USA Today recently published a wide-ranging interview by Maria Bartiromo with Starbucks’ CEO Howard Schultz. The interview not only explores Starbucks’ global ambitions (see link below), but also what Schultz describes as ‘universal relevance’, a concept that many hospitality operators seek – not just coffee shops but, for example, pubs and bars.
Starbucks’ business is flourishing: last quarter, it reported an increase of 9% store sales, and 8% globally “because the stategy we put in place is resonating with customers”.
Not just morning coffee
Schultz explains how Starbucks used to be a business that was primarily about morning coffee, served in the morning. No longer:
“We have transformed things to reflect becoming a primary destination in multiple (parts of the) day. We’ve created products and categories so customers use Starbucks for more than just morning coffee.
Universal relevance
“Our stores domestically and around the world, have become the third place for customers between home and work. The environment, the store design, the free Wi-Fi — everything we’ve been able to do has created this primary destination. That is the same in Honshu, (China), in Beijing, in Shanghai, in Spain, in Tokyo or in New York City. We’ve cracked the code on universal relevance.”
Social and digital media
Starbucks recognised some years back the potential for their business of social and digital media, and began investing significantly, including loyalty cards and mobile.
Three years later, Schultz reports that they are now the leading consumer brand on Facebook and Twitter, and that they now process over 5 million mobile transactions a week in their stores.
Their partnership with mobile processing company Square has contributed to this success, but Schultz regards their creation of a Starbucks-developed internal app as more significant:
“It has given us the ability to build an emotional connection and relevancy with customers outside our stores. From an economic standpoint, the return on that level of emotional engagement has reduced our cost of customer acquisition in terms of lowering the cost of advertising because of the competency of social and digital media, the Starbucks card, the loyalty program and mobile payment.”
For the full interview click here