Would you switch coffee brands if I offered to match the price of a big, fancy cappuccino?
What would the effect be if I promised to donate most of the proceeds to a foundation that helps Americans find jobs?
Starbucks teamed up with Google Offers the other day to offer a tantalizing deal to new and existing customers, and the program offers a fascinating look into shopper loyalty, product adoption and cause marketing. Let’s have a quick discussion to pick apart the success of this effort and what your business can learn from it to gain new fans and customers.
Rewarding Customers While Growing Revenue
The simplest way to describe the success of this campaign is how many people bought into it. For $5, shoppers got $10 worth of purchasing power from Starbucks that could be used in the form of a physical or mobile rewards card. I’m not sure the total amount of dollars generated from the push, but when I snagged the offer I couldn’t access the Starbucks account set up page due to the massive amount of traffic affecting their servers.
Think about your coffee house experience.
How easy is it to drop $10 on a single trip, especially with a companion? A grande soy latte costs around $6.25, and any remainder on my card pretty much ensures a follow up trip. So the price point in this social offer is very telling — pay $5 to receive $10 in buying power, which pretty much assures you will do one of the following:
- Buy two coffee drinks with ridiculously fat profit margins
- Buy one coffee drink plus an ancillary product, like a baked good or prepackaged sandwich, that sends the cost of your purchase well past $10 on high margin goods
- Visit a second time, spending non-Google-Offer money on your trip and helping to establish a buying habit
Takeaway: Think about building a long term relationship with shoppers of deal sites like Google Offers. One off sales are usually not profitable, unless you can get away with markups like the Seattle powerhouse, so price your deal accordingly.
Hiding The Football – How To Boost Mobile Adoption Using Daily Deals
Once you buy the Starbucks offer an email hits your inbox with redemption details. Here’s the message I received upon clicking the Google Offers link:
Wait, so I can either print the offer or store it via a digital account? That’s a simple choice.
I’m all about reducing friction in the purchase process. The last thing I want to do is print a piece of paper that will be handed to the barista, while living with the uncertainty of being able to store any remaining dollars left over (Will I get cash back? Do I have to spend it all at once? Am I going to be handed another piece of paper? Will this add time to my visit and inconvenience other guests, marking me as ‘That Guy’ in my community?).
Once I read about the digital option I picked up my iPhone and downloaded the Starbucks app (It’s well designed and easy to use). After their servers caught up with all the traffic from shoppers, I was able to quickly create an account and enter the code for my purchase, thereby transferring the cash onto my iPhone (Well, my Starbucks account that is accessible via my iPhone, more precisely).
This is a genius move by Starbucks.
They knew going into the deal how to maximize their return. First, they priced it to give buyers a great deal and increase the chances for a follow up visit. Second, the company made it easy to opt-into their digital app — where you can bet your digital fingerprints are being tracked via a data warehouse.
In addition to data, using a smartphone app to pay for coffee is similar to having a running tab you refill periodically. The company I work for allows employees to run a tab in the cafeteria, and it is ridiculously efficient. I buy organic breakfasts and lunches frequently, only stopping to scan my employee badge before heading back to my desk or a cafe table to eat. The idea of spending money never enters my consciousness.
Same with the coffee app.
If you only need to refill the card infrequently, then you’re only really spending money at that time, right?
Takeaway: Reduce friction in the purchasing process to increase sales. Offering customers the option of making purchases with a mobile app might be a savvy marketing move — but only if your app is clean and simple to use. If an app isn’t in the cards, consider sending users to your website where they can sign-up for your rewards program that add another $3 to your card, or another action that adds value to your business.
Cause Marketing Increases Affinity for Your Business
Upon completing your purchase of the $10 for $5 Starbucks deal from Google Offers, the following message is displayed:
But wait…there’s more!
The coffee conglomerate also made a huge donation to fund the organization ‘Create Jobs for USA’:
Notice the Google Offers logo on the Create Jobs for USA homepage? See the mention of the $5,000,000 donation? Want to bet that Google is sharing in the cost of the program?
Takeaway: Partner up. Starbucks used a social medium — Google Offers — to give their socially conscious message the reach it needed to succeed. The win for Google is higher adoption of their new service, and a more compelling cause to promote than Groupon was likely offering. Any time you can boost awareness by sharing two groups of shoppers instead of one, the ‘network effect’ is more likely to gain attention (Think in terms of Facebook ‘friends of friends’).
First Place Doesn’t Matter
Full disclosure: Starbucks isn’t my favorite coffee.
I’m a die-hard fan of Green Mountain Coffee Roasters and their Fair Trade Wild Mountain Blueberry blend. Each morning I brew a K-Cup using my Keurig coffee maker, and then I add Stevia (A natural sweetener) and almond milk. Whenever I have to use regular milk or sugar, I get miffed.
So why did I jump at the chance to buy this Starbucks deal?
AIRPORTS.
I travel a lot for work, and nearly every airport I head to has a Starbucks. I might not find Stevia, but I can always count on at least soy milk, and the experience leaves me no surprises when I’m on the go.
Starbucks may only be my back up brand, but they’ve got something Green Mountain Coffee doesn’t: A piece of real estate on my iPhone (I downloaded their app and haven’t placed it inside a folder — in other words, it’s got a prime location on the second screen of my iPhone).
Takeaway: Don’t worry about being first, think about being relevant to primary and secondary markets. There are lots of revenue opportunities available to socially aware companies that consider all of the uses for their products.
Did you take part in the $10 coffee deal? How would you modify this offer for your own business?