Starbucks (NASDAQ:SBUX) has built its business on its relationship with its regular customers. However, the company sees areas where it can strengthen those connections by offering better service and allowing staff to spend more time in customer-facing roles.
The coffee chain touts itself as a "third place" after work and home. That's a lofty ambition that requires customer buy-in. People need to feel comfortable and welcome to consider a business location on par with their home and office.
It's all about the customer
To make that happen, the company has increased its focus on customer-facing initiatives. COO Rosalind Brewer shared some of the chain's efforts to enhance its relationship with its customers.
"Starbucks heritage is built on the third place experience where everyone is welcome and where customers can enjoy high-quality arabica coffee while they stay for moments of connection with each other and with Starbucks partners," the company explained in a press release. These areas include:
- Taking away or automating administrative tasks to allow employees to focus more on customers.
- Automating inventory and replenishment to both free up human capital and improve those processes so stores aren't experiencing outages.
- Renovating stores to increase efficiency.
Basically, the core of the revised "third place" strategy is allowing baristas to make meaningful connections with customers. That could mean a welcoming greeting as an occasional customer enters, or building a connection with regulars.
This may sound simple, but it's a challenge in high-volume stores. Drink production can be complicated as the chain's menu expands, and that area has not been automated in any way. Taking away any tasks that aren't crucial allows stores to both deliver at volume and have meaningful customer relationships.
Let's get digital
In addition to improving the relationship between in-store staff and consumers, Starbucks has continually revised its digital focus. That makes sense, because "digitally engaged customers purchase 2 to 3 times as many products as those that are not digitally engaged," according to the company.
That makes it essential for Starbucks to add to its connected customer base and find ways to enhance those relationships. To do that, the company has three priorities:
- New member acquisition
- Increased adoption of Mobile Order & Pay
- Improving its Starbucks Rewards loyalty program
Engaged digital customers can be driven (or enticed) into desirable behaviors, including more visits and visits during off-peak times. And customers who order through the Starbucks app allow the company to know what their preferences are -- and that can lead to increased personalization of promotions.
People have the power
These efforts are Starbucks acknowledging that customer loyalty is a key pillar of its business. That's not something to be taken for granted, and the chain appears to understand that it has to nurture its relationships with its core customers while expanding its reach overall.
Starbucks does not want to be a store people visit. It literally wants to be a part of its customers' lives. That's a potentially more rewarding relationship in the long-term, but it's one that requires a personalized effort involving employees and data, and a commitment to doing more than just getting orders filled quickly.
This is not an easy path, but it's one the chain has walked well so far. Acknowledging that this is a continuous growth process suggests the company has its priorities in line and that it will keep making the right moves to retain or even enhance customer loyalty.
Check out the latest Starbucks earnings call transcript.