Starbucks: A social commerce success driven by market

#SocialMarketing #SocialCommerce #MarTech #Starbucks #SocialCRM

Every time I pick up a Grande` from Starbucks, the company’s entire business history with a steep graph of both failures and successes comes to my mind.

Starbucks was a $1 billion company in 2004 and was reduced to almost half of its business the very next year. By efficiently integrating the social and physical worlds, it turned around ts sales to $1.4 billion in 2010 and a whopping $24.7 billion in 2018.

I was extremely intrigued by their story, and an in-depth study of their business processes with respect to Marketing, Technology and Management gave me a clear idea of how and why social commerce is and should be an inevitable part of any business. Only with seamless integration of the three, the potential success can be achieved. I want to share some of the lessons I learnt in this case. 

 Social Media MARKETING: An early on realization and Cashing on Online marketing.

One of the first online campaigns that made Starbucks primarily a customer-centric company was the ‘My Starbucks Idea’.

It was an active community of customers, employees and target market where they could all ask questions, give suggestions, collaborate, comment or even complain about their experiences with the company.

This was an unprecedented idea of how a company could take CRM to another level. Another way that this portal worked as a catalyst to the growth of the company was that the company took the ideas and suggestions very seriously. The super successful and customer-hooking reward card system and paper cup recycling were a by-product of this portal. These ideas were under serious analytics, and the results were published on the ‘Ideas for Action’ blog. The company also started rewarding the customers with huge cash prizes if their idea on a particular campaign was selected. This kept the buzz alive on the Internet, and the sales just kept rolling up.

Facebook was the first and the most effective way that the company used for starting its online presence and engagement. The company makes sure that it provides the best online marketing communication experiences to its customers on the fan page and levels it up by integrating the same for the mobile landing pages as well.

The company maintains an excellent presence on LinkedIn and Twitter as well. Every time a new campaign, promotion, company update or contest is launched, it is seen by its current 11,906,095 followers on Twitter! LinkedIn engagement is also parallelly built by sharing business data and reports, employee profiles and current job openings. A couple of years back, they misspelt names on the Starbucks cups became an Internet sensation. What a brilliant viral post strategy!

The TECHNOLOGY edge

Starbucks is essentially a tech-savvy company. Their entire marketing efforts are backed up by technology giants such as Yahoo (back in 2000s) and Google (currently). When a customer enters a store, he gets access to not just free Wi-fi but also to all Starbucks digital networks.

Now, the company also uses Microsoft technologies to create an even more personalized customer experience by using technologies like blockchain and Cloud computing.

The extent of the technological support to building up and maintaining the brand can be accessed by the fact that the customers on the Starbucks app receive tailor-made suggestions for food and drinks based on their order history, store inventory, popular selections, and even the weather and time of the day! In the backend, it is done using the reinforcement learning platform that is built and hosted in Microsoft Azure.

Another groundbreaking technological integration in the business was the development of the tech-abled drive-throughs in some of their stores. This included the development of centralized network operations for menu board configuration and management, digital instrumentation of the drive-thru lanes and access to the loyalty payment platform. This resulted in an average 20% lift per ticket in the baristas and an approximate $400 million lift in the company’s revenue.

Clearly, Starbucks is a winner at CRM.

In a small personal experiment, I asked a few of my colleagues if they have the Starbucks app installed on their smartphone. It didn’t come to me as a surprise that eight out ten said yes, and one of them was not a coffee fan. Clearly, coffee is synonymous with Starbucks for most of us. The company handles its customer relationships very seriously, systematically and sensitively. Recently the Marketing magazine stated that Starbucks is not only a leader when it comes to effective loyalty programs, but it also used it well to increase its profits. Company’s customer acquisition is on point, with more than 6.2 million gold members out of a total of 10.6 million loyal program users. It is well known that a customer can use the stars earned for free food and drinks, which in turn brings in more sales and leads to a virtuous cycle of happy customers and happy company. Satisfied customers resulting in a positive image of a brand is the best possible method to gauge the success of a company. According to theory, Customer profitability is the last objective of a successful CRM strategy, and without a doubt, the company aces at it too.

As evident I am completely sold on the best possible balance of Martech and management, and have implemented some measures of my own, but I will keep that for the next time. Meanwhile, I would love to hear from you on your personal social commerce experiences in the comments below.