Starbucks’ Killer Social Media Strategy

“Social networking is not about farming followers, it’s a way of cultivating relationships.”

– Hubspot

“Starbucks is now banning smoking within 25 feet of its stores. It will get even worse for smokers once they realize every Starbucks is about 25 feet from another Starbucks.”

– Jimmy Fallon

Starbucks is a very socially engaged company. In March 2012, U.S.-based Starbucks Corporation was adjudged the most socially engaged company in a study conducted by PhaseOne, an advertising research firm. Dachis Group’s Social Media Index currently ranks Starbucks as the 36th most effective company in social media in the U.S. (ranking consulted on August 19th 2014, Figure 1). One key success factor is that Starbucks does not treat social media as a marketing channel but as a consumer-relationship building environment.

Despite all its successes, starting in 2007 Starbucks saw a slowdown after years of growth (Figure 2). The main culprit for the situation was the economic situation in the U.S. which made consumers cut back their spending in the small indulgences that Starbucks provides. In 2008, Howard Schultz became CEO once again to turnaround the company. He announced sweeping changes which included closing underperforming stores and stated that the company’s comeback would be based largely on customer experience and innovation. As part of this new strategy, the company made a significant investment into social media in order to reconnect with customers.

Social media enhances the customer experience and improves customer interaction. Starbucks’ social media strategy is guided by ten main principles:

10 guiding principles of Starbucks’ social media strategy:

Listen;

Be transparent;

Use authorities;

Be human;

Share timely information;

Offer personal attention;

Be humble in replies;

Don’t preach;

Give fans access;

Don’t spam users.

It has a dedicated social media team forming a cross-functional, centralized group. In 2008, several additions were made in an attempt to improve customer’s experience: the introduction of semi-automatic espresso machines that allowed baristas to make eye contact with the customers, complete reinvention of brewed coffee in-store, introduction of the loyalty program, the strengthening of Starbucks’ relationship with Conservation International, and the launch of MyStarbucksIdea.com, marking Starbucks’ entry into the social media arena.

According to Shultz [1], there are key reasons that help to explain Starbucks’ social media marketing success.

Customer relationships

Instead of solely focusing efforts on acquiring new customers, Starbucks cultivates its current relationships. The ongoing relationships ensure more fans and followers in the long run, as well as the continued existence of brand advocates. These relationships are cultivated both physically (by providing a great in-store experience) and digitally (with online engagement) and emphasize the importance of customer service. Through Facebook, Starbucks does not try to sell any of its products directly, but use it to inform customers about new products, services, activities, etc. The fifth-largest brand on Facebook, with 34 million fans, Starbucks trails only Coca-Cola, Disney, Red Bull and Converse, according to SocialBakers.com [2].

starbucks-concept-store

Going to its customers

When Starbucks takes a photo, it shares it on Instagram, posts it to Facebook, tweets it on Twitter, and pins it on Pinterest. Starbucks goes digitally where its customers like to hang out. Each channel provides the opportunity to reach a new audience, increase visibility, and reinforce existing relationships. The free in-stores Wi-Fi allows to combine the online and in-store experiences.

Customer engagement

Starbucks believe in letting engagement and conversation occurs as naturally as possible. They are listening, engaging, and making the adjustments. It engages customers with campaigns such as challenging them to hunt for new advertising posters in six U.S. cities and be the first to upload a picture of them on Twitter, in exchange for gift cards. Another example is an online game where the new Pumpkin Spice Latte would be sold in the city of the winner one week before it would be introduced in other cities.

Encourages sharing

Happy customers are eager to share good experiences and offers. For example, the Starbucks frequent promotions like “buy 1 get 1″ garner an extraordinary amount of engagement on social media through comments, “likes,” and shares.

Evolution-Logo-Starbucks

MyStarbucksIdea

MyStarbucksIdea is an online community based on crowdsourcing where customers and employees can make suggestions and ideas for new products, improve products and services, and enhance the Starbucks experience. People can comment and vote on suggested ideas. The focus is on open dialogue and collaborative environment. All the submitted ideas are considered. A blog showed how the selected ideas were being implemented. Starbucks also explained why some of the ideas were not implemented.

The campaign was highly successful and remains one of the gold standards in crowdsourcing. MyStarbucksIdea has welcomed more than 150,000 ideas from customers, leading to the implementation of 277 new innovations for Starbucks [3] (Figure 3). The site is at once a crowdsourcing tool, a market research method that brings customer priorities to light, an on-line community, and an effective internet marketing tool [1].

Experience customization and empowerment

Starbucks provides a unique customer experience. Customization is achieved through programs such as MyStarbucksRewards or MyStarbucksSignature [4] [5]. The former is a rewards loyalty program. The latter is a site which enables customers to create their own personal drinks, name them, and share them with their friends. The site can also show you the drink’s nutritional information. Starbucks also has localized store experiences, although this aspect was somewhat slightly loss in its rapid expansion. Their social sites, in particular Pinterest and Instagram, encourage users to share their Starbucks moments—whether it be the return of a favorite holiday drink or just an artsy coffee cup shot. Through Twitter, Starbucks connects with each of the customers individually, answering their questions and retweeting what they were telling about Starbucks. With web pages featuring interactive content like the “What’s YOUR Everylove story” and “Do YOU prefer Starbucks Blonde Roast, Medium, or Dark?”, Starbucks taps into visitor’s desires for individualized experiences that appeal to their unique preferences.

starbucks-lg-01

Taking a stand and having a mission

Starbucks’ mission is “to inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.” They believe lifting customers up will lead to more customer loyalty [1]. Starbucks give consumers a charitable reason to buy its products by associating itself with charitable endeavours. They know their customers and pay attention on how their brand can fit into trending topics. Facebook’s videos show details of how Starbucks source its raw materials and its Fair Trade practices. They post pictures of Schultz’s visits to coffee plantations in Rwanda and staff involved in voluntary charitable activities. Starbucks also promote green initiatives through Facebook like giving free coffee to customers bringing their own cups, or sharing a part of sales on the World AIDS Day with charities. In early June 2013, the company offered a free tall brewed coffee to customers who made a donation to help storm victims in Oklahoma, spreading the word via Facebook [6].

Despite all its success, Starbucks faces a number of challenges. An important one is the commoditization of the brand: the rapid expansion has diluted the brand and lessened the original experience. Stores feel like mass chain stores rather than offering the warm feeling of neighbourhood cafés. Also, Starbucks opened so many stores in close proximity to each other that they cannibalized each other’s sales.

Another challenge is that the chain can be adversely affected by recessions, and was hit hard during the Great Recession since customers were unwilling to pay a premium for a coffee at Starbucks. Finally, Starbucks faces increased competition from small specialty coffee shops and large chains, the likes of McDonald’s and Dunkin’ Donuts in the U.S. and Tim Horton’s in Canada.

We can only applaud Starbuck’s digital media strategy. They are a market leader in social media and constantly redefine best practices in the field. I believe that innovation and customer experience will help to fight off commoditization and competitors by diversifying the offering and by providing a premium experience. A more diverse offering will also help to stabilize revenues and allow the company to be less affected during economic downturns.

Some Ideas and Food for Thought

Growth and Innovation

Starbucks should continue to focus on growth and innovation. This shall be achieved in terms of markets, products, and social media. Store growth resides mostly in emerging markets where strong demand and growth opportunities lie. According to Wikipedia, there are 25 countries that have higher coffee consumption than the U.S [7]. China’s coffee consumption is increasing [8]. As is the case with the Japanese, Chinese people live as extended families in small houses. This means that there is a strong demand for Starbucks as a “third place” [9]. Starbucks could also test the enterprise segment by installing automated espresso machines in companies and supplying the Starbucks beans.

Starbucks-Frappuccino

In terms of products, Starbucks could augment its consumer products segment. This would allow the company to be more resilient during economic downturns. One such example is the relatively new and successful introduction of the VIA Ready Brew instant coffee [10]. Starbucks should continue to research and develop innovative products, like smoothies, fruit juices, energy drinks / shots, and diversifying its food items offering. It could also investigate the possibility to license the Starbucks brand to create consumer retail equipment like coffee makers and espresso machines.

In terms of social media, Starbucks should continue to innovate and stay at the forefront of technological changes and trends. It should create a small committee that would be in charge of monitoring new trends in digital marketing and social media in order to adapt quickly and retain its key strength of being where the customers are. Starbucks should have a strong focus on the Millennials segment who leads demographic spending on restaurant food and drinks.

397px-Latte_at_Doppio_Ristretto_Chiang_Mai_01

Customer Experience

Starbucks could provide free and voluntary latte art training to baristas. The resulting drinks would enhance customer’s experience and feel like more personalized drinks made in small coffee shops. Another possibility is to explore the development of a sub-brand for the premium market, as the Starbucks brand becomes more commoditized. Starbucks already uses the Seattle’s Best Coffee brand for a more working class positioning [12]. Starbucks also need to work on its Corporate Social Responsibility. Especially, it needs to pay its just share of corporate taxes [13] to avoid creating a backlash from consumers which could be amplified with social media.

Starbucks stores should regain the warm feeling of neighbourhood stores. I believe that a great example to follow here is Lululemon Athletica. Lulu personalizes stores by empowering store managers to customize and give a neighbourhood soul to their stores. They have a great degree of autonomy and send constant feedback to management about how to improve products and store experience. Store managers are empowered to act as small business owners. The stores also provide brochures and information relating to the community in which it operates (in Starbuck’s case it would be the Wi-Fi portal). Each store should be more unique and adapted to its location [11].

For Starbucks, there is a huge opportunity to strengthen and integrate the national stores footprint with the social media networks that they have developed. Starbucks Wi-Fi portals could provide community-specific information and be managed at the store level. Social media presence for local stores should also be encouraged. This would strengthen the small and local community feel and fight the mass chain stores perception. Starbucks should be the go-to place for hosting community meetings, social clubs gatherings, book clubs get-togethers, students’ group meetings, etc. To strengthen this, it could provide an app to organize and invite attendees and reserve in-store area.

Appendix

social media index

Figure 1. Starbucks Corporation’s Social Business Index as of August 19th 2014. Source: http://www.socialbusinessindex.com

store growth

Figure 2. Starbucks stores growth. Source [14]

MSI%20Infographic%20FINAL

Figure 3. MyStarbucksIdea.com – Celebrating 5 years of inspiring ideas that have made us better infographic. Source: Starbucks Corporation.

starbucks_map_version2_large

Figure 4. U.S. Starbucks store counts per capita. Source: http://en.ilovecoffee.jp

References

[1] Shoultz, “Starbucks Marketing Strategy … Making Social Media a Difference Maker,” Digital Spark Marketing, [Online]. Available: http://www.digitalsparkmarketing.com/creative-marketing/social-media/starbucks-marketing/. [Accessed 24 June 2013].
[2] Allison, “Starbucks brews fans, sales via social media,” The Seattle Times, 3 June 2013. [Online]. Available: http://www.dispatch.com/content/stories/business/2013/06/03/starbucks-brews-fans-sales-via-social-media.html. [Accessed 28 June 2013].
[3] “Starbucks Celebrates Five-Year Anniversary of My Starbucks Idea,” Business Wire, 29 March 2013. [Online]. Available: http://www.businesswire.com/news/home/20130328006372/en/Starbucks-Celebrates-Five-Year-Anniversary-Starbucks-Idea. [Accessed 22 June 2013].
[4] Beirut, “My Starbucks Signature: An Experience You Don’t Wanna Miss!,” ThoughtPick, 7 June 2011. [Online]. Available: http://blog.thoughtpick.com/2011/06/my-starbucks-signature-an-experience-you-dont-wanna-miss.html. [Accessed 24 June 2013].
[5] Braccini, “My Starbucks Signature,” Crowdsourcing.org, 27 April 2011. [Online]. Available: http://www.crowdsourcing.org/site/my-starbucks-signature-/wwwmystarbuckssignaturecomstep00/3778. [Accessed 24 June 2013].
[6] Mansfield, “5 Retailers nailing social media,” Retail Digital, 22 June 2013. [Online]. Available: http://www.retail-digital.com/online_retailing/5-retailers-nailing-social-media. [Accessed 26 June 2013].
[7] “List of countries by coffee consumption per capita,” Wikipedia, [Online]. Available: http://en.wikipedia.org/wiki/List_of_countries_by_coffee_consumption_per_capita. [Accessed 26 June 2013].
[8] J. Holstein , “China’s New Obsession: Coffee,” The Atlantic, 28 August 2012. [Online]. Available: http://www.theatlantic.com/sponsored/connections/archive/2012/08/261342/. [Accessed 27 June 2013].
[9] Mourdoukoutas, “Starbucks And McDonald’s Winning Strategy,” Forbes, 25 April 2013. [Online]. Available: http://www.forbes.com/sites/panosmourdoukoutas/2013/04/25/starbucks-and-mcdonalds-winning-strategy/. [Accessed 26 June 2013].
[10] O’Leary, “Starbucks Brews Success With Via,” Adweek, 6 August 2010. [Online]. Available: http://www.adweek.com/news/advertising-branding/starbucks-brews-success-103004. [Accessed 27 June 2013].
[11] Handley , “Starbucks wants bespoke design for every store,” Marketing Week, 26 June 2013. [Online]. Available: http://www.marketingweek.co.uk/news/starbucks-wants-bespoke-design-for-every-store/4007167.article. [Accessed 27 June 2013].
[12] “Seattle’s Best Coffee,” Wikipedia, [Online]. Available: http://en.wikipedia.org/wiki/Seattle’s_Best_Coffee. [Accessed 27 June 2013].
[13] F. Presse, “Starbucks Pays UK Corporation Tax For First Time Since 2008,” Huffington Post, 23 June 2013. [Online]. Available: http://www.huffingtonpost.com/2013/06/23/starbucks-uk-corporate-tax_n_3486612.html. [Accessed 27 June 2013].
[14] Bhardwaj, “Starbucks: Onwards VIA China,” Guru Focus, 15 May 2012. [Online]. Available: http://www.gurufocus.com/news/176720/starbucks-onwards-via-china. [Accessed 22 June 2013].
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