How Starbucks Built a Fiercely Loyal Community in China

The coffee giant leaned on a tightly integrated online to offline (O2O) approach. With social distancing, O2O is more important than ever.

June 3, 2020

Way back before the coronavirus upended retail, stores were moving toward hybrid digital-physical businesses. Locations to stand as hubs for browsing and buying (and returning) and mobile apps and websites to offer e-commerce, loyalty programs and other forms of engagement between and during store visits. This online-to-offline strategy tracks with the way consumers move seamlessly between offline and online spaces, but it was also seen as a way to stem declining store sales amid e-commerce’s growing share of revenue. 

The pandemic has accelerated a need for more digital than physical in this equation, and it’s worth taking a look at successes to date. In China, which has a more digital, mobile population than anywhere else in the world, Starbucks used digital platforms to build community around its brand that continues when customers aren’t in their stores. This strategy led to 90% engagement with its app.

At the Signal conference in 2018, Starbucks China’s Chief Marketing Officer Emily Chang shared strategies and lessons from the company’s online-to-offline strategies — or online-merge-offline, as she prefers. They are even more relevant today.

Key insights from the conversation:

  • 3:32 — Why “online-merge-offline” is better than “online-to-offline”: “The ‘to’ implies you’re going from offline to online or online to offline. China’s really blown by that already, because we’re already integrated. If we as leaders aren’t creating an OMO experience, merging online and offline—whether the customer is in the store or not in the store—we’re frankly not meeting their needs.”
  • 6:12 — Results from a key part of Starbucks China’s digital flywheel, a loyalty program that grew quickly to seven million active members with 90% app engagement.
  • 6:58 — An example of merging offline and online: A “members night” at select stores, where members scan a QR code when they come so they can post online about where they are, thereby engaging digitally, while also engaging physically as they interact with the store and other members.
  • 11:10 — The importance of digital payments to glean more about customers. Because 80% of Starbucks China’s customers were cashless, Chang said, “We know what our customers are buying, we know their journey over time with us, we know which stores they’re going to and they’re preferred payment method. We’re able to create more customized and relevant offers.”
  • 22:13 — How the company built digital in-store experiences at The Roastery, a Starbucks superstore in Shanghai that would have lines running down the block, through wifi, apps and augmented reality.
  • 23:45 — Why brands should think of “experiences,” not “journeys.” “‘Customer journey’ implies a start and an end, so we don’t talk even about journeys, we talk about experiences. … Everyone has their own way to engage with what you have to offer. Being able to delight them no matter how they want to engage with you is what online-merge-offline is all about.”

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