston will have free Wi-Fi everywhere, as a city-wide perk. I'm definitely looking forward to that.
I didn't know Starbucks charged for internet. This is just another reason I'm glad I use local coffeeships - always free wi-fi. It's ridiculous to pay for internet. Especially for Gen Y who already has it at their fingertips.
I do think your argument is interesting though, and when you charge for something, it certainly places a higher value on it, but that something has to be worth that money.
It's an economic and human effect. Similar to the co-pay for a doctor's visit, it keeps people from abusing the "free" or "unlimited" concept. Actual studies have shown that the $10 co-pay drastically reduces the visits to the doctor. Eliminate the co-pay and people will stop in for cuts, scapes, etc.
Similar to Starbucks, charging a nominal amount and create "limits" really will reduce the otherwise abusive use of "free." Check out Predictably Irrational. The author goes through some interesting thought exercises on human behavior.
It's interesting that you view the Starbucks wi-fi wording as a benefit. I just finished reading an article about how Sprint is being web-lashed this week for limiting their "Unlimited" broadband card access to 5G.
In this case, setting a limit set off a protest. Nevermind the fact that you've have to do some MASSIVE web surfing to go over 5G a month. In fact, LESS THAN 1% of Sprint's customers even go over the 5G level right now...but the point is that those customers cost Sprint a fortune. In essence, everyone is being limited because of a few people. The reality is that 99% of the broadband card users will never see a difference, but public perception is that Sprint is lying. This Simply Everything/Unlimited plan is not REALLY unlimited.
It's interesting how one company that is adored (Starbucks) sets a limit and is praised for being strategic and another company that is hated (all cell phone companies) is blasted for being dishonest.
By the way....even with the 5G cap, the answer to Starbuck's time limit (if it is an issue for anyone) is a Broadband card. I use Sprint's EV-DO card and it ROCKS!!!!! My speed is usually faster than people on Starbuck's wi-fi network.
I am surprised that the Bucks is doing this - typically if you give free WiFi at coffee shops you get a bunch of people sitting there for hours on end, taking up table space, with a cup of tea that cost $1 and makes no ROI whatsoever.I'll be interested to see how they enforce the 2 hours as well....
Marketing Genius!! The fact that Starbucks allows 2 "free" hours per day is going to boost their bottom line substantially. I used to go to Panera because of the free internet while I traveled for work since it was usually the only option. However, now I have an option of Starbucks (let's face it they are everywhere). I guarantee that 99% of the people who use the "free" internet option will be buying something.
Good call Bert.
I work from Starback every week or so when I need a change of venue from my home office and I didn't even realize they were offering the free internet now. I have to admit Carribou, one of their competitors around here, has offered free wi-fi period for up to an hour at which point you have to buy something to get a card with a code (or just ask for the card). Carribou actually took a different approach and just changed to an unlimited amount and I found I started using it. Starbucks, having switched to AT&T now offers me unlimited too since I'm a U-verse customer that has an @att.net email address now.
So, I agree, it's important to associate value with services (I'd always charge even just a little for computer consulting work even if I don't mind giving it away so people know my time is valuable and they can't just call on me as their Geek Squad), but past the marketing it perhaps does not make a lot of sense to spend the time and money to enforce these arbitrary limits sometimes.
IMHO Starbucks are putting up a barrier. If some people are anything like me and sees that there are terms to using wifi - then they would go elsewhere.
The smart thing to do would be to open it up to everyone. The amount generated in sales would most likely cover the cost, if not more.
Honestly, as much as I enjoy Starbuck's "froofy" drinks (I'll take one triple grande skinny caramel macchiato), I take my computer to local coffeeshops where the wireless is free and you don't have to deal with the hassle of Starbucks' internet deals. As a grad student/ research slave I routinely spend 6 hour stretches at coffeeshops when I'm close to a deadline. And I know this is true of a lot of people who do their work out of the office. It may be a good strategy to grab novelty browsers, but when it comes to the hard-core devotees of coffeeshop wifi, they are losing customers.
Keep in mind that Starbucks' favorite kind of customer is the one who comes in, buys several items, and promptly vacates the premises. They're not trying to snag those of us who drink a cup of coffee just to camp out on the wifi for six hours.
So how does Starbucks handle their stores that are in airports that have wi-fi that is not free (DFW would be one example)? Will we end up seeing huge crowds gathered around the storefront, blocking travelers progress through the concourse, so they can get the free wi-fi and not pay for the airports wi-fi? Hmmmmm?
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