Starbucks: Social Media Revenue Based on Relationships

The Challenge: How can brands turn their social media fans into revenue? For Starbucks, success through social media begins with a commitment to relationship-building, not sales.

Many companies concentrate social media efforts on getting as many fans as possible, but focusing just on the number of fans misses their true value - they are loyal customers who have raised their hands to say they want a relationship.

The real win is achieved by engaging with customers. An Ad Age study found that only 1% of the Facebook fans of major brands engaged with the brand pages in a given month. One-time promotions to increase the number of fans rarely produce long-term benefits. IBM's Yunchun Lee writes, "That isn't to say that CMOs shouldn't strive to build a fan base. The issue is how to do this in a productive way. There are no short cuts. Winning a loyal customer begins with matching a great product or service with a flawless and repeatable customer experience." Social media marketing requires a long-term commitment to enriching the customer experience.

Starbucks is a great example of a company taking the right approach. In an interview with Adweek , Starbuck’s Alexandra Wheeler said that the firm’s social media strategy “isn’t a marketing initiative. It isn’t a PR initiative. It’s cultivating and creating great consumer value and great consumer relationships.” Starbucks treats its fans to a steady stream of special deals and a richer experience than they’d get solely by going to a store, including interesting background stories on coffees and great photography of merchandise. Starbucks also encourages fans to share all of this with their friends, which spreads the good will and increases the likelihood that posts will appear more widely in newsfeeds.

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The results?

1. Starbucks continues to add 300K+ fans every week to its already huge 33 million strong base on Facebook. It also has over 3 million followers on Twitter.

2. According to a joint study by comScore and Facebook, Starbuck organically reaches more non-fans than fans with its posts on its Facebook brand page. This means that fans engaging with or forwarding content more than doubles the reach of the fanbase – a process Facebook calls amplification.

3. The same study also shows that exposure to a Starbucks post leads to 38% increase in in-store purchases.

Key Takeaways for Marketers

1. Don’t just add fans, build a genuine connection with them.
Although a large fan-base is valuable, it should be based on a genuine connection with the brand. Make it a long-term strategy to identify why consumers love your brand and use social media to build on this.

2. Make engagement worthwhile.
Deliver content that fans want and will forward to others. Great photography, stories about coffee, exclusive deals – even taking a stand on controversial issues -- are ways Starbucks does this.

3. Use the brand page as a listening tool.
Fans give invaluable information with their likes, comments and user-generated content. Respond to any complaints, or proactively offer solutions as customer needs arise.

Starbucks: Using Online to Enhance Bricks and Mortar

The Challenge: As e-commerce grows in popularity, brick-and-mortar retailers are finding themselves losing more and more sales to online outlets like Amazon.com. But how are some of the most successful brick-and-mortar retailers holding their own against online retail?

According to STORES’ list of the largest U.S.-based retailers, Amazon.com has outperformed most brick-and-mortar retailers to rank 15th in the nation, establishing itself as America’s fastest-growing retailer. Like many successful online retailers, the website achieved success via competitive prices, fast shipping, and personalized offers that leverage a considerable customer database. So how are brick-and-mortar retailers fighting back? By using technology to upgrade customer service and create the same convenience in-store.

Mobile point of service

Retailers are equipping sales forces with smartphones and apps that allow them to reprice items, check inventory for customers, and conduct sales transactions on the spot. This spells a potential increase in employee efficiency and customer convenience at every point of contact. Lowe’s, in particular, has taken this method to heart, distributing iPhones to all 42,000 of its employees,

Precision Retailing

Precision Retailing is a customer service solution created by SAP that anticipates customers’ wants and gives them personalized discounts and offers at the appropriate time. This is accomplished by gathering multi-channel customer data and applying a system of predictive analytics. The technology allows stores to personalize shopping for customers in-store by sending mobile coupons and suggestions to their smartphones as they shop, and rewards customer loyalty by offering discounts based on their most frequent purchases.

Mobile Payments

Starbucks is a mobile payment pioneer, with over 70 million mobile payments made through their app since January 2011. But in addition to the existing Starbucks-exclusive payment app, Starbucks is expanding to support the multi-business Square Wallet app. The Wallet will allow customers to use the Square directory to find Starbucks locations, and will eventually add the ability to tip via smartphone, which will allow Starbucks and other businesses to measure customer satisfaction in real-time.

Key Takeaways

1. Customer service is key
Customers buy from online outlets because it’s often more convenient than dealing with their offline equivalents. Information is easier to come by, product comparison is simpler, and transactions are easier to conduct. The businesses above have shown that if you can streamline those processes offline, you can be competitive with online outlets.

2. Upgrade your sales process.
Regardless of how good an employee is, they can’t be everywhere at once. Arm them with the technology they’ll need to do their jobs to the best of their ability. The more efficiently they can accomplish their tasks, the better they can help your customers at each touchpoint on the purchase path.

Starbucks - 3 Twitter Best Practices

Twitter can help your business get closer to its customers ... create better word of mouth and greater brand advocacy ... and generate great ideas from engaged fans. How? Start by learning from the best practices used by companies that have been successful with Twitter.

Start by learning from Starbucks. When a national brand accumulates nearly two million followers on Twitter, its social media strategies are worth examining. The Seattle-based coffee giant is currently ranked as the fourth most popular corporate brand in this space. (By way of comparison, General Motors has 44,000 Twitter followers.)

The Starbucks tweetstream is impressive. Check out these three easy-to-emulate Twitter best practices. Each can be adapted to any industry, and each is modeled consistently via the company's Twitter account, @Starbucks -- which I found to be deeply personalized to individual questions, complaints, and suggestions from customers.

Best Practice #1: Do Something You Know Your Customer Believes In. Starbucks uses Twitter to promote cause-driven promotions that resonate powerfully with its user base. One particularly successful example was a “promotion where customers received free coffee if they brought in a reusable mug. This promotion grew their online fan base by 21% outside of the U.S. and by 6% overall. It not only drove sales, it changed how people purchased and consumed their coffee." (Source: Smartblogs.) What causes do your customers believe in?

Best Practice #2: Ask for Pictures. Starbucks uses Twitter to post plenty of interesting, user-generated images of its followers drinking from, displaying, or generally having fun with something that bears the familiar green company logo. Circulating these images means more engagement, greater advocacy, and broader brand awareness. How easy is it for a customer to take and forward a picture of your brand image? What would happen if you tweeted those images?

Best Practice #3: Let Customers Know That You Are Using Their Ideas. Starbucks uses Twitter to update individual customers on the status of individual ideas they have submitted via @MyStarbucksIdea. Wouldn’t you follow a company that kept you up to date about that?

If you haven’t given your company’s Twitter account regular attention (as in, original posts at least once a day, and prompt personal responses to each customer post), take a closer look at the infographic above.