Beth Wernet Pam Jue Meghana Khandekar Shelly Ni
Q : What brought you to Starbucks,the first time you ever went?
"Weekend morning Starbucks runs withmy dad are one of our most importantfather-daughter traditions."- Kylie, 15 year Starbucks customer A : Friends or family
"Weekend morning Starbucks runs withmy dad are one of our most importantfather-daughter traditions."- Kylie, 15 year Starbucks customer
Who goes when? Super regulars 16-20 x mo. 4% 20% customers revenue 17% 37% Regulars 8-12 x mo. customers revenue Occasionals 1-4 x month 79% 43% customers revenue
Whats interesting here? Super regulars 16-20 x mo. 4% 20% customers revenue 17% 37% Regulars 8-12 x mo. customers revenue Occasionals 1-4 x month 79% 43% customers revenue
Coffee Trends "Individuals who start their day in a friendly coffee circle will never have a totally bad day... [As Starbucks changes] the flavor of its stores, its belittling the very role that it created for itself, and for its customer. It isnt easy for all of us who used to love our cozy neighborhood Starbucks." - Ray Oldenburg, writer behind 3rd place idea.
Strategy Bring a friend to Starbucks for 10% discounts on both your drinks. Bring more friends, and everybody enjoys a larger discount, up to 50% off.
How it works Introducing: Starbucks Coffee Breaks
How it worksIncreased functionality to be built into Starbucks existing mobile appStarbucks Mobile100 million mobile payment transactions sinceprogram launch in January 2011 Increased functionality to2 million mobile payment transactions/week add & manage contacts$3 billion loaded onto Starbucks Loyalty Cards(mobile & physical) accounting for25% of all store transactions(Nov 2012) Starbucks Coffee BreaksOctober 2012 launching mobile paymentpartnership with Square, increasing paymentcapabilities
How it works main app flow 1 2 3 Select nearby Select meeting Message multiple friends place friends at once
How it works main app flow Via Square GPS, grouping and discount earned display automatically4 Friends receive invitations and can accept or decline 6 Meet in store for a Coffee Break! The more people you can recruit, the bigger discount you will receive 5 Optional: Originator of the Coffee 1 Friend = 10% off 1 drink Break can allow invitees to add 2 Friends = 15% off additional friends to the group ... 10+ Friends = 50% off
How it works app flow - saved groups Friends can be saved Message all group and organized into members to organize more permanent meet ups in advance, or grouping anyone whos nearby for an impromptu coffee break
How it works app flow - group & store stats Group Stats Store Stats
Estimated Revenue 0 - 12 MONTHS (US) $177M - 422M 5 - 10% increase in annual US customer traffic (225,000 - 450,000 more visits / year)
Estimated Revenue 0 - 12 MONTHS (US) 12 - 36 MONTHS (GLOBAL) $177M - 422M $450M - $3B 5 - 10% increase in annual US customer traffic (225,000 - 5 - 30% increase in annual global 450,000 more visits / customer traffic (400,000 - 2.4M more year) visits / year)
Estimated Revenue Facts from Annual Report: 60 million / week $13.3B / year revenue 75% of revenue comes drinks bought in store 10,000 US stores 17,000 international stores Calculated numbers: 450 unique customers / store / day $4.93 - average spent / store / customer / day $3.70 - average spent on drinks / store / customer / day
Model Increase discounts by 5% per additional customer, up to 50% Only discount $3.70 spent on drinks Calculate average revenue gained from 1 - 30% additional customers buying discounted drinks Calculate average revenue lost in discounts from 1 - 20% (portion of Starbucks customers who are super regulars and regulars) Estimated revenue = revenue gained - revenue lost
Coffee Market in US Americans spend $40 bil on coffee 8 mil Starbucks 35 mil premium 36 mil low 79 million buy coffee 62 million take away from home coffee breaks
Launching the Program MARCH/APRIL 2013 MAY 2013 1-2 months before app launch ● Introduce the concept with in-store promotion: Wednesday afternoons, bring in friends for discounts on coffee ● In initial phase, groups will simply tell barista that they are together
Launching the Program MARCH/APRIL 2013 MAY 2013 ● Launch Coffee Breaks across all US stores with update to existing mobile app ● Square GPS integration makes allows baristas to seamlessly access groups ● Encourage higher adoption by allowing app users to invite friends via Facebook or Email
Risks & Costs Risks Costs ● Customers dont use it $1.03 million in US ● A competitor will launch something similar ● App Design/Development ● Print and Online Advertising ● Training Baristas
Starbucks Strengths Large & loyal Mobile Payment Locations "Third Space"customer base leader 5 Million active Square Partnership 17,600 locations Free WiFi Starbucks card 2 mill mobile worldwide members transactions per week 10,700 in US Starbucks Evenings
Future MeetUp/Eventbrite Meetup and Eventbrite encourage face to face interaction but many organizers face the issue of finding a physical space for their events. A partnership with Starbucks will: ● give Meetup and Eventbrite organizers more options for space ● promotion for Meetup and Eventbrite ● increase traffic and regulars for Starbucks
Future Online Education Coursera, Udacity and edX are the leaders of the massive open online courses (online course aimed at large-scale participation and open access via the web) By pursuing a partnership and with various online universities, Starbucks can be the sponsored and official meeting place or "campus" for students globally to convene to study. A partnership with Starbucks will: ● increase traffic & regulars ● reinforce goal of facilitating community & customer engagement ● support educational initiatives & help online universities keep student retention high
Future Global Profits Model: Total # of groups globally within online education, MeetUp & Eventbrite Assume 25% of groups use social groups discount Approximately 10 people per group, meet 2 times per month Spend $30.90 per visit Online Education: $590 mil Eventbrite/Meetup: $215 mil Total: $805 million first year
"if you decide to join [a group], youcan cut your risk of dying over thenext year in half."- Robert Putnam, Bowling Alone
"Coffee is a gift to mankind, coffeeunites, coffee entertains, andcoffee educates."