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Starbucks Social Media Case Study 2011 Chevy

Starbucks is known for lots of things: great coffee, friendly baristas, and a near-complete takeover of practically every street corner in America. Did you know it's also known for it's killer social media strategy? It's true! Take a look at some of these stats:

● 37.32 million Facebook likes

● 6.56 million Twitter followers

● 2.98 million Instagram fans

● 2.86 million Google+ followers

● 160K Pinterest followers

● 32K YouTube subscribers

Those numbers are staggering but well-earned. There's no doubt Starbucks is crushing social media, but how do they do it? Let's take a look.

Facebook

Interestingly, the Starbucks social media management team doesn't post Facebook updates all that often. When they do, however, they're usually eye-catching and ultra-clever. The posts strike a good balance between fun contests, helpful tips for the java-loving crowd, and subtle sales messages to its customers.

Twitter

Starbucks has a fascinating and unique approach to Twitter updates -- they don't do them all the time rather strategically! Fans who connect to the company on Twitter to catch the latest news and updates are in for a surprise. The team does post unique content but also uses the Twitter as a service to reach out to customers talking about their in-store or product experiences.

All Tweets are directed at specific Twitter users who've "spoken" to Starbucks in their own timeline, sometimes with a complaint or negative feedback. The Starbucks team checks in several times a day and encourages dissatisfied customers to get in touch with the company for follow-up using a Twitter-specific email address. It's an unorthodox but smart approach to deal with customer complaints before they have a chance to get out of hand.

Pinterest and Instagram

A big part of the coffee culture is about beautifully decorated espressos and fancy cups to drink your favorite cuppa. Starbucks really shines on visually-oriented social sites like Pinterest and Instagram where they can post appealing beverage-related eye candy. The company maintains several Pinboards featuring tea rituals, coffee gadgets, and soothing spaces to get cozy in while you sip. Instagram, on the other hand, is an assortment of cool images related to the coffee community and culture.

What Starbucks knows about social media

Getting customers is good. Keeping customers is great. With over 21,000 stores in more than 65 countries, its a safe bet that anyone with even a passing interest in coffee already knows Starbucks exists. The company has reached critical mass in terms of advertising so its challenge at this point is keeping customers loyal so they're not swayed by competitors with similar offerings.

The Starbucks social media team is great at offering the customer service of local coffee shop on a grand scale over its social media channels. Even though they're a huge company, they still give customers individual attention, which no doubt goes a long way toward keeping them coming back for more.

Coffee is made for socializing. One of the reasons behind Starbucks' social media success is that drinking coffee is a social activity. People love to meet over coffee, bring each other coffee, swap stories about coffee, and build coffee acquisition into their morning routines.

By extension, sharing the coffee-drinking experience is a natural fit for platforms like Twitter and Facebook. In a classic case of "build it and they will come," all Starbucks has to do is create places for coffee drinkers to congregate online and they will happily oblige.

Consistent branding is key. No matter what Starbucks social platform you visit, the Starbucks touch is evident. The company's social channels all have the same look, feel, and tone as their stores. Although the marketing team takes a slightly approach from Twitter to Instagram to Facebook, the content is consistently unified around the company's mission, message, and goals.

Whether you're a fan of the Starbucks product line or not, their social media success is undeniable. As with every other aspect of the company, their attention to detail and customer-centric messaging is what makes their social outreach some of the best in the business.

Main image: Starbucks.

Much has been written about SM and its rising importance in engaging customers. A consumer's engagement with a brand can be measured along a continuum from no awareness, through to early engagement, and maybe, if you are lucky (and clever), onto advocacy. As for any relationship, the strength of feeling will develop and vary over time and, as in any healthy relationship, both parties should be aware of feelings so they can react accordingly. Consumers are much more trusting of friends and colleagues than they are of TV advertising or corporate communications. Consumers talk to each other like never before through a multitude of social channels. Social ‘media’ (see the Appendix for list of social media types) contains ‘conversations’. Like any conversation, in a café or bar, for instance, the content varies. Some conversations are serious and some fun, some are short and some long, some happy and some angry and intense.

Thoughts, opinions, ideas, jokes, confidences, experiences, photos and videos are shared by individuals to small networks and can be rapidly amplified into larger networks of people, within a location, nationally or globally. Consumers’ experiences are naturally part of this conversation and brand and service experiences are discussed openly and frankly whether organisations are involved in the conversation or not. In this way, consumers are becoming more powerful.

As opinions amplify, so brand performance will be impacted. The locus of control in the brand–consumer relationship is shifting from brands to consumers. Brand marketing is becoming less about pushing messages out to consumers within a static relationship, and more about the brand being part of the dynamic conversation, listening, serving relevant content/ experiences to earn the trust of consumers. Clearly monitoring the buzz and intervening, when appropriate, has advantages to brand managers in any b2b or b2c environment. This monitoring can lead to a better understanding of consumer behaviour and feelings of the mood in the market. It can lead to changes in strategy, services, products, promotions, pricing channels and so on.

Brands are using SM in ways other than listening and innovating. Consumers of all ages interact with SM content on mobile devices, PCs, kiosks, at home, at play, at events, at work, on holiday or when travelling – in just about any situation – in much greater, and ever increasing numbers than before. In a survey of 1700 US Internet users, Nielsen Online found that 73 per cent engaged in SM at least once per week. Engagement was defined as reading a blog, visiting a social network or reading (and/or commenting on) a message board.1 The research estimates the total US SM audience at 127 million. Brands that really understand how their consumers behave on and offline are taking advantage of an unprecedented opportunity to engage with their target consumers, sometimes in small groups, through content and online brand experiences. The currently accepted rule is that 90 per cent of SM users just view content, whereas 9 per cent edit it (for example, provide a comment or review) and 1 per cent create brand new content. This percentage profile is very different in some segments of the population.

If the content engages the consumer, the consumer may do nothing, buy the product directly or interact in some way. The interaction may be via a comment on Facebook, which may not require a response or it may lead to a 1:1 exchange with the organisation, through whatever channels are right for the exchange.

Traditional advertising combined with SM content and other response vehicles (for example, on pack) will generate interactions, which can be managed through a combination of SM and, for some consumers at some times, communications through more traditional CRM channels. Early pioneers have called this combination of SM and CRM, SCRM (Box 1).

Definitions of SCRM

Paul Greenberg2 has an excellent definition of SCRM:

SCRM is the business strategy of engaging customers through SM with goal of building trust and brand loyalty.

As SM is all about customers, our definition is

‘SCRM is how we…
  • Help you engage with us, whenever you need to, wherever you are, in ways that are convenient to you;

  • provide you with the personal experience you need to keep you engaged, informed, interested and maybe even entertained;

  • transact with each other, or through third parties, in ways that are mutually valuable;

  • get to know each other over time so that we can tailor what we do (and how we do it) with you in mind’.

Why do S and CRM go together and why is it so challenging?

Companies without sales data

In data poor3 markets, such as consumer goods, pharmaceutical and most retail, brand management aims to build in consumers’ minds a set of perceptions and attitudes relating to a product or service, leading to positive buying behaviour. Traditionally, the methods that brand managers use to find out who their consumers are and what and how much they buy are market research and retail audits. They influence consumer behaviour through powerful communication methods, such as advertising, sales promotion, packaging, display and the like. If there are any differences between consumers, none of these methods can be customised to deal with individual consumers. Research has always shown brand managers that consumers are not a homogeneous set; they have differing value to the brand (the Pareto (80/20) rule exists in some shape or form with almost all brands) and there are different levels of engagement4 with the brand. Importantly, multiple bodies of research have shown relationships between engagement and value.5 Brand advertising and sales promotion are blunt and costly tools that target the whole market. In truth, advertising dollars in these areas have little accountability and the relationship with net sales value (NSV) and gross margin (GM) is unclear, beyond a macro level.

Enter SM

SM enables the brand to extend its personality to engage with consumers on consumer terms, at the time they want, where they play, where they work, when they are travelling and through channels that they chose. Consumers can engage at a level to suit themselves; on a peripheral level or at a level that involves more interaction with the brand. Content, designed to entertain, inform, educate or provide insight, can be designed to connect with consumers, communicate relevantly with those that show interest and convert them to win sales and even advocacy. Consumer marketing experts are working with partners to develop data – light ultra low cost CRM approaches (especially when compared with CRM databases in the past), which may be able to first identify and then target high value consumers. The early adopters of these techniques will turn their category performance on their head and alter brand economics forever. Small changes in the way high value consumer groups behave will have massive impact on NSV and GM. Sales will increase, share will increase and in all likelihood, the cost of sales and advertising spend will be reduced.

Companies with sales data

In data rich markets, such as financial services, automotive, telecoms and some retail, direct marketers have for years combined sales data, profile data provided by customers and varying quality of data from external sources, such as neighbourhood, credit or lifestyle databases. They segment their customers based on value, needs and (rarely) psychographics to predict the likelihood of purchase. They then use sophisticated targeting (outbound to the customer, or inbound when the customer called in or used the website) to communicate the right offer to the right person at the right time. These techniques can uplift response rate versus random selections of contacts but they are still blunt instruments because of the difficulty of getting accurate data on how a customer is feeling, acting or thinking. The interactions are designed to sell, not to engage. So, although ‘traditional’ CRM helps manage customer relationships on a huge scale, it does not help in building mutual trust between buyers and sellers as it is impossible to build trust with thousands of customers over e-mail, mail or phone. For building trust, you need to know your customer well and not just be limited to mere transactions as was the case with traditional CRM.

Enter SM again

SM provides the opportunity to marketers to become ‘personal’, to interact with thousands of customers spread across geography on a 1:1 basis so that marketer and customer get to know each other well enough to trust each other.

The Oxford English Dictionary's definition of ‘have trust in (verb)’ is ‘believe in the honesty and reliability of someone or something’, ‘have confidence in’. Customers can gain trust in a brand quite rapidly but it can be destroyed rapidly too. An organisation embarking on a strategy to build trust must stick to the strategy, take it seriously and not undermine it with inappropriate sales approaches, trivial cost-cutting or ‘big corporate’ type procedurally driven interventions that frustrate and annoy customers. Although we have said SCRM is a business strategy and a way of thinking and behaving for an organisation, it must be supported by IT systems.

The new SCRM IT architectures will empower marketers. SM expert Jeremiah Owyang: (http://www.forbes.com/2010/04/09/facebook-twitter-social-media-crm-dell-comcast-cmo-network-jeremiah-owyang.html) says: ‘Traditional crm suppliers, such as Salesforce.com and SAP are starting to integrate data from Facebook, Twitter and other online social networks. Dell and Comcast, both leaders in social marketing and support, have already integrated Twitter data to allow brand managers and support teams to actively track what's being said in tweets’.

Why does it matter? Marketers will have the ability to understand the mood, find new sales leads, respond faster to customer needs and maybe even anticipate needs by listening into their conversations and taking action. SCRM does not replace existing CRM efforts. Instead, it adds more value by augmenting traditional systems. SCRM is a great hunting ground and place for brands to look to acquire consumers to full ‘traditional’ CRM programmes (although e-mail based) … and from that then identify key influencers who can be considered as super high value customers. It offers companies an organised approach, using enterprise software that connects business units to the social web giving them the opportunity to respond in near real time, and in a coordinated fashion. What does success look like?

Marketers will be able to listen into what customers are saying, to better understand their needs, their voices and tie it back to actual customer profiles. In addition, marketers will be able to catch leads in ‘mid air’ by listening for keywords that suggest a customer is getting ready to buy, then sending real-time alerts to sales teams to respond. SCRM is the connection of social data (wherever it is) with existing customer records (customer database) that enable companies to provide new forms of customer insight and relevant context.

Box 1: Procter & Gamble

In an interview with Advertising Age in April 2010, P&G Chairman-CEO Bob McDonald said that what made P&G successful in the past will not make them successful in the future. He wants to avoid the trap of leaning too heavily on the company's marketing legacy and ‘it is one thing that keeps him up at night’. Increased focus on digital marketing, he said, is one of the keys to P&G's strategy to remain a leading marketer. ‘Any medium that helps us create a one on one relationship with any consumers is what we want to do … an end point of marketing (or at least on the journey) is a 121 relationship with any consumer. Digital allows that relationship. I want a one on one relationship with 7bn people … where we can customise the offering’. David Hornik reports that P&G's explicit goal for 2010 is to assure that each of its brands has a meaningful presence on Facebook, as an advertising platform and a brand destination, and they are willing to pay dearly for that.

And while P&G's thought leaders expressed some scepticism about the efficacy of Facebook's ‘engagement ads’, they certainly view Facebook as a must have for digital advertising and brand building. They did not quantify what they are paying for that exposure, but it is quite clear that the numbers are very big.

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