How Starbucks Coffee is transformed into a "Technology Company"

June 30, 1999 was one of the most embarrassing times in his life for Howard Schultz, CEO and chairman of Starbucks. At that time, the founder excitedly announced to the outside world that the company that sells coffee drinks was becoming an Internet company-launching a portal, selling coffee and kitchen supplies online, and investing 20 million dollars in an online chat company. As a result, Starbucks shares fell 15% on the same day. Investors can't understand why a coffee and beverage company uses the Internet so aggressively, and they are frightened by the high investment. Schultz admitted to the media that "I fell over in this matter."

It wasn't until Schultz splashed out $25 million to sit on the board of Square, a mobile payments company, in August 2012 that it was discovered that Schultz had never given up its efforts to add technology genetics to its company. After experiencing the embarrassment of that year, he learned to carefully carry out the transformation of Starbucks in a low profile. In addition to building an e-commerce system, the Seattle-based company is also very active in embracing the mobile Internet. Starbucks launched its mobile app client in 2009. Since the launch of mobile payments in the US market in January last year, the number of transactions has reached 60 million as of July this year, with more than 1 million orders paid through mobile phones every week. Schultz hopes to imperceptibly influence consumers to accept a Starbucks that is very different from the past.

Today, it's hard to find a large company that doesn't offer mobile apps or lacks a social media strategy, but Starbucks is ahead of its retail peers in investment and marketing. Today, Starbucks is not only the largest retail company for mobile payments in the United States, but also the most popular food company on social media such as Facebook, Twitter, Pinterest and so on.

The reason why Schultz is so eager to shift to e-commerce, mobile payments and social marketing is simple-Starbucks goes wherever customers are. What's more, the new technology can closely connect customers inside and outside the coffee shop, which Starbucks could not do before. According to Starbucks, most of its consumers are using smartphones, whether it's Apple's iPhone or various Android phones. Attracting more and more customers to use the mobile Internet to spend money at Starbucks means tracking them and creating an online community with them as the core users.

The new approach allows Starbucks to build stronger relationships with its customers than ever before. Having data on customers' spending habits and taste preferences will give the company, which is known for peddling the user experience, an extraordinary advantage. Schultz is trying to quickly adopt a new era of digital approach to a large number of Starbucks marketing initiatives. Mobile payments are just part of this big plan.

In fact, Starbucks' recent big changes are not because its chairman, Schultz, is a tech geek, nor because the company is in the same place as the tech giants Microsoft and Amazon. In fact, after his return, the founder did not develop any new flavor of coffee drinks, but led Starbucks, the traditional coffee chain, quietly set off a marketing revolution. Starbucks' coffee chain has long been popular with consumers in many cities on the planet because it offers not just coffee or bread, but a way of life. The originally cold business relationship between merchants and customers has been given a lot of added value by Starbucks.

Schultz just keenly predicted that the biggest change of this era is the impact of the Internet and mobile phones on people's living conditions, and he realized that the characteristics of this era must be quickly integrated into Starbucks products and services. So Starbucks began to change in order to keep up with the times. Marie Han Silloway, vice president of Starbucks China, said: "Digital marketing improves the Starbucks experience and makes customers feel that 'Starbucks is around'."

A recent viral online video illustrates Starbucks' philosophy-in a Starbucks mobile service called Early Bird, when a set wake-up alarm goes off, users can drink a cup of discounted coffee with an app when they click "get up now" and arrive at any Starbucks store within an hour. This is a good idea to connect your products with your users' daily lives. It doesn't force users to sell anything, but provides humorous and moving services.

But Early Bird is still a touching story, and Starbucks headquarters confirmed to Timeline that the company has not released such a stand-alone mobile app, but will consider offering similar services in the future.

Mobile payment pioneer

When Starbucks first launched its first mobile app in 2009, no one expected it to become the most active retail company on the mobile Internet today. The original mobile app was poorly featured until the integration of mobile payment in 2011. After logging in to the account through the membership card number, users can not only query all personal account information, but also directly complete the recharge of the personal credit card to the membership card. When spending at a Starbucks store, the payment can be completed by directly scanning the QR code of the member account in the mobile app at the cashier.

Mobile payments using mobile phones can save Starbucks waiters a lot of credit card swiping time and transaction fees. In fact, mobile payments take an average of only 6 seconds, which is nearly 2% less time than swiping credit card transactions over the counter. Supporting Square mobile payments in more than 7000 stores across the United States can further reduce Starbucks' costs. Square not only offers lower credit card transaction rates, but also manages all its credit and debit card transaction data in the United States for Starbucks. 65% of Starbucks' American consumers use smartphones. It is conceivable that when this group chooses mobile payments, it will save Starbucks a lot of money. Compared with taking out your wallet and swiping your credit card, the new way is to point your phone at the instrument. Customers are also more willing to enjoy this convenience.

It is extremely important for the retail industry to make payments faster. This will not only prevent customers from losing patience and giving up shopping in long queues, but also drive the sales of more products. In fact, Starbucks customers are indeed willing to spend a little more when using mobile payments, because the speed of mobile payments often leads to additional shopping impulses. "A lot of people don't take their wallets with them when they go out, but few people don't have their cell phones with them." "our goal is to continue to grow existing models while expanding other digital touch points with customers," said Adam Brotman, Starbucks' global chief digital officer.

Since its launch in January last year, the mobile payment app has covered 6800 self-owned stores and more than 2000 partner stores in the United States.

"so far, the total number of transactions from mobile payments has reached 60 million." Marie, vice president of Starbucks China, told Timeline that she is also a fan of Starbucks mobile payments. In July, Starbucks expanded its mobile payments to Canada and the UK, increasing the number of stores to 14000. At the same time, in the American market, users can recharge their Starbucks membership card through Paypal.

Transform into a technology company

Starbucks' embrace of technology can be traced back to the return of Schultz in 2008. When the Starbucks founder came out again as CEO of the company, he made a lot of big decisions: clarify the background of Starbucks' time and reposition Starbucks' role in it. Unlike most stories where the founder's return rarely ends well, Schultz created a comeback for itself and Starbucks.

He continued to invest heavily to greatly improve Starbucks'IT base, and set up a venture capital department and appointed the chief digital officer to push Starbucks into the new digital era.

A series of moves, such as investing in Square and appointing a new chief digital officer, have led to speculation about whether Starbucks will become a technology company like Amazon.

Starbucks is a brand dedicated to connecting people, the so-called 'Starbucks experience', not just a cup of coffee. When we see that mobile Internet and social media have become a part of people's lives, we redefine the way we connect people, which makes Starbucks realize the importance of digital marketing. " "Digital marketing is as important to the company's continued success as the coffee it sells," Schultz said.

In the fall of 2010, Starbucks announced the launch of Starbucks Digital Network (Starbucks Digital Network) in its stores in North America. Through the free Wi-Fi network, customers can read paid content such as the Wall Street Journal, the New York Times, USA Today, the Economist and watch ESPN events in Starbucks stores. Nick Jr. Children's programs and Snag Films documentaries. Starbucks went on to work with Yahoo to link to a variety of free e-books, news, music and movies on the welcome home page of its digital network, and with Apple so that customers can enjoy free music downloads on iTunes that are only available to Starbucks digital networks.

"when people are at Starbucks, we want to provide them with every bit of information-from news to music." The combination of cafes and information, as Marie calls it, is reminiscent of the "good old days". Historians have spared no effort to affirm the role of cafe prosperity in the Enlightenment and how it gave birth to many great ideas on the banks of the Seine in France after World War II. Today, Starbucks has glued together today's most fashionable digital information channels and platforms in its new era of enlightenment. In the strong aroma of coffee with Starbucks digital network, I do not know how many people are inspired by this.

Marie believes that the success of Starbucks digital network in North America is of great significance to Starbucks China. "leaving people in the store to enjoy Starbucks' unique store experience is our common business philosophy." But China is different.

Different Chinese market

After a lot of market research, the Starbucks China team found that the online ecology and habits in China are very different from those in other parts of the world. In the American market, young people are usually active in acquaintance networks such as Facebook, which are more purposeful and functional. But in China, digital space has almost become a large part of people's life itself. In a survey of Chinese users of Weibo, a female customer said that she might not answer the phone in time, but when she received a message or private message on Starbucks, she would "definitely put down all her work and reply immediately". So Starbucks hopes to make full use of the large number of fans currently on Sina Weibo for interaction. Starbucks releases energy to connect people. We hope to do more in this direction. Marie told the Timeline.

In order to further expand its digital marketing business, Starbucks China selected JWT in May to take charge of its digital marketing and social media business in China. JWT will use its in-depth understanding of Chinese users to help Starbucks expand more creative and targeted digital marketing channels. For existing social media like Sina Weibo, Starbucks China is still in charge of running it.

At the end of August, when promoting a new drink, Starbucks China adopted Wechat, a Tencent mobile social app, for marketing for the first time. A promotional label with a QR code will be affixed to Starbucks coffee cup covers. Customers will automatically add Starbucks China as their friend after scanning the QR code with Wechat. Over the next month or so, users will be able to listen to different types of music when they interact with Starbucks China on Wechat.

"the QR code on the coffee cup cover transforms the coffee cup from a simple cup into an interactive point for the brand to spread the coffee concept to consumers. In the future, we will see that mobile phones have gradually become a more important pillar of brand communication. " Qiu Youren, director of interactive media at JWT, told Timeline, "spread the concept of educational coffee and build positive relationships through interesting content and interactive experiences." We hope to stimulate a heated discussion so that people will always have Starbucks in mind. "

When it comes to the future of Starbucks digital marketing in China, mobile payment and Starbucks digital network are unavoidable topics. Marie said that because the banking systems in China and the US are completely different, it does take some effort to implement mobile payments here. "in the next 12 months, you will see our well-prepared digital surprise," said the vice president of Starbucks China.

After experiencing the "instant coffee" era represented by Nestl é and the "espresso" era represented by Starbucks, Chinese consumers are facing a new round of coffee wave. "the Chinese market will tell the world who will win in the end." Marie said confidently.