social media and customer dialog management at starbucks

Social Media and Customer Dialog Management at

Starbucks

Introduction (by Parth Acharya) Social Media based Customer Dialog

Traditional Media Social Media

3-M Framework Social Media at Starbucks (by Bhuvana) Challenges faced with Social Media (by Parth Sampath) Guidelines to follow Social Media(by Karthik Kota)

Outline

Bridge for interactions between customers and firms Consumes user online time ahead of gaming (10%) and email (8%) Firms recognize the importance of communicating with customers Customers gather information, amplifies other customer’s actions, shapes

product success and molds markets. Social media intensifies the Firm and Customer interactions with the new

3-M Framework◦ Two Direct Relationships

Firm-to-Customer [Megaphone] Customer-to-Firm [Magnet]

◦ One Indirect Relationships Customer-to-Customer [Monitor]

Overview of Social Media

Before the emergence of Social Media, two types of interactions between the firm and customers◦ Direct Interactions

Individual Communications (Synchronous - Phone Calls, Face-to-Face

or Asynchronous- Email or Postal Mail) Mass Communications (Broadcast advertisements, Newspaper Ads)

◦ Indirect Interactions Customer-to-Customer Interactions (letters to editors, reports to

consumer advocates) Drawbacks

Little opportunity to MonitorMismatch in Feedback Volume

Traditional Media

Enrich traditional customer and firm interaction◦ Strengthen Firm-to-Customer and Customer-to-Firm communications ◦ B2B Relationships: LinkedIn, Twitter◦ B2C Relationships: Facebook, Twitter, Youtube

Monitor the customer’s view on the firm◦ Strengthen customer-to-customer communications◦ Examples: Yelp, TripAdvisor

Pros: Monitoring yields market intelligence correcting inaccuracies and mitigate damage

Social Media

Three components of the Framework◦ The Megaphone◦ The Magnet◦ The Monitor

Social Media via 3-M Framework

Firm-initiated Social Media Dialog Firms needs to be aware of the path to reach the customers They are used effectively for

◦ Brand-positioning◦ Establish clear message◦ Conveys corrections◦ Distributes time-sensitive information◦ Recruits staff, customers and partners

The Megaphone

Megaphone- Reach out!

Megaphone- Attract!

Megaphone- Schedule!

Customer-initiated Social Media Dialog These are helpful to

◦ To capture Customer feedback◦ Enhance Market Research◦ Augment customer service◦ Foster Innovation

The Magnet

Magnet- Example

Citibank, for example, beat Wells Fargo and BofA in resolving 36% of all customer queries that came in via Twitter. Have you ever tweeted a complaint to your bank? What was the result?

WSJ Infographic

Customer-to-Customer Social Media Dialog Monitors the inter-customer dialog, yielding insight as well as market

intelligence Monitoring will enhance the active engagement in addition to passive

observation Requires complex contextual analysis skills as well as judgement

◦ Examples: Facebook wall posts, tweets, comment fields and discussion

forums

The Monitor

Monitor- Observe!

Monitor- Use Tools!

Monitor- Analyze!

Monitor- Role of Analyst!

Different Media work together as promotional tools◦ Twitter and Facebook posts may refer blogs or YouTube videos◦ Twitter re-tweets◦ Facebook news feeds encourage viral promotionPersang Karaoke ExampleCustom Karaoke Youtube VideoShare on Facebook, Twitter- generate more fan base.Social Media and Hollywood◦ Paranormal Activity (created for a measly $15 million and made over

$150 million dollars at the box office.)◦ Inception(SCVNGR)◦ Twilight (first to reach 1M on twitter)

3-M Framework work in UNISON

Active social media not only manages but also takes action based on search results

Advantages:◦ Firms will increase reputations◦ Garner positive mentions◦ Influence customer perception of their brand

◦ Social Media is more about brand management, rather than revenue generation!

3-M Framework work in UNISON

Social Media tightly align with Starbuck’s strategy, from brand definition to execution through service delivery

17000 retail outlets, 130,000 employees, $9.7 billion revenues, Starbucks ranks among the world’s largest retail and service firms.◦ No.3 in Food Services category◦ Rank 241 among the Fortune 500 companies

Starbucks CEO Howard Schultz encourages technology initiatives and was aggressive in using consumer-focused new media

Introduced ‘MyStarbucks Idea’ and ‘Starbucks Digital Network’ Develop customer interactions via mobile devices Collaborated with Apple to provide the menus, nutrition information, store

locators, card management and even payment facilities in iPhone App Social Media activity at Starbucks involves both services maintained by the

firm and third-party services. Currently has links with 12 types of Social Media.

STARBUCKS

My Starbucks Idea

Starbucks Digital Network

Starbucks and the Megaphone

Widely shares the information across different types of social mediaCreates millions of potential customer contacts, thus branding ads

onlineThe firm runs its own-branded social media sites (e.g., MyStarbucks Idea – builds and creates anticipation of product

ideas)Third-Party public sites dominates its Megaphone-oriented activities

(e.g., Facebook, Twitter, YouTube, Foursquare)Customers more likely participate in these public sites

Starbucks Social Media Efforts via 3M Framework

Starbucks and the Magnet

Starbucks uses social media initiatives as a Magnet to attract inbound customer dialog

The firm runs its owned sites Magnet-Oriented Initiatives (effective) (e.g., MyStarbucks Idea)Third-Party Magnet-oriented initiatives (more attraction) (e.g., Facebook, Twitter)Example of Magnet-oriented initiatives:

Manager encourages positive behavior among participants ◦ Surprise reward of Starbucks Gold Card to the Top 100

contributors


Starbucks and the Monitor

Starbucks actively Monitors the social media and selectively mediates interactions either publicly or privately

Customers interactions spread virallyMonitoring helps the firm to

Correct inaccuraciesRespond to customer service issuesRelay issues to other staffPost an apology


Most social media platforms use the Megaphone, Magnet and Monitor in ways that work together to reinforce online dialog◦ Example 1:

MyStarbucks Idea Welcome page states the four points Share (Megaphone) Discuss (Monitor) Vote (Magnet) See (Monitor)

◦ Example 2: Campaign through Facebook offered a free cup of coffee to those

who said they voted in the November 2008 U.S. Presidential elections Created Awareness of the campaign, Customers voted and

intended to stop by Starbucks, Spread across the world through news feed.

Starbuck’s Complementary use of the three Ms and Different Social Media

3-M Framwork and Starbucks

Balancing Centralized vs. Decentralized Governance and Control

Social Media: Low-cost, Easy-to-deploy end user technologies Cases below can fail the organizational objectives

Decentralized Governance and control leads to disjointed efforts Overly restrictive centralized control may strangle the innovation

Starbucks unique approach by Chris Bruzzo, vice president of Brand Content and Online to manage all the 3-M’s successfully Matrix Structure to engage staff partners in every functional area of the Starbucks A centralized, cross-functional social media group offers several advantages

Avoid disjointed campaigns Learn from experimental initiatives , synthesis expertise and disseminate it

Challenges faced with Social Media

Balancing Facilitating and Censoring

Firms face challenges by chaotic nature of Internet Example: On Facebook, wall is the first page, Starbucks wall contains unwanted

comments whereas Discussion tab on Starbucks contains enthusiast comments and thoughtful dialog

Firms should recognize the they are engaging in a dialog that cannot control the user’s voice. It should always monitor in order not to exacerbate the issues. Starbucks paying an outside vendor to remove self-promoting or offensive posts Starbucks found that customers required robust tools like ‘thumb-up’ and ‘thumb-down’ Starbucks regularly monitors and addresses the rumors and mediate reaction


Mobilizing Supporters to Counter Detractors

Critics use Social media to hijack firm’s efforts via protest campaign Social media are mobilizing platforms for firm’s supporters Social media can strengthen the firm’s base by raising awareness and

growing supporters Social media allow direct engagement than conventional public relations

efforts Example:

Starbucks used social media to organize participation in its ‘Pledge 5’ initiative offered a up of coffee to patrons who pledged to perform five hours of social service


Managing Expectations and Results from Social Media Innovation Forums

TwoBest known Innovation Forums◦ MyStarbucks IdeaStorm◦ Dell’s IdeaStorm

Critics statement of truly novel ideas was proved wrong by Starbucks and it stated

MyStarbucks Idea - [DIRECT INPUT TO ACTION}- contributed to the addition of packaged gluten free products in store as per

customer’s idea


Responding without Reinforcing Negative Behaviors

Megaphone activities are effective for building brand identity and raising awareness, while Magnet-oriented initiatives help us to resolve customer service issues

Inappropriate usage of these activities may encourage complaints Social media has the ability to create indirect consequences for a very

simple issue Firms may sometimes reward the customers who had bad experience, but

remember it may lead to more complaints Starbucks initiative regarding respondents:

“Make Friends, Not Offers”


Gauging Return on Investments

Measuring ROI from Social Media is difficult Reports show that the firms invested in social media activity found

increase in revenues on average by 18% Direct Relationship: Social Media and Firm performance However the link between social media and performance may require

time to influence corporate performance Though Starbucks showed a decrease in revenue during the study period, it showed

another result to gauge the ROI for social media. Free Pastry Day was credited with driving one-million patrons to stores in a single day. NOTE: This was one of the first widespread couponing campaigns on Facebook in 2010


Align Social Media with Culture and Strategy Monitoring Social media activities yields competitive intelligence on potential problems. without Corporate culture and strategy aligned to social media,its not possible to make

the most out of social media. Some firms like Apple prefer strategies like secrecy, surprise and controlled messaging and are

reluctant to embrace Megaphone broadcasts, Magnet-oriented approach(conventional openness.)

Some aggressive advertiser like GEICO with the strong brand could not attract many customers and had only 624 twitter followers as on January 2010.

Firms need to weigh investment and expectations against their ability to align social media with culture and strategic fit.

Organize with clear Authority, Responsibility and Leadership Firms without professionalism/authority/responsibility/commitment while handling

social media space may have embarrassing and potentially brand-damaging consequences.(ex Hotel Franchiser and franchisee. )

Executive leadership plays an important role in case of conflicting obligations in a complex, large-scale enterprise systems.

Guidelines for engaging in Social Media

Guide Efforts through High-Level Principles, Not Low-level Rules Principles – Professional Communications Rules – Conflict(tone- youtube, corporate blog, twitter) Starbucks principles include “Listen”, “Be Transparent”, “Use Authorities”, “Be Human”,

“Share timely Information”,”offer personal attention”, “thoughtfully deputize throughout the company”. Etc

Create a Consistent and Authentic Voice Megaphone and Magnet are publicly visible- voice should be authentic and consistent across

the dialog flows across 3 M`s. Third party advertising and public relations –Starbucks has refused. Starbucks seeks to convey an authentic voice in many ways. It trains the staff in social media

engagement and positions them to respond to dialog in their area of expertise Consistency can be achieved by “EMBASSY APPROACH”

Example:

Facebook.com/starbucks, Flickr.com/starbucks, Twitter.com/starbucks, Youtube.com/starbucks


Coordinate Resources and Balance With out Well-planned coordination ,with the wide spread reach of social media Megaphone

may back fire.( Ex Free pastry day – starbucks, deployment implications- customer demand.) With out the Complementary effects of Magnet and Monitor, the benefits from social media

initiatives are diminished. Firms may be tempted to embrace Latest social media tools and techniques. However- important to examine how opportunities fit in the 3 M frame work.

Remember other Customers High volume of activity may tempt firms to focus on social media participants. Focusing on social media customer will help to identify issues and foster innovation. Note that they may not represent every other customer of the firm.

Example:MyStarbucks Idea participants represent the forward-thinking customer group-High Frequency customers and Tech-Savvy customers


3-M Framework assists firms to

Understand the support, planning, coordination and execution of social media activities

Identify gaps in social media initiatives

Assess strategies for emerging opportunities

CONCLUSION

social media and customer dialog management at starbucks

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