What eCommerce can learn from Starbuck’s Omnichannel Retailing Strategy

Going into 2019, omnichannel retailing is becoming table stakes for eCommerce and traditional brick 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 overtime. 
  • 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 personalization 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 from 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 capitlize 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 their 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.

Lessons for ECommerce in Driving Retention

How do you create value to justify a continued relationship with your brand?

In Starbucks case, they use a combination of one time discounts and ongoing loyalty rewards to drive purchase frequency. They also focus on customer adoption of more premium offers.

Barilliance has a number of ways to help eCommerce stores replicate these tactics. 

Create a 360 View of Customers to Develop Understanding of Customer Preferences

To make effective offers, you need to be able to track customers across devices and shopping sessions. Barilliance tracks more than what products each customer has purchased. 

  • Product Affinity: Beyond products purchased, you want to track which category and product pages visitors interact with, as well as what on-site searches they make. 
  • Frequency: Barilliance tracks site visits. You can segment based on first visit, last visit, or number of visits - giving you the capability to define your own segments of first time visitors, returning lapsed visitors, those who are in threat to churn, VIP customers, or whatever segment makes most sense to your business. 
  • Demographic Data: Information such as location and device type are automatically recorded. 
  • Brand Engagement: Lastly, you want to be able to track customer engagement overtime, including if they've responded to past offers, and if you need to trigger a follow-up.

​Use Big Data to Create Personalized Offers

Data without application is useless. Barilliance gives you the ability to use this data in a number of ways.

In the screenshot above, you see the backend of our Retention product. You can create any number of segments important to your business. We wrote up a whole post on six crucial segments for eCommerce businesses using RFM Analysis here

Additionally, you can use demographic and product affinity data to personalize each email. You can restrict in-store offers to those that are within the same city, or restrict free shipping to certain areas. 

My favorite examples incorporate our product recommendation engine. 

You can see a break down on how our personalized recommendations outperform standard recommendation widgets here, increasing CTR by 289% and conversion rate by 189%. 

Next Steps...

The first step in creating your own successful omnichannel retailing strategy is to identify a technology partner.

You want a partner that is capable of:

  • Unifying Customer Data: Collect and connect customer behavior, demographics, product/category affinities, and purchase history across all channels
  • Cross-Device Continuity: Able to make a seamless, omnichannel experience across devices
  • Segmentation Capabilities: Data is useless without the ability to analyze and take action. Your technology partner should equip you to identify high priority customer segments and create personalized offers to each.
  • Personalization Capabilities: The strength of your partner's personalization capabilities will directly correlate to your ability to maximize opportunities.

To see if Barilliance is a good solution for you, schedule a demo here