Starbucks’ technology investments and its use of social and digital media channels are “increasing and becoming a significant competitive advantage,” said Howard Schultz, the chain’s founder, chairman, president and CEO. Speaking during a recent conference call discussing the chain’s quarterly financial results, Schultz said social media and technology help the company “create rich, emotional engagement with consumers and enhance their Starbucks experience, while at the same time [we’re] benefiting from the lower costs of customer acquisition.”
Schultz identified several recent developments demonstrating technology’s importance to the company’s strategy:
- Starbucks successfully used social media to launch its 2010 holiday season promotion, signing up nearly 250,000 consumers to receive a daily text message announcing the specials during the 12 Days of Sharing promotion.
- The company recently launched a mobile payment application that allows U.S. customers to pay for in-store purchases with select smartphones.
- In the year since the company launched its loyalty program, Starbucks has added 2.5 million new members. At peak volume during the quarter that ended January 2, 2011, the chain was selling 42 My Starbucks Rewards cards per second across the country, with customers loading, on average, 39% more on their cards compared to the same period the previous year.
- As part of its operational excellence initiative, the chain has increased its investment in barista training and completed the final rollout of its new inventory and point-of-sale systems.
Customer engagement as a measure of the chain’s success is a key theme for Schultz. Citing the benefits Starbucks is receiving from its loyalty card program, he said “Noteworthy is that much of the performance is attributed to substantial growth in card sales outside our company-owned stores, demonstrating that Starbucks’ expanding and deepening connection with its customer is extending beyond our stores and into complementary retail channels.”
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