Growing the Connection Through Technology
Information technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without talking about the other.
BILL GATES
In a 2012 Time magazine survey, people were forced to choose one item to take to work: their wallet, their lunch, or their mobile device. The result: 66 percent chose their mobile device over their lunch, and 44 percent chose their mobile device over their wallet. In the same study, 68 percent of adults report that they sleep with their mobile phone next to them, and 89 percent say that they couldn’t make it through a single day without using their mobile device.
In my 2006 book The Starbucks Experience, I spent little time talking about technology or the future of mobile communication and interconnectivity. Instead, I shared how Starbucks leaders positioned their coffeehouse as the “third place,” an environment that provided a desired alternative to customers’ first place (home) and their second place (work). In the intervening years, Starbucks leaders have widened their focus to engage customers in the first and second places (more on that in Chapter 9), as well as to innovate connections in a mobile world that essentially encompasses all the places where customers find themselves other than work, home, or Starbucks stores. While I was discussing this evolution with Howard, he shared, “We started out before there was a digital revolution; the third place was our stores. Our mobile focus has evolved to the point where everyone is getting primary information and communicating in a way that was nonexistent before. I don’t think any enterprise or organization can exist in the future without having a primary relevant position in the minds and hearts of people through these mechanisms, whether it is technology or software. I think we are off to a very good start, but we also recognize it could be fleeting. As such we must continue to make the investments and understand what is relevant. Many brands will come and go in terms of relevancy and trust in the digital world, as trust and relevance will be harder to maintain digitally than through a physical presence.”
Starbucks has become a recognized leader in digital platforms, social media engagement, and innovation. For example, Starbucks was selected by Forbes as one of the top 20 innovation companies in 2011 and was recognized by General Sentiment’s QSR MediaMatch report in 2012 as having the highest impact value ($111 million) among the quick-service restaurant sector. Impact value assesses the reach of a brand and determines a monetary estimate based on the broad discussions and overall exposure garnered by a company. Additionally, the Starbucks Card mobile app received the Wireless Application and Mobile Media (WAMM) award as Best Retail, Shopping and Commerce Application in 2011.
At the core of Starbucks successful digital strategy are several interrelated areas that all business leaders should consider when they are attempting to connect with customers from the broad mass market to the one-to-one. The five key components of this digital strategy are (1) commerce, (2) company-owned web and mobile channels, (3) loyalty/customer relationship management (CRM)/targeted database, (4) social media, and (5) paid digital marketing.
One of the largest components of Starbucks current mobile strategy is anchored to commerce and connects through the Starbucks Card. Even before Starbucks initiated the loyalty card program discussed in Chapter 6, the leaders had created a Starbucks gift card. To understand the dimensionality of the card business, let’s assume that you buy a $10 Starbucks Card as a gift for a friend. Your friend can use the $10 and simply throw the card away. Alternatively, he might add value to the card while he is in a Starbucks store and continue to use it as a prepayment card. Finally, he may register the card online (thus becoming part of the Starbucks loyalty program). Once the card is registered on the Starbucks website, your friend can either manually or automatically replenish the Starbucks Card from a credit card that he places on file or add value to the card at the register. Given these options, the Starbucks Card itself represents a multibillion-dollar business, with half of Starbucks Card customers using it solely as a gift card and the other half using it as their own loyalty and prepayment mechanism.
As of January 2011, customers in the United States with an iPhone, iPod touch, or BlackBerry were able to download the Starbucks Card mobile app, add their Starbucks Cards, track rewards, and reload their cards through either PayPal or a credit card. Subsequently, Starbucks enhanced the app’s capability to include phones with Android-based operating systems, merged it with an existing app so that it includes a store locator and other features, and expanded its availability outside of the United States. Adam Brotman, chief digital officer, offers a sense of the importance of these enhancements and the challenges involved in them: “It was hugely important for us to extend our mobile pay app to Android and integrate functions of our existing apps into one seamless app experience. Android took off fast as we were developing our original iPhone and BlackBerry apps, so we worked as quickly as possible to produce a well-integrated app for this exploding population of mobile phone customers.”
Through these efforts, Starbucks leaders produced a complex, yet easy-to-use, mobile payment and social app that also offers a rich value-added experience for Android and iOS mobile platforms. From the standpoint of ease of mobile payment, a customer simply selects “touch to pay” and positions her phone for a Starbucks barista to scan. In addition to ease of payment, customers can track purchases and see their progress toward rewards, receive messages in a mobile inbox, garner information on food and beverages, and select e-gifts.
The Starbucks mobile app was the first widespread mobile payment program of its kind in the United States, and it reflects the leadership’s willingness to take a practical and innovative step into the mobile arena. Starbucks leaders did not attempt to declare a technical standard in mobile payment, as they believed that future standards would probably emerge from credit card companies working with businesses like Square, Google, Amazon, PayPal, Microsoft, and Apple. Instead, Starbucks leaders took a pragmatic and adaptable approach, utilizing the most readily available technology at the time—the 2D barcode. As part of a large-scale upgrade of the company’s Point of Sale system (POS), Starbucks leaders purchased 2D scanners and integrated them into the POS.
After extensive testing prior to the initial launch, Adam Brotman notes, “Mobile pay is the fastest way to make a purchase at Starbucks. Not only is the transaction quick but the line isn’t slowed down with customers reloading their cards. It’s better for everybody. Our customers are voting with their hands and they want mobile payment.” Within approximately a year and a half of starting to accept mobile payments, Starbucks had captured more than 100 million transactions, and by late 2012, it was capturing more than 2 million mobile payment transactions per week. Adam adds, “Mobile pay is accelerating, but we also realize that not every customer is going to be a member of our loyalty program. Not everyone is going to have a Starbucks Card and want to pay with it.” Although Starbucks Card transactions are 25 percent of Starbucks tender, leaders wanted to give customers more choices. In essence, they wished to reach a larger segment of their customer base through the mobile momentum that they achieved with their mobile payment app. As a result, they looked for a mobile wallet that would give customers the ability to make purchases directly from a debit or credit card using their mobile device.
In August 2012, Starbucks announced a strategic alliance with and a $25 million investment in Square Inc. to achieve a mobile wallet solution. Square gained widespread attention in 2009 when it launched a mobile credit card capture solution geared primarily to small business owners. That solution involved placing a small credit card capture device into the headphone jack of an iPhone. Square’s leadership in mobile payment technology served as the foundation for the Starbucks leadership’s choosing Square’s existing wallet software for expanded use in Starbucks stores. Curt Garner, Starbucks chief information officer, notes, “There are a large number of Starbucks customers who pay with traditional credit and debit cards. That may be because their visit frequency is low or they prefer not to use prepaid cards. Square is an option for those people so that they can enjoy the convenience of mobile and all the benefits of tracking their purchases, along with getting digital receipts. Additionally, their mobile wallet provides a directory of businesses near them that accept mobile pay tender on their platform.” At full functionality, the Starbucks and Square collaboration is expected to utilize geotracking technology that will facilitate not only mobile payment but mobile ordering as well.
Within three months of the announced alliance between Starbucks and Square, the Square Wallet mobile payment option went live, with initial mobile payment benefits at 7,000 company-operated U.S. Starbucks stores. At the time of the launch, Marcus Wohlsen, a staff writer for business at WIRED magazine, predicted that a mobile payment revolution would be initiated at Starbucks: “Because of its openness and seamless approach, Square at Starbucks is better positioned than any other technology to become the gateway drug that could finally make mobile payments mainstream…. Paying with Square at Starbucks is simple. People will start using it because of little perks like getting your receipt via text. Soon you’ll also be able to add a tip just by tapping. Multiply that usage by even a few dozen customers at each of 7,000 Starbucks stores, and the network effect starts to ripple. You use Square next at a merchant nearby because you see it in the app. Merchants near Starbucks start using Square to get into the directory. A virtuous cycle ensues, and Square—which is to say your phone—becomes just another way you pay.”
Both the Square Wallet and the Starbucks Card mobile app afford customers convenience in the purchasing process. These apps also provide valuable information to customers. In the closed-loop system of a loyalty program (one where you can track the effectiveness of marketing efforts through the sales information obtained during loyalty card or loyalty app use), a merchant can also learn from and refine its offerings for its customers. Adam Brotman, Starbucks chief digital officer, gives a specific example of the power of integrating customer analytics, customer relationship management information, and a targeted database approach. According to Adam, there are more than 10 million members in the Starbucks loyalty program, of which about 5.5 million have opted in to receive communications, marketing messages, and offers from Starbucks. On average, those 5.5 million opt-in customers receive a weekly e-mail from Starbucks (although the frequency is higher for those who purchase merchandise from the StarbucksStore.com website and separately opt in for communications through that platform). The frequency of e-mails also tends to increase around the holidays.
Adam addresses the targeted nature of these e-mails by noting, “We tend to create about five or six different groups of emails so that we can make sure that people get an offering that is highly relevant to them. For example, we looked at our database of My Starbucks Rewards members and isolated customers who buy food regularly. We then started examining other characteristics about this group such as what drinks they were buying, when they were coming in, and other demographic or psychographic variables. We then did predictive modeling by looking at the rest of our My Starbucks Rewards customer database.” In essence, Adam notes that his team found other individuals in the rewards customer database who were similar to the regular food customers in behavioral and demographic characteristics, with one exception: they were not buying food at Starbucks. Adam’s team then crafted a message targeted at these individuals, encouraging them (without making a discount offer) to consider Starbucks food offerings. The e-mail also featured attractive pictures of Starbucks food. Several hundred thousand of these customers who had behavioral characteristics that resembled those of regular food customers received this targeted e-mail. According to Adam, “Customers who received the food email purchased food seven times more often than they ever did before. We had an initial sales lift with a sustained tail effect and this targeted group performed 700 percent better than the control group performed.”
While Starbucks is utilizing data gathering, analysis, and data modeling approaches to better forge relevant messages to and connections with customers, Adam and other leaders at Starbucks readily admit that they are still working to create more tools to automate these processes. Additionally, the leaders are looking for ways to communicate more efficiently and personally into the mobile inbox that is part of the Starbucks Card mobile app. Rather than targeting their communications to traditional e-mail, the future holds great opportunities for Starbucks leaders to send messages through the mobile app, thus utilizing the app as a one-to-one connection platform. Eventually, Starbucks leaders will also be able to personalize the look and feel of the company’s website and mobile app based on their knowledge of the individual user. The Starbucks website and app can be presented differently depending on the characteristics of the customer.
Before we leave our discussion of the capabilities and importance of the Starbucks Card mobile app, let’s take a moment to understand how the app engages customers through “gamification” strategies. Amish Shah, chief product officer of the mobile apps company Bitzio, Inc., describes gamification as “using game-type mechanics in non-game businesses to increase efficiency, customer loyalty and engagement.” As it relates to Starbucks, Amish notes, “Starbucks has incorporated game mechanics and design into its popular loyalty program. Through multiple reward levels and a progression tracker, Starbucks coffee lovers are continually given incentives to engage with the brand.” From a visual perspective, this “progression tracker” takes the form of virtual gold stars falling into a virtual cup on the Starbucks Card mobile app, and it is just one example of the company’s deployment of gamification principles.
Conversations with Starbucks leaders who are involved with digital technology often focus on the mechanics of popular online games. Beyond acknowledging the fun and theatrics of games like World of Warcraft, Zynga Poker, and Rovio’s Angry Birds, common drivers behind the success of these games include factors such as achievement, rewarding frequency, and being able to publicly show advancement. With this awareness, leaders at Starbucks are integrating emotional drivers from game theory into the ways they engage customers through their mobile devices. One example of how Starbucks deploys gamification came in the form of a two-week, seven-round scavenger hunt in collaboration with the American pop singer and song-writer Lady Gaga. Each round involved customers decoding clues by going into Starbucks stores, using mobile QR readers, and visiting Starbucks digital properties and blogs. The scavenger hunt was designed to get customers to want to work in teams and share their experiences. The venture was a win/win for both Starbucks and Lady Gaga, as she released a new album during the hunt and customers gained exclusive access to it on the Starbucks Digital Network. The winners of each round received Starbucks and Lady Gaga prizes. The Starbucks/Lady Gaga marketing and gamification example reflects the power of working with individuals or organizations that have the ability to generate social media interest, followed by welcoming customers to gain special access or playfully interact.
REFLECTION ON CONNECTION
1. How would you assess your success in forging a digital connection of trust and relevance?
2. Do you have a multipronged and integrated strategy concerning digital and mobile solutions?
3. Are you using game-type mechanics to increase efficiency, customer loyalty, and engagement? How can you deploy common drivers behind popular games more successfully in your digital strategy, such as by rewarding achievement or frequency and enabling public displays of achievement?
In many ways, Starbucks, by the nature of its culture, was well suited for social media. After all, Starbucks leaders value emotional engagement and connections with customers and community. Yet in other ways, a full commitment to digital and social strategy took a mind shift for its leaders. For example, Chris Bruzzo, senior vice president, Channel Brand Management, was charged with launching Starbucks in the social space. Chris notes that the social connection is authentic to the Starbucks brand and that coffeehouses by their nature facilitate social meeting networks: “In a sense, coffeehouses have served as the original social network. That said, Howard called me around Christmastime in 2007 and shared, ‘We need to be in the social and digital space. I know people have been giving me that message for a while, but now we’ve got to move. We are struggling to hear our customers, and we must address this digitally.’ Howard propelled us to launch the My Starbucks Idea customer idea site in 2008, and shortly thereafter to move into Twitter.”
In Chapter 3, I shared the benefits of the MyStarbucksIdea.com site from the perspective of hearing the voice of the customer. It is important to note that the site has also helped change the Starbucks culture in a way that is necessary for future social media success. Prior to the customer idea site, messages to and from customers were mainly routed through the brand communication division at the Starbucks Support Center. My Starbucks Idea created a much broader and more immediate dialogue between customers and Starbucks subject-matter experts. Against that backdrop, Starbucks could next launch onto the highly interactive microblog platform of Twitter. Chris Bruzzo notes that Starbucks Twitter (@starbucks) launch was greatly aided by having the right person approaching the right leader at the right time: “This young technical guy knocked on my door one day and said, ‘Chris, I want to grow and I want to help develop the business through social. I think Twitter could be the place.’ This was before Twitter was a well-known concept, and frankly, I didn’t fully appreciate what it had to offer or how it would effectively work for us. But since this partner had a background as a barista and he envisioned Twitter as a ‘way to extend the barista connection online,’ I thought we should give it a chance. Starbucks engaged Twitter before any other social media thanks to that partner because he perceived it to be the place for brands. Facebook was not getting a great deal of traction for companies at the time. On the first day the account was created, Starbucks had 600 followers; 1,500 the second day. Starbucks has over 3 million followers as of mid-2013.”
From the perspective of outside analysts, the Starbucks approach to Twitter is praised on the basis of its direct engagement with customers and responsiveness to customer service issues. Kylie Jane Wakefield, writing for The Content Strategist, notes, “Checking out Starbucks’ Twitter page, it’s visible that most of the tweets are directed at users…. In fact, many of its tweets start with ‘sorry about that!’ or ‘sorry to hear!,’ offering dismayed customers solutions to their problems. Instead of losing disgruntled customers, Starbucks directly responds, solving the issues and making sure that customers are, in the end, satisfied…. By responding to customers directly and doing its best to fix the problem, Starbucks shows that it cares about the people who buy its products.” From a social media perspective, Twitter fits well with the Starbucks focus on “uplifting moments” and personal connections. As a result, the Starbucks Twitter strategy is to speak directly with customers as opposed to microblogging “look at us” or marketing-type messages.
While Starbucks had an easy entry into Twitter, the company’s Facebook page required initial groundwork. Alex Wheeler, vice president, Global Digital Marketing, and the first person to be hired to address social and digital issues as part of the Starbucks brand team back in 2006, notes, “It took a little effort for us to establish our official presence on Facebook. In order for that to happen, we connected with the Facebook page owners of about a dozen existing fan pages. All together there were probably about 30,000 fans across those dozen pages. We let those page owners know that we wanted to consolidate their pages to have an official presence. Everybody was very receptive and excited about that consolidation and that was the beginning of our Facebook journey.”
Two of the key elements in the Starbucks Facebook strategy are authenticity and interesting content. Starbucks is committed to making friends, not offers. In essence, the Starbucks social media team wants to generate credible interest, not to give people incentives to follow the company. Using that test, Alex and her colleagues on the social media team have helped steer the Starbucks page away from “baits.” A bait is where you get someone to “like” your page so that he can see additional content.
In addition to authentic and high-quality content, Starbucks leaders seek to deliver frequent and consistent messages. For example, the social media team tweets daily and posts on Facebook with regularity, but not in an overwhelming fashion. Specifically, the team believes that its Facebook feeds should engage the appetite of Starbucks followers without overwhelming them with content. The social media team also reads posts that people place on the Facebook wall and engages with them actively. A significant challenge for this team is managing the scale of activity on these sites. For example, there have been threads that had 30,000 comments on a status update. From a strategic perspective, managing scale is a good problem to have. Twitter posts and Facebook feeds should engage the appetite of your followers without your bombarding them with messages. Twitter and Facebook are about connecting. There are more appropriate settings for selling and closing.
In addition to Facebook, Starbucks has a strong social presence through YouTube, Google+, Foursquare, Instagram, and Pinterest. Also, the company’s employment team has been actively involved with LinkedIn. With regard to YouTube, a marketing content specialist at Pardot, Matt Wesson, notes, “Starbucks is constantly expanding its content channels and exploring new formats to connect with its customers. I believe it is also one of the best companies out there when it comes to the use of video to tell its brand story. The company’s YouTube channel has over 250 videos that focus on the company’s values, give ‘behind the scenes’ insight, and share customer’s personal experiences.”
Despite effective expansion onto new platforms and praise from analysts, forward-moving Starbucks leaders are continuously looking for new ways to innovate their social media strategy. Adam Brotman states, “We are excited about the opportunity to do a lot more with YouTube. When we tell story through video, we’re just as apt to embed those videos into the player on the home page of Starbucks.com as well as embed them within Facebook. So when we connect and tell our story through video, YouTube is only one of several different channels that we’re utilizing. Given the speed of change in the digital space, complacency or a sense of contentment is not an option.” Great leaders continually seek to leverage the options that are emerging through technology and to position their businesses on social platforms more effectively and strategically.
In 2012, PhaseOne, a leading analytical-based marketing communication research firm, conducted a study that looked at 75 top brands across six vertical markets: automotive, dining, food/beverage, retail, services, and technology. In order to assess social engagement, PhaseOne analyzed the brands in its survey by using metrics such as Facebook likes, Klout scores, and Net-base sentiment analyses. The conclusion: Starbucks is the number one brand when it comes to engaging social media users. In discussing this finding, PhaseOne researchers noted, “To achieve this successful social media engagement, Starbucks focused its Web page, Facebook page and television advertisements on the individual and his or her individualized experience with the brand. For example, Starbucks Facebook page engages the visitor by speaking to his or her coffee preferences and personal stories.” While individualized experiences and unique preferences are substantial components of Starbucks social media success, the company also benefits from a thoughtful and respectful approach to each social platform in which it participates. By taking this strategic and methodical approach, Starbucks ultimately draws participants on those platforms toward the brand.
Many companies jump on emerging social platforms with zeal; however, Starbucks leaders take a more calculated approach to entry. Members of the Starbucks social media team examine each new platform opportunity to determine whether there is a fit with the human connection that is the essence of the brand. Similarly, they look at whether they have the resources to engage on that platform effectively while seeking to respect the existing members of the community. Adam Brotman notes, “Considering the level of reach and engagement we have achieved, we are a pretty small team that is very thoughtful about our commitment to an emerging platform. Let’s take Pinterest as an example. It is such a personal platform that we knew we should be there. As it was taking off, we saw a lot of our customers on Pinterest and we were eager to reach and connect with them but we spent about 6 months discussing our launch. Behind the scenes, we were agonizing about not getting on the platform quickly, but we also wanted to do it right. If you get into Pinterest you realize there’s a way to engage and a respectful way to show up. Just like on Twitter, Facebook, and Instagram, there is an authentic approach needed to engage the community and we had to place that into the context of how we honor our brand essence. When we did engage Pinterest with a concept of Starbucks love, we tended to post and pin a lot of things that were not our own. We put considerable thought into the Pinterest boards we put up.” In the context of its “Starbucks Loves” theme, Starbucks pins things like coffee, food, music, and inspiration. As a result, Starbucks boards include “real food,” “coffee moments,” and “inspiring places.” These themes are not only at the heart of the brand but close to the hearts of Starbucks customers.
By building social media connections through individualized experiences, unique preferences, thoughtful platform selection, and respect for the platform community, Starbucks pulls customers to its content, as opposed to pushing marketing material to them. Mark Bonchek, PhD, founder of ORBIT+Co, describes this as creating “gravity.” Mark states, “Where traditional companies push out messages and products, these companies pull customers in. Instead of treating customers as passive targets, they treat them as active participants. Like the sun in a solar system, they create a gravitational field that pulls customers into their orbit. They go beyond customer loyalty to building customer gravity.”
Thanks to this gravity, Starbucks has done what many brands only talk about: translate social media and digital spending into ROI. Alex Wheeler, vice president, Starbucks Global Digital Marketing, notes, “One of the really important moments in our social media journey occurred in 2009 when we did Free Pastry Day. We decided to launch our new food platform through digital only, which was very unusual for us. The question was: could digital and a free food offer drive traffic? On the strength of digital/social, a million people went into Starbucks that day, and we created awareness through about a million and a half pastries.” While it’s one thing to see that many people in a Starbucks store for a free item, the company routinely garners hard data that show digital investment to be an efficient business driver. As Alex puts it, “We have validation of the amplifying effect that digital engagement has on the direct marketing and paid marketing investment.”
On a purely strategic level, Starbucks leaders see both social media and paid digital advertising as playing important roles in creating connections with customers. Paid ads expand the brand’s reach, while social media addresses reach along with engagement, fun, and brand building. Starbucks leaders are building fans and followers through social media and are deciding when to do something in that space that is directed at promotion or at engagement. If leaders are seeking engagement, they attempt to trigger “virality.” Adam Brotman puts it this way: “In social, if somebody likes you or likes your comment, it shows up to their friends, family, and followers. When they retweet you in social, it literally amplifies and magnifies your brand’s reach. The benefit of social is that people are engaging with us. They are telling their friends that they are checking in at a Starbucks, and they are usually telling it on Foursquare and connecting their Foursquare to Facebook or Twitter or Instagram. We integrate paid digital advertising into our social strategy. We take the viral effect of the messages we send into our regular feed and enhance them intelligently by connecting with paid digital advertising in the social space. So when we do promoted tweets and promoted stories on Facebook and Twitter, we efficiently lower the cost of each paid impression and connect with that many more customers.”
Dave Williams, CEO, BLiNQ Media, who likens Facebook to the world’s largest cocktail party, suggests that the goal of the medium should not be to give a hard sell on the platform, but to achieve likes—the equivalent of receiving a business card at the party. Dave notes that the Starbucks approach to the integration of social and paid media is a desirable best practice. “For me, consumer-initiated ads are the future of advertising, not only on Facebook, but across other social networks too. Facebook’s Sponsored Stories—initiated by the consumer, not the brand—is one of the cleverest ways to tap into this data mine. Here the user becomes a brand champion, with micro interactions such as likes, posts, check-ins or apps used relayed to friends and turned into subtle, but promoted content. Starbucks is the obvious brand example here that has utilized Sponsored Stories well, steadily building up its fan base before using the social graph to pick up on discussions around coffee breaks and its various food and drink products, and serving up ads with a social context.”
Given Starbucks thought leadership on social media strategy, I asked Adam Brotman to offer his advice directly to readers like you. His response was straightforward: “I can’t imagine there is a more powerful place than digital when it comes to connecting with your customers, telling your story, or gaining reach. Digital is everything from a website to digital marketing and even loyalty. Square is a great example—for a physical retail merchant, Square gives you the ability to not just have an efficient way to accept credit card payments easily but they’ve created an entire operating system between the small merchant and his or her customers and you can complement that with Twitter and Facebook and a compelling website.” Adam also offered the opinion that every business should have a dedicated person or team that pays attention to community management, brand building, and marketing through digital. If a business is small, those responsibilities might be only part of a single individual’s job description, but they need to be addressed consistently and tactically. Adam suggests that you need someone to “commit time to thinking about the platform that fits your business and customer interface, and not just social media but your own website, your loyalty program, how you use payment as a form of communication, the nature of customer relationship management systems, and how data can guide your marketing and engagement strategy. Whether there are two people or 2,000 people in your business, you have to have a strategy. You can be scalable and customizable, but you must have someone to chart and monitor the course.”
REFLECTION ON CONNECTION
1. How strategic are your decisions concerning the social media platforms through which your brand will engage?
2. Are you looking for ways to measure the ROI and amplifying effects of your social and media strategies? Are you linking paid digital advertising to your social media strategy?
3. Have you dedicated resources to “commit time to thinking about the platform that fits your business and your customer interface, … your own website, your loyalty program, how you use payment as a form of communication, the nature of customer relationship management systems, and how data can guide your marketing and engagement strategy”?
Starbucks leadership has made vast investments in technology, some of which its customers and partners notice, while others operate in the background. The bulk of these capital expenditures targets the delivery of uplifting moments and enhancement of the Starbucks connection. One of the most obvious of these changes was the company’s transition to having one-touch free Wi-Fi in stores. The company’s former chief information officer told me he knew Starbucks was behind the times several years back when he went to the taco truck outside the Starbucks Support Center in Seattle and noticed that the truck was offering one-click free Wi-Fi, but Starbucks was giving customers only two hours of Wi-Fi a day, and only if they registered a Starbucks Card and kept a minimum balance of $5 on it. So in 2009 Starbucks made the investment needed to make Wi-Fi seamless and easy to use. At the same time, Starbucks worked with content partners to create the Starbucks Digital Network, which allows customers who use the in-store Wi-Fi network to access free curated Internet content from various partners. For example, customers can get a Pick of the Week download from iTunes, view local businesses on the Square Directory, scan a local restaurant review, or read a book through New Word City. From premium content to locally relevant information, the Starbucks Digital Network provides added value to enhance the in-store Starbucks Experience.
Another less obvious example of technology being used to improve the in-store connection is a project as mundane yet massive as the overhaul of the stores’ Point of Sale (POS) system to something called Simphony. Curt Garner, Starbucks chief information officer, notes, “To take an order in our old POS, it had to be entered in a particular sequence, with size first and then drink and then any modifiers.” Leaders observed ordering interactions and noticed that even regular Starbucks customers who had actually learned the correct ordering sequence for their drinks occasionally were tripped up. For instance, let’s assume that someone regularly comes into Starbucks by himself, but on a particular occasion is accompanied by his child. The customer says, “I’ll have a double short peppermint mocha, a hot chocolate, an oatmeal, and a turkey bacon breakfast sandwich.” In that stream, the barista would be forced to remember the hot chocolate and not ring it in until she could go back and clarify the size. Obviously such a system placed a considerable cognitive demand on the baristas, distracted them from full engagement, and produced ordering errors. A new customer might come in and give an order that was not in the prescribed sequence; the barista would repeat the order in the way that was necessary to ring it into the POS, but it often sounded as if the customer was being corrected. Curt notes, “From all those observations, the idea of conversational ordering was born. That notion was we would let technology resolve the order of a drink entry. The barista could enter a drink into the system in any order consistent with the customer’s ordering pattern.”
In essence, the computer starts constructing the drink on the screen, and it shows the default part of that recipe in light gray and what needs to be marked on the cup in dark green. Curt and his colleagues anticipated that the conversational ordering aspects of the new POS would be of particular value to new baristas, but they were surprised to find that tenured baristas appreciated the new system as well because it gave them a visual check that they had rung the order in correctly. Curt adds, “We also took advantage when rolling out Simphony, our Point of Sale solution, to do several things from a tech perspective that tried to look around the corner into the future. One was to create a networked solution so instead of having dumb cash registers sitting on a counter disconnected from anything in the enterprise, and then dialing into them once a day to retrieve sales, every single register has an IP address on our network. We are pulling sales from those registers constantly and also sending and receiving information from them continually. The POS architecture allows us to connect with APIs (application programming interfaces) and other routines that enable us to plug and play things like scanners and afforded us a 90-day turnaround time on Square.”
A great deal of technology spend at Starbucks is also occurring on behalf of streamlining communication to those within the organization. As difficult as it is to deliver consistent leadership messages in a small organization, Starbucks leaders have the added challenge of communicating to hundreds of thousands of partners around the world. As a result, Starbucks leadership is constantly working to develop integrated technology solutions to offer options other than relying on very busy store managers to see to it that all messages cascade down.
When asked what the future of technology and digital looks like for Starbucks, Alex Wheeler said it succinctly: “Technology will evolve and people will change, but our mission will guide us. Technology will serve our mission, and we will deploy our strategies to engage our partners and customers wherever they spend their time. We will seek to stay relevant to them and uplift them through human connection.”
Technology is powerful when you view it as a way to enhance the human connection rather than as inevitably leading to impersonalization. In the area of leveraging technology to fuel humanity, Starbucks leaders have produced some interesting and unexpected results, even in other businesses. For example, Jack Dorsey, CEO of Square, discontinued the use of the word users thanks to the Starbucks leadership. According to Jack, Howard Schultz, a member of Square’s board of directors, privately inquired why Square referred to its customers as users. Jack reflected, “The term ‘user’ made its appearance in computing at the dawn of shared terminals…. It was solidified in hacker culture as a person who wasn’t technical or creative, someone who just used resources and wasn’t able to make or produce anything (often called a ‘luser’).” Based on the provocative nature of Howard’s question, Jack noted that Square will replace the word user with the word customer. From Jack’s perspective, this simple word change reflects a shift to a more humanity-based focus on service. Specifically, he notes that Square must stop “distancing ourselves from the people that choose our products over our competitors…. We have customers we earn. They deserve our utmost respect, focus, and service.”
When talking about the word partner in Chapter 5, I said that words matter. Hopefully, the lessons provided here will help you see the powerful “human connection” that you can forge with the help of technology. Technology is not an end unto itself, nor is it something that is provided for technology “users”; it is a tool for serving and connecting with your “people” and your “customers”!
While “brick-and-mortar” connections tend to be terrific opportunities to develop personal face-to-face relationships, most brands today face the challenge of building or extending personal connections outside of a traditional retail building.
Key components of a comprehensive digital strategy include (1) commerce, (2) company-owned web and mobile channels, (3) loyalty/customer relationship management (CRM)/targeted database, (4) social media, and (5) paid digital marketing.
Today, successful businesses look for ways to integrate their digital assets to build online commerce, brick-and-mortar traffic, customer engagement, and consumer loyalty.
Twitter and Facebook approaches should focus on consistent but not overwhelming levels of communication, delivered for the purpose of connecting.
When you consider engaging on an emerging social media platform, you should consider three aspects: Does the platform fit with your brand? Do you have the resources to sustain engagement? Have you spent time understanding how people prefer to interact on that platform?
By building social media connections around individualized experiences and unique preferences, you are likely to pull customers to your content.
No matter what the size of a business, its leaders should designate someone to be in charge of social media strategy.
Technology should serve the mission, not the reverse.
Technology is powerful when you view it as a way to enhance the human connection rather than seeing it as inevitably leading to impersonalization.
Technology might be something that you should not view as being provided for “users,” but instead should see as a tool for serving and connecting with your “people” and your “customers”!