Schultz Credits Social Media for Saving Starbucks

September 23, 2010
By the ZippyCart Shopping Cart Reviews Content Team

What is the third most popular place Americans log onto the Internet? The answer is Starbucks, and it’s third only to home and office. While Starbucks is mainly a brick and mortar company (that can be found on almost every street corner or strip mall across America), chairman and CEO Howard Schultz recently credited Starbucks logging online, for saving the company from its downward turn in 2008.

Founded in 1971, Starbucks quickly became a household name in coffee-driven city, Seattle. By the early 90′s, Starbucks was opening a new store for every day of the year. As Starbucks continued to evolve with ventures like Hear Music, menu expansions, a partnership with Apple, and more, it began to lose part of its core “soul” as Schultz put it, which took the focus away from coffee and made it easier for other companies to provide Starbucks with some worthy competition. This, combined with a rocky economy and $3.00 latte’s, led to the company’s first loss in sales and traffic around 2008, just a few years after their first store closures in 2005. Now, just a few years later, Starbucks is back on top, and Howard Schultz stated at Tuesday’s nights entertainment industry conference, The Grill, that he owes it all to Facebook, Twitter, and social honesty.

Everything began with the launch of MyStarbucksIdea.com in 2008, which provides an online forum for customers to share ideas, ask questions, and wage complaints. As of 10am yesterday, there have been 96,878 ideas shared on this site, which are grouped into 3 major categories: Product Ideas, Experience Ideas, and Involvement Ideas (community giving, social outreach, etc). This site has allowed millions of customers to comment on ideas, share insight, and vote on what ideas should be implemented. Starbucks also maintains accountability by providing a list of ideas that have been implemented thanks to the site.

Beyond MyStarbucksIdea.com, Starbucks also provides their customers with other forums to get in touch and share their stories, concerns, and more. The Starbucks Twitter account has over 1 million followers, their YouTube subscribers are close to 10,000, and their Facebook account is the largest out there, with 13 million fans. While Starbucks does have a leg up when it comes to getting fans and followers, there is still much to be learned from their strategy. For instance, they do not use these accounts to push deals or drive sales, they instead use them to build relationships, which is what true social media is made for. Rather than having PR companies run these social media accounts, Starbucks lets current employees explain the true Starbucks experience. Their Twitter account, for instance, was started by a 28 year old ex-barista who had moved into IT at the company. By doing this, they have been able to squash false rumors before they got out of hand, publicly deal with complaints (which earns them trust and recognition), and provide quick updates regarding big changes, like their new addition of free Wi-fi without the need of a gift card. By using social media, Starbucks was able to rebuild its brand and earn customer loyalty. Starbucks was also able to better share information about public, social, and local outreach including Rebuilding Together New Orleans, their work with fair trade farmers, Project RED, their Ethos water, and much more.

While smaller brands do not have the same opportunities with regards to number of followers and fans in social media, this doesn’t mean that they won’t see a gain in sales through earning customer loyalty and building a brand in social media. Starbucks just recently began traditional advertising campaigns including print, billboards, and television (and those commercials only air on MTV). As such, they clearly have been able to get by with word of mouth and online advertising for quite some time. They are just one success story, proving that social media is not just a good strategy, but a necessary means to success.