Starbucks, the coffee-house chain, is using the disruption of the COVID-19 pandemic to “move aggressively and further differentiate” its brand from competitors.
Kevin Johnson, president/CEO of Starbucks, discussed this on a subject during a quarterly earnings call held with investors. And even though the company’s revenue fell by 38% year on year, he was optimistic for the long term.
“In every industry, there are periods of disruption that create great opportunity for those businesses that adapt to the disruption, invest in relevant ways and strengthen their differentiation and competitive advantage,” he said. (For more, read WARC’s in-depth report: Three ways that Starbucks is preparing for post-pandemic consumer needs.)
“I believe [COVID-19] is one of those rare opportunities to move aggressively and further differentiate Starbucks from our competition.”
Digital touchpoints like mobile orders and the Starbucks Rewards loyalty program both saw an uptick in customer engagement and demand in the last quarter and are at the heart of its differentiation efforts.
“We are seeing first-hand the power of integrating physical and digital customer touchpoints to meet customers’ growing need for convenience,” Johnson said. “Our digital assets have proven to be a competitive advantage.
“Within the quarter, we saw significant acceleration in the number of customers who downloaded the Starbucks App and joined Starbucks Rewards, totalling three million in the quarter, and up 17% from Q2.”
Engagement with Starbucks Rewards’ customers also outpaced non-Starbucks Rewards members, with year-over-year sales growth from Starbucks Rewards customers turning positive in early July.
“As a result, Starbucks Rewards as a percentage of tender in Q3 rose four percentage points from a year ago to 46%, which is above the pre-COVID trend. [This] highlights our success in acquiring new loyalty members as well as re-engaging our existing customer base,” Johnson said.
Almost 90% of sales volumes in Q3 flowed through the combination of drive-through and mobile order-and-pay, Johnson said. Delivery has also been a boon for the company during the pandemic.
“Starbucks Delivers transactions tripled in Q3 from Q2 levels, with the highest volume in the late morning and midday,” Johnson said.
“All of this indicates that customers are adapting their routines, and we are well-positioned to drive further recovery by simply increasing throughput and enhancing those safe, familiar and convenient experiences customers desire.”
Sourced from WARC
