Amidst the Covid-19 coronavirus outbreak with bans, border closures, lockdowns, many companies are struggling as the situation goes from bad to worse. So what can we learn from Starbucks and their approach?

Why Starbucks, because I thought they are a good example of a company that has been hit massively in China and the rest of the world by Covid-19. They have developed an approach and a playbook from what they have learnt and they are applying and learning from what is going on in real time with success.

Secured safety of the team first

I believe we can all learn a lot from the clear leadership of Starbucks CEO, Kevin Johnston. He set the standard for both protecting employees as well as the company with a ‘both and’ solution – protecting employees incomes as well as avoiding the re-hire and re-training costs when we all get through these times and ‘back to normal’.

Communicate the plan clearly

Johnston was fast to ensure Starbucks employees knew that they were secure for at least the next 30-days, they knew the plan of attack and equally as important, Johnson was great in communicating the plan to Wall Street and investors.

“Partners are the heartbeat of Starbucks, and we will continue to do whatever we can to support them… I am optimistic that together we can overcome this challenge. The human experience is about overcoming adversity by being resilient, and that is certainly on display across the nation. We will overcome this. Our resilience will be rewarded.”

Kevin Johnston, CEO

Agile approach to apply learnings from China fast

Starbucks’ recent experience dealing with Covid-19 in China offers clues as to the company can proceed in other markets. At the peak of the outbreak in China, around 80% of stores had to close. CEO Kevin Johnson recently described how management tackled various challenges,

“Our team in China defined elevated cleaning protocols for stores and leveraged new customer experiences, such as contactless pickup and mobile order for pickup or delivery.”

Kevin Johnson CEO

As the outbreak subsided in China, over 90% of Starbucks stores have reopened under modified hours and conditions and Starbucks are using the approach developed in China for stores now facing Covid-19. they are keeping their drive through service open and constantly refining the ‘playbook’ as they learn more. Employees are turning up and customers can buy on Starbucks app and collect.

Planning for tomorrow today. Starbuck focus on Digital & AI

Called the Digital Flywheel Program, Starbucks implemented AI technology some time ago with it’s Rewards members’ accounts, considering factors like order history, current weather conditions, time of day, whether it’s a weekend or a workday, and even if it’s a customer’s birthday in order to make drink and food suggestions. They are now leveraging this data to keep the communication going directly to their customers in a meaningful and relevant way.

By combining AI with marketing, Starbucks has managed to grow and expand its Starbucks Rewards program that has 17.2 million active members, and the growing at 14% year over year. In China alone, the member base has crossed the 10 million mark with +45% year-over-year growth.

Personalization

The Starbucks Rewards program gathers a huge amount of data on customer spending and preferences and this means that Starbucks is able to personalise the experience for each and every customer based on their unique preferences and spending habits. The AI mines the data to let customers know which store is open for take out coffee or to suggest new food or drink choices and customise recommendations according to the time of day.

The system also allows for personalised marketing and offers discounts to engage customers to keep coming back. Real-time triggers and push notifications create a deeper level of connection with customers. Users get a sense that Starbucks is aware of their preferences and is tailoring the experience to make it more fulfilling.

Key Points

  • Starbucks documented and systemised the approach used in China knowing that they would need it later
  • Fast to roll-out the approach in a localised way to other markets
  • Tracked and measured the impact of Covid-19 locally vs the play book models and approach
  • Protected their employees first and made sure they are safe and there for the long haul
  • Invested in local communities to support them and create a positive ‘social movement’ around Starbucks
  • Clearly and consistently communicated the plan to employees, customers and investors
  • Keep the cash flow coming with take out orders
  • Doubled down on Digital and AI to communicate with customers and employees