CASE STUDY: An Omnichannel Strategy that works – Starbucks
Going into 2019, omnichannel retailing is becoming table stakes for eCommerce and traditional bricks and mortar alike.
I want to breakdown one of the pioneers in a multi-channel approach to customer relationships.
That pioneer is Starbucks. Their success with omnichannel retailing – particularly the changes they’ve made in the last year, provides a playbook for successful omnichannel tactics in 2019.
Each section will first look at specific strategies and tactics Starbucks is using today. Then, we will draw specific action steps eCommerce stores should take.
Deepen Relationships with Purposeful Channel Expansion
In 2018, Starbucks had a problem.
While their most loyal group of customers were actively enrolled in Starbucks Rewards that left 60 million customers a month who had no digital relationship with the brand at all.
Once identified, establishing a digital relationship with these customers became the cornerstone for expanding Starbuck’s omnichannel retailing strategy.
Create Incentives and Force Channel Adoption
In March 2018, the company decided to gate free wi-fi.
In order to access the internet, customers first had to register with an email address. In other words, they forced a digital relationship, gaining permission to contact customers via a new channel (email) in exchange for access to free wi-fi.
Internally, customers who have inputted their email but have yet to sign up for Starbucks Rewards (SR) are called “digitally registered customers”.
Since creating this category, they’ve added 10 million digitally registered customers to their database.
In their last earnings call, Executive Vice President & Global Chief Strategy Officer Matthew Ryan shared how they view this relationship:
“We have to think of it (digitally registered customers) as the top of the funnel; an enabler of the relationships that we can create that lead people eventually into the Starbucks Rewards Program.
Later, we’ll explore exactly how Starbucks executes this funnel. But first, I want to draw a few lessons that large eCommerce stores should consider.
We have to think of it (digitally registered customers) as the top of the funnel; an enabler of the relationships that we can create that lead people eventually into the Starbucks Rewards Program. – Matthew Ryan, Executive Vice President & Global Chief Strategy Officer, Starbucks
Lessons for Ecommerce in Channel Adoption
Channel adoption is fundamental to omnichannel retailing.
It is worth incentivizing by whatever means possible.
Starbuck’s playbook is simple. First, identify what your strongest customer touchpoint is and incentivize channel adoption with a clear benefit during that touchpoint.
In their case, they already had 28,000 physical stores with 75 million monthly customers. They identified a key benefit and parlayed that service into new customer relationships via email.
For many eCommerce stores, their strongest customer touchpoint is online (their site). Barilliance equips you with a number of tools to convert site visitors into whichever channel makes the most sense for your business.
Some of our most popular features for doing this include:
- Unique Triggered Email Offers: The most effective email opt-in offers we’ve found in eCommerce are service-related, such as email my cart and visit summary offers.
- Personalized Browse Abandonment: Most visitors never make it to your checkout pages. Personalized browse abandonment offers can convert visitors to email subscribers, and give you an opportunity to nurture a relationship over time.
- FB Messenger: Message apps represent the fastest-growing channel in eCommerce. The behemoth in the space is FB Messenger. Last year, we enabled clients to leverage this channel to significantly reduce cart abandonment. However, once you have permission, you can use this channel to drive repeat purchase.
- Onsite Personalization: Lastly, you can prompt visitors to opt-into any channel you want through personalized widgets. We have clients that use a variety of message bars, pop-ups, or dynamic content to transform visitors into email subscribers, social followers, or download their mobile app.
You can see an example of onsite personalisation below.
To begin their omnichannel retail strategy, this client starts with a personalized offer, only seen by visitors who have not already submitted their email.
The offer is presented in the form of a sliding message bar.
Once a new visitor reveals interest by clicking on the bar, a pop-up is displayed.
In exchange for their email address, they will receive a 10% off code. In implementing these solutions, it is important that you control the user experience.
For example, this particular tactic isn’t shown on mobile devices, nor to returning customers who they already have a relationship with. With Barilliance, you can easily define any number of segments to present unique offers to.
Whichever number of tactics you employ, you want to give a concrete, exclusive benefit to creating a continuous relationship with your brand.
As we’ll see, establishing multiple channels as part of your own omnichannel retailing strategy will give you multiple ties to customers, allow you to gather more data on each client, and ultimately create personalized offers that increase order frequency and AOV.
Drive Brand Engagement and Retention in New Channels
How do you capitalise on new customer relationships?
As Matthew Ryan shares, “We’re not in the business of creating digital relationships for digital relationship’s sake. They’re an enabler for us to communicate and talk to our customers.”
We’re not in the business of creating digital relationships for digital relationship’s sake. They’re an enabler for us to communicate and talk to our customers. – Matthew Ryan
Starbucks uses these newly acquired email addresses to drive retention and purchase frequency.
While a variety of offers and communications are sent, two stand out.
First, is a recurring flagship offer: Happy Hours.
In this email, Starbucks sends a discount offer on a specific product category (such as teas, seasonal drinks, or frappuccinos). The offer is limited, often expiring same day and only available during certain timeframes.
The goal is to drive digitally registered customers into stores during non-peak hours. Offers are geared toward premium products, serving as a gateway to more profitable skus.
Second, as alluded above, Starbucks views email as the first phase in its omnichannel retailing strategy. It is their first digital channel, not their last.
The ultimate goal of digitally registered customers is to motivate them to become a part of their Starbucks Rewards program.
Customers are given regular incentives to progress through the funnel. In the example below, they email an offer of a free drink when they create aSR account. The exact offers sent are personalized to the types of products a digitally registered customer has bought in the past.