Starbucks moves away from the ‘drumbeat of promotions’ to build longer term relationships with customers
The coffee shop chain admits it had become too focused on promotional activity, which was no longer profitable and meant its focus had become too short term.
Starbucks is shifting its focus from short-term goals to build a more “sustained platform”and more personal relationship with customers.
Speaking on an investor call yesterday, Matthew Ryan, global chief strategy officer at Starbucks, said: “The long-term strategy is something that is going to build over time, and it’s part of an ongoing shift in our marketing, from a short-term ‘one and done’ focus to a sustained platform, ongoing relationship focus with our customers.”
Rosalind Brewer, chief operating officer of Starbucks, admitted that the brand has, in the past, focused on a “drumbeat of promotional offerings” that did not lead to sustained growth. It has reduced by 30% year on year the number of time-limited offerings.
Instead, its new marketing approach will centre on targeted offers personalised to individual customers. For example it is revising its ‘Happy Hour’ offer. Previously Starbucks offered a free Frappachino to “anyone and everyone, even customers who might have come in anyway”. While this worked initially, it now isn’t profitable.
Starbucks will now offer more personalised promotions by encouraging customers to sign up to direct digital contact and creating one-to-one offers that will appeal to individual customers. It has already started this work, which in the second quarter led to “strong incremental profits” and widened its appeal beyond reward programme members.
There will also be a shift to supporting products that have broader appeal. Brewer cited ‘Blonde Espresso’, which is a sweeter expresso coffee, as a product Starbucks is looking to push rather than its more one-off drinks. Initially, Blonde was only slated to have approximately six weeks of marketing support, but this will now be extended across the year.
The culmination of these changes will be a campaign launching in May to push afternoon sales that will last for three months. “We will be driving a consistent and sustained message to the consumer that leverages the fantastic line-up of new beverages, great food pairings, a more welcoming environment for our customers, and reinforced engagement with our customers once they are in our doors,” said Brewer.
The changes are part of the coffee shop chain’s three key priorities as it looks to strengthen customer relationships. Brewer, who joined 6 months ago, outlined these as: “Digital relevance and the expansion of our digital relationship; innovation in both our products and our marketing activities; and an unwavering focus on the customer experience in our stores.”
