“An Accountant Knows the Cost of Everything, but the Value of Nothing”

There’s a dangerous trap that businesses can fall into: viewing their brand through the narrow lens of cost-cutting and efficiency, rather than focusing on the holistic value proposition they provide to customers. This approach might improve short-term financial metrics but often erodes the very essence that makes a brand special.

Starbucks faced this challenge head-on during the COVID-19 pandemic. Necessitated by health concerns, the company had to pivot away from its cherished “third place” concept—a welcoming space between home and work—towards a more transactional model emphasizing drive-thrus and mobile orders. While this shift was essential for public safety, it inadvertently led Starbucks down a path that distanced it from the experiential brand identity it had cultivated over decades.

Conversely, Southwest Airlines, once celebrated for its unique customer-centric policies, now appears to be at risk of making a similar misstep. By moving away from its core value proposition, Southwest may be prioritizing immediate financial gains over the enduring value that fostered its loyal customer base.

This is a tale of two brands—one that recognized the peril of straying from its core values and is striving to realign, and another that seems poised to repeat the same error.

Starbucks: Navigating Necessary Change and Rediscovering Its Core

Starbucks’ foundational value proposition transcended just serving coffee. It offered a “third place” experience—a comfortable environment between home and work where customers could relax, connect, and enjoy premium coffee. Starbucks’ enduring value proposition was built on several enduring planks:

  • The Best-Tasting Coffee: Commitment to quality through controlled sourcing, custom roasting, and handcrafted beverages.
  • Customer Intimacy & Personalization: Baristas who knew your name and your favorite order, creating a personalized experience.
  • A Premium Atmosphere: Inviting store designs with local aesthetics, fostering a warm and welcoming environment.
  • A “Third Place” Between Home and Work: Providing more than just caffeine—a space for community and connection.
  • Social Responsibility & Culture: Dedication to ethical sourcing, employee benefits, and community engagement.

COVID, however, necessitated a significant shift. Health and safety concerns led Starbucks to close many café-only stores temporarily, focusing instead on drive-thru and delivery services. This pivot, while essential, moved the company away from its “third place” identity, emphasizing convenience over experience.

Recognizing the unintended consequences of this shift, Starbucks has been actively working to realign with its core values:

  • Reimagining the Third Place: Investing in store designs that balance convenience with the inviting atmosphere customers cherish.
  • Enhancing Customer Experience: Reintroducing self-serve condiment stations and comfortable seating to encourage in-store engagement.
  • Simplifying Operations: Streamlining the menu by 30% to improve service efficiency and reduce wait times, ensuring quality isn’t compromised.

A Leadership Shift to Get Back on Track

Recognizing that it had drifted too far from its roots, Starbucks recently appointed Brian Niccol, former CEO of Chipotle, as its new CEO to realign the company with its original mission. His focus? Going back to basics—reinvesting in the in-store experience and re-emphasizing quality over efficiency.

Under Niccol’s leadership, the company has seen a 28% increase in shares, reflecting investor confidence in his “back-to-Starbucks” strategy.

These efforts underscore Starbucks’ renewed commitment to its foundational identity, aiming to harmonize operational efficiency with the rich customer experience that defines the brand.

Southwest Airlines: Risking the Erosion of a Beloved Identity

Southwest Airlines built its reputation on a customer-first approach, characterized by its core value proposition:

  • A Fun, Friendly Flying Experience: Employees known for their personable interactions and lighthearted approach.
  • Low Fares with Transparent Policies: Offering free checked bags and no change fees, embodying their “Transfarency” promise.
  • Operational Efficiency: Utilizing a single aircraft type and quick turnaround times to maintain low costs.
  • Simplicity and Convenience: Open seating policies and frequent, direct flights from secondary airports.

However, recent strategic shifts indicate a departure from these core principles:

  • Introducing Checked Bag Fees: Southwest announced it will start charging for checked bags on flights booked on or after May 28, ending its longstanding “Bags Fly Free” policy. This change aligns Southwest with its competitors, which have long charged for checked bags and basic economy fares.
  • Leadership Changes Under Investor Pressure: Activist investor Elliott Investment Management acquired a significant stake in Southwest and has been pushing for leadership changes and strategic shifts aimed at boosting short-term profitability.
  • Cost-Cutting Measures Impacting Culture: The airline’s decision to lay off 15% of its corporate staff has raised concerns about eroding the unique company culture that has been integral to its success.

These changes, driven by financial pressures, risk undermining the very attributes that have endeared Southwest to its customers. By prioritizing immediate cost reductions over the holistic value offered to passengers, Southwest may be compromising its brand identity.

The Takeaway: Upholding Core Values Amidst Change

Both Starbucks and Southwest Airlines illustrate the delicate balance between operational efficiency and maintaining a brand’s core identity. Starbucks, having recognized the drift caused by necessary adaptations during the pandemic, is actively working to reclaim its “third place” experience. Southwest, however, appears to be veering away from its foundational principles under external financial pressures.

Brands that endure and thrive are those that stay true to their core values, even while adapting to changing circumstances. They understand that while cost management is essential, it should not come at the expense of the unique value that defines them. As the adage goes, focusing solely on costs without appreciating true value can lead to decisions that, while financially sound on paper, ultimately harm the brand’s essence.=

Next Steps: Strengthening Your Value Proposition

Think about your company’s biggest challenges:

  • Does your value proposition feel vague or undifferentiated?
  • Are you struggling to align your product, brand, and customer experience?
  • Have recent changes in the market left your brand feeling disconnected from its core?

If you answered yes to any of these, it’s time to rethink your value proposition. Chapter 4 of Upstream Marketing outlines a proven framework for designing and aligning value propositions that resonate, differentiate, and drive long-term growth.

Get Started With Free Upstream Marketing Resources

At EquiBrand Consulting, we help businesses craft compelling, customer-centric value propositions. Whether you need to refine your positioning, enhance differentiation, or better connect with your audience, we provide the tools and insights to make it happen.

To jumpstart your efforts, we’re offering free access to:

✅ A downloadable presentation outlining our upstream marketing framework.
✅ A free chapter from Upstream Marketing all about value propositions and brand alignment.

Access your resources today and start building a stronger brand.