The Personalization Strategy Behind Starbucks Relationship Marketing Efforts

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This is a podcast episode titled, The Personalization Strategy Behind Starbucks Relationship Marketing Efforts. The summary for this episode is: <p>Starbucks has built an incredibly loyal customer base by taking a more human approach to its brand experience.&nbsp;Their relationship marketing strategy is rooted deeply in personalizing every touchpoint, and across all 4 stages of the relationship marketing cycle.&nbsp;With over 60% of all Starbucks orders being completely custom, they have mastered personalization at scale and customer engagement both in-store and online.</p><p>Barbara Spiering explains why your brand’s purpose must be driven by both the head and the heart, and why your technology should be seen simply as a tool that helps make every interaction with your audience more human.&nbsp;She’ll also discuss how important it is to personalize everything you do, and how critical clean data and a strong platform are to executing successfully.&nbsp;&nbsp;</p><p>We also discuss the importance of zero-party data, privacy and the future of women in technology.</p>
Who is Starbucks?
02:11 MIN
Who is Barbara Spiering?
01:07 MIN
Why human connection and personalization is critical
00:52 MIN
How technology bridges the gap from physical to digital
02:09 MIN
Why acquisition and personalization are foundational
01:40 MIN
Why the Starbucks app is critical to relationships
01:12 MIN
Know what you stand for, your core values
02:02 MIN
Listening to your customers and partners is key
01:16 MIN
How clean data, machine learning and AI
01:01 MIN
What Cheetah Digital powers in their relationship marketing strategy
00:51 MIN
Why Cheetah Digital is a Starbucks partner
02:42 MIN
What's the future of privacy and personalization?
01:40 MIN
The value of zero-party data at Starbucks
01:32 MIN
You need to care, it's the basis for a relationship
00:36 MIN
How to stay ahead of of regulation
00:57 MIN
An example of Starbucks building relationships and community
01:45 MIN
The power of women in technology
01:44 MIN
Getting personalization sold to leadership
01:39 MIN

Tim: Today, I am super excited to be in Seattle because I'm talking with Barbara Spiering at Starbucks. We're going to talk about how Cheetah Digital helps them with their personalization and relationship marketing efforts. But first, I have never had a cup of coffee. Scout's honor. I promise you. So, I got to get that done here in Seattle, the birthplace of Starbucks. But before we do that, let's jump in this bad boy, take in some quick sites, and I'll tall you what we're going to talk about. Seattle, also known as the Emerald City, is the birthplace of both grunge and Starbucks. There's the Space Needle. Looks great from the air. Founded in 1971 by Howard Schultz, it's an iconic brand that has become the fabric of tens of thousands of neighborhoods all around the world. Starbucks is always striving to innovate and create new experiences for both their customers and their partners who wear the green aprons inside the coffeehouses. Oh, Seattle's Great Wheel. I hope I have some time to visit that later. Starbucks locations really are hubs where patrons can connect with their own community as well as their neighborhood barista. Today, we're going to talk about how important personalization is to their relationship marketing strategy. With over 60% of all orders being completely customized, Starbucks does personalization well and at scale. There's Lumen Field, home of the Seattle Seahawks. Cheetah Digital is proud to be the technology partner helping understand which offers need to be sent, actually delivering them, and even fulfilling the stars to customers in their loyalty program. Time to get on the ground and do something I've never done before. Well, I could get my first ever cup of coffee at the first ever Starbucks here at Pike Place with this crowd, but I'm going to go to the Reserve Roastery, where they experience the art, science, and theater of coffee craft.

Speaker 2: inaudible

Tim: Okay. Here I am and this place is amazing. It's just unbelievable. But I have to get to it. My first cup of coffee ever. Let's try it. Interesting. I don't know. I don't know if that's going to stick, but time to go see Barbara Spiering over at HQ and get this interview started. Now I got some pep in my step, so guess we're good to go. Well, Barb, I made it to Seattle and I had my first cup of coffee today at your iconic Roastery. It was amazing, the Roastery.

Barbara Spiering: Yes.

Tim: The coffee, I'm still not sold on.

Barbara Spiering: Coffee was amazing and you'll get there.

Tim: I'm not a huge coffee fan but I'm trying. But thank you for having me. This is great to be here.

Barbara Spiering: Welcome. Welcome to Seattle.

Tim: Why don't you give us a little bit about what you do here at Starbucks? I want to hear. What do you do at Starbucks?

Barbara Spiering: Awesome. I am the VP of Marketing Technology and Quality Engineering, and we like to say we create tools for our marketers to connect with our customers. It's all about the connection.

Tim: It's all about connection. And connection really is... I mean, going back to the start of Starbucks, it's in the DNA. It's not even like a, " Oh, we should connect with our customers better." Can you tell us a little bit about how connection is baked into your locations and just the whole mantra?

Barbara Spiering: The foundation of Starbucks is the third place. Creating that third place for our customers and our partners outside of work, home, this is where you can come to experience your community, to connect, and I think what everybody thinks of when they think of Starbucks is it's kind of like that Cheers. You walk in and they could say, " Hey, Tim. Do you want your usual?" They know when you're coming in because it's your work day or it's the weekend and you're coming in with your kids, so your daughter's going to want her cake pop. That's what true personalization is and that was the foundation of Starbucks, is that community connection. The connection between you, and your barista, and your community.

Tim: Okay, so connection. Human connection. Talk to me a little bit about how Starbucks and your role bridges that gap, because now you have technology to scale this across the globe and make connections with your customers, and customers to customers. How does that mantra work here?

Barbara Spiering: The goal of technology and my team is to create that bridge between the physical and the digital so customers feel as seen and known in all of our digital channels as when they walk into the store, and that it's a seamless experience if you're placing an order on your mobile order and pay, having it print it out for the baristas and going to physically pick up, you are seen as one throughout the entire experience and acknowledged and recognized. That is our primary goal. Technology, another big use for technology for us is how do we find ways to simplify the life of the barista so they can lift their head up and connect with you as an individual, and take out the repetitive or the manual tasks that really prevent them from having that true connection with our customers. Because that's why people come in. They want to be seen and known from the digital to the physical and we want our baristas to have the time to really create that experience.

Tim: You know, you mentioned something, just being recognized from a customer. We did a consumer trends index. We do it every year. This is our third year. That was a huge part of what drives loyalty. People said, " Hey, I just want to be recognized. You don't have to give me all these discounts. Those are nice, but recognition is one." It's interesting that you just said so the barista can have a connection and still do their job. How does that work? Literally, you have technology inside, behind the counter, so the barista knows your name, and if you order on the app they can literally continue that conversation at the counter?

Barbara Spiering: They can. I want to say that the best connection is the human connection, when the barista... They just know you. That's the best computer we have. The barista looks up like, " It's Tim. How you doing today?" But we also want Tim to be able to travel to Seattle and still feel seen and known in a store that he doesn't go to day to day, so if you're placing a mobile order as you come in, your name is made available to the barista so they can have that conversation and continue the dialogue. You can know you can place your order and it's going to be the same as you would get in Denver. It's creating that bridge and enabling our baristas and you to continue the dialogue.

Tim: That's great. And look, Starbucks is probably one of the best companies on the planet of personalizing at what we would call the first stage of relationship marketing, right? Relationship marketing is the idea, and you and I have talked about this off camera, you have to build relationships like humans do. You have your friends, you have your family, you talk to each other, you ask each other questions, and relationship marketing is rooted in that. And the stages would be unknown consumer, then a known consumer, then an engaged consumer, and then a loyal brand advocate. Starbucks, whether I come in with$ 10 bill, or a credit card, or anything, you ask my name. I can't even get a product from you, whether it's a sandwich or coffee or anything, without you going, " Hey, Tim. Your product's ready." How inherently important is personalization across that entire relationship marketing strategy here at Starbucks?

Barbara Spiering: It's foundational. It's foundational. And it's beyond the name, so right now about over 60% of our customers' orders are customized.

Tim: Wow. 60%.

Barbara Spiering: Over 60%.

Tim: So, instead of, " Hey, I'll take a number one," they are literally custom.

Barbara Spiering: Exactly. It is, " I want my half caff caramel macchiato with an extra drizzle of caramel." It's what you want. And so, that is customizing, personalizing the product, ensuring the interaction is one that is authentic and sincere. Because we ask your name, we know who you are. It's throughout the entire lifecycle and that is really our goal, is to create that connection and to ensure that we have a relationship. You know who we are, we know who you are, and there's that alignment of love.

Tim: Now, your app is something I use. I don't drink a lot of coffee. I don't drink any coffee, honestly, but my kids, they will get the breakfast sandwich and the cake pop, and we'll order that online. Talk to me how important it is for that app to work seamlessly and people to feel personalized inside the app. Is that a giant tool for you in this digital connection?

Barbara Spiering: It's foundational for us and becoming more and more important, especially coming out of the pandemic. People have really shifted to more digital ordering. Customers who weren't as comfortable with technology are now embracing it because they're having to do it with all aspects of their life. But we see the app as more than just a way to quickly facilitate an order. Think about it as a way to also increase inclusivity and accessibility for customers who maybe can't come in and order verbally, or read or menu, so there's so many different ways that the mobile app creates a experience that is personalized for the customer, meeting them where they're at, and allowing them to drive their interaction in a way that meets their needs.

Tim: Got it. Well, it's amazing, and it's amazing product. It's very simple, easy to use. Would you have any inspiration, or would you have any guidance, or suggestions for a brand that might not be watching right now going, " Yeah, yeah. They're Starbucks. They have all the money in the world and all the greatest technology. They're a technology company first. They make drinks second." What would you tell them to inspire them to start a stronger, more sophisticated relationship marketing strategy in their own product or vertical?

Barbara Spiering: I would say first thing is know that it's inversed. We're a coffee company who really leverages technology and I make that point because to be successful I think as an organization, a company, you need to know who you are. What's your passion? What do you stand for? What are your core values? And for us, mission and values is the heart of who we are. And making sure that that is front and center as you start that dialogue and the relationship with your customers, today customers are really choosing companies that they know what they stand for, they have some kind of alignment with them, and they believe that they're a match. Just like you have a relationship with a friend or a partner, it's based on some kind of common foundation. Starbucks has always known who we are, what we stand for, and we're a very progressive company that is inclusive and embraces all of our society, and is very vocal about that. That's part of our messaging and very important to all of the partners that wear the green apron. You can't have a relationship with a customer and market to them if you don't know who you are. So, technology should follow the message that you want to send. If it's only about the technology, and the message, and increasing the sales, it's only going to last for so long.

Tim: It's short lived. Yeah.

Barbara Spiering: You need to create a relationship and that's how you get true brand advocacy, because people believe in you and they feel seen and heard by you and the alignment of your values.

Tim: No, that's great advice, and you're absolutely right. And relationship marketing really does have... It means you have to have a two- way street. So, how does Starbucks handle that, right? Because you need feedback. You need to understand not only what does our audience as a collective aggregate need, but what does Tim need? What does Dane need? What does Michael need? How do you factor that into your relationship marketing strategy?

Barbara Spiering: Couple different ways. One way is listening to our partners in the store. They have that direct relationship with our customers and they're customers themselves. The customer experience is only going to be as good as our partner experience, so making sure that we are listening to them. What are they hearing from our customers? What do they love? What are they passionate about? That should be part of our messaging. The second is leaning into what our customers are saying through... TikTok drinks are huge right now, right? We have customers create their own drinks. They go viral on TikTok. Finding ways to bring those into the store. Pink Drink started as a TikTok drink.

Tim: Really?

Barbara Spiering: So, how do we listen to our customers and let others get excited about it, bring it into the store, and then show that we're listening and reflecting that back out?

Tim: Yeah. How do you do that at an individual level? Is it through the app? Do you understand my history? I mean, if you look at my app history, if it were to be spit out or printed out, there's no coffee sales in there, right? It's cake pops, as you mentioned, and other drinks. How does the individual personalization... How important is that to Starbucks from a technology standpoint? And for a marketer right now going, "All right, I know I need to personalize. I know that's the path forward. But I don't have the technology." Again, what's your inspiration and advice to somebody who knows they need to get there?

Barbara Spiering: Clean data. You need to have really strong data governance practices. Machine learning. At our scale, it's not a individual looking and creating messaging for individuals. A lot of it is driven by Deep Brew, which is our data science application. Those are critical. If you don't have clean data, you're never going to send the right message.

Tim: And I'm going to ask you, because we've been partners for a while at Cheetah Digital here. We have a personalization engine that you're utilizing. Can you explain a little bit about what Cheetah does specifically inside your technology across your relationship marketing strategy?

Barbara Spiering: For a lot of our SR members, Starbucks Rewards members, one of the big interactions they'll see from us and Cheetah is when we send out streaks, or, " Hey, come in four times this week and you'll get so many stars," or, " Try this product dashes." That is done in cooperation between our Deep Brew algorithms and then Cheetah to understand what offer we sent, send the communication out via Cheetah, track the progress, and then eventually award the stars when somebody has met the hurdles that they've been given.

Tim: Got it, so you have a lot of in- house technology. You're one of the most advanced companies on the planet there. We get it, you're a coffee company first and foremost, but how did Cheetah land there? Why and how did Cheetah become the engine to deliver what you just explained?

Barbara Spiering: Even before this, we've been working with Cheetah for 15 years, right?

Tim: Email, bulk email, transactional email.

Barbara Spiering: Yeah, we've had a really longstanding relationship with Cheetah, and that's always been a great partnership. When it was time to look at what are we going to do with our personalization efforts, we of course looked at many companies.

Tim: Sure, there's a lot out there.

Barbara Spiering: There's a lot out there.

Tim: It's a big thing right now.

Barbara Spiering: And a lot have different strengths, but we look at not only what is the technology, what is the roadmap, is this a company we want to work with? Do their mission and values align with ours? Do they have happy employees? It has to be just like a relationship with your customer. A relationship with our suppliers is really important, that this is something we want to go in for the long term. And Cheetah met that, so we started down this journey of creating this, our personalization platform. What's been really amazing for us is how it's went from we need to implement this, let's just stand this up, to here's the things we want to do, here's the direction we want to go, here's our problems, and these co- creation dialogues that we've had with the Cheetah product team that has allowed us to not just take an app and put it in, or to bring it in and customize it just for us, but to come together and co- create something that allows us to have a supportable, somewhat off the shelf, because you're building in this new capability, and you're having these dialogue with us and talking about the future and how together the companies can help each other.

Tim: That's great, so it sounds like we're the partner who not only just has a product and has capabilities sitting on the shelf, but truly can create the solution as you need.

Barbara Spiering: With us. Yeah. It's the difference between buying a commodity and putting it in and sort of having a relationship and building something together for the future. That others can use, right? This is great for Starbucks and it's great for Cheetah because I think we're doing innovative stuff, but there's a point where other people are going to want to do it too. Maybe at different scale. And it's really creating a really strong product with Cheetah.

Tim: That's great to hear. That's great to hear that we're a strong partner, we have been for a long time. We're solving your nearest and dearest needs because personalization is everything these days.

Barbara Spiering: It's our future.

Tim: It is the future. So, Cheetah's solving some great problems for you. We're scaling your realtime data and your personalization engine, but we both know together, and other brands watching, there are rocky roads ahead. One, the increased desire for personalization from consumers. We know that's lifting day over day. People want more personalization. However, they also want more privacy, and so do legislators across the globe. We see all the laws here in America, we see them happening over in AMEA. Do you have any thoughts about what the future of privacy and personalization and that balance, that conundrum looks like going forward?

Barbara Spiering: I do. I think the laws are going to continue to evolve, first of all. It's important for us, though, as a company, to have a solid perspective where we're not just trying to be compliant. That's not enough. That's just checking a box. I've done the bare minimum to meet the legal needs. We need to look at what our customers want, and what they want is agency over their data. They want to know that there's a value exchange, if they're giving us their data we respect it, and they're getting something in return. But at any time they could say, " Okay, thanks. I'm going to take my cookies and go home." So, we really talk a lot about how do we create that agency and strive to meet our customers' needs, which is going to continue to raise, and the bar's going to continue to go up. And if we do that, we'll have met the legal needs. But the customer is our focus and that is what we're really going after is how do we make sure our customers trust us, know we will protect their data, and that they have agency over it.

Tim: Yeah. It's incredibly important, especially... We have kids, right? We have to protect our kids, and the data that's collected around them, and the behavior and whatnot. I'm going to ask you if you have an opinion on the phrase zero party data. It's been a few years now, right? And we define zero party data... By the way, Cheetah is, as Forrester has recognized, one of the largest scalable collectors of zero party data for brands. We define it as information that a customer will give willingly, usually via value exchange, directly to the brand. So, not to a Facebook, not to a Google, not to a third party intermediary. Directly to an entity so that the entity can use it. How important do you think the idea of zero party data, brands having that conversation, asking direct questions and getting psychographic data usually, how important do you think that is to the future of brand marketing?

Barbara Spiering: I think the critical word in your question is conversation and that's why it's so important, because when you have a relationship, it's a dialogue. And customers know if oh, you went out and bought that. They can tell. Or it enters the creepy zone. Why do they know about me? Because they're mining my data. But when it is conversational, then it's freely given and they know they're going to get a value in exchange, and it creates that dialogue and relationship. We want to know more about you. We will respect that. And we will know that you are a vegetarian. We're not going to send you a promo for our sausage breakfast sandwich, right? It's not relevant to you. It's not something that you want to see.

Tim: Got it. So, you got to be in that conversation, and it's always on, right? It's not a acquisition play. It is, again, if you look at the relationship marketing stages, you've got to ask questions. The only way to get from unknown to known is to ask questions. Hey, what's your name?

Barbara Spiering: Yeah. It's care.

Tim: Care. That's a great way. Marketers need to start being more human and start caring about the people that they're reaching with.

Barbara Spiering: Yeah. And that's to me the biggest strength of technology. It's not to remove the human experience. It's to allow it to be richer and to create a vehicle for those conversations.

Tim: Do you think there are best practices out there right now, or resources, or should government or some body be telling brands, " This is the way to have human conversations through technology?" What resources are in place or have you seen that a brand that might be watching right now could go out and explore this? Do you know of anything?

Barbara Spiering: The governments I think are always going to be behind what the technology can do, so while that's an important aspect, it's never going to reflect the here and now. It's going to reflect the yesterday. You need to catch up. I think the best places are to have conversations with your trusted partners, like a Cheetah, an say, " What are you saying? What are other companies doing? Where do you guys see it going," to reach out to your peers and form that network, and then most importantly, ask your customers. Create that dialogue.

Tim: Yeah. And you even do it with your partners, right? Anyone wearing an apron in a Starbucks is a partner and you're getting that feedback.

Barbara Spiering: Absolutely.

Tim: Okay, and we've talked a bit about personalization, but do you have a favorite example or an experience that Starbucks has run that displays really good human connection, understanding, and that relationship building?

Barbara Spiering: I do. It doesn't involve technology but I think it's really foundational to what Starbucks is about, and that's our Neighborhood Grants program. And through the Neighborhood Grants, it's actually asking our partners to submit local charities in their community to receive a grant from Starbucks to continue their good work. That's really putting our money and our connection right into the individual communities, looking to our partners to be part of that community building and conversation. They live there, they work there, they know what their communities needs, and who's really doing good. And we've given I think over five- and- a- half million dollars since this program started.

Tim: Wow.

Barbara Spiering: That's community building and personalization.

Tim: That is. That's right in your own back yard at scale.

Barbara Spiering: And coming from our partners. Coming from our partners saying what's important, what are their community needs, and who's doing good.

Tim: It's super important to recognize that rather than a board room, or a few executives in an office somewhere in some city saying, " This is what we're going to do," to go out to your partners, the people with the feet on the street, who live right next to their own customers. I mean, there's probably baristas who have a next door neighbor that comes in every day to their store.

Barbara Spiering: Exactly. And then you're seeing the small groups that are really making significant impacts but won't raise to the level of being on a Seattle corporation's radar when they're in a small city in Texas, right? So, this gives the visibility to the groups that are really impacting that community today and making sure that they have the funding they need to continue the work.

Tim: Well, you are a strong woman in technology, and I know that you're passionate about that space. We at Cheetah... I know Michelle Curless is a big part of our relationship here from the Cheetah side with Starbucks. Tell me a little bit about your passion for women in technology, and what that means, and what do you hope the future holds for women in tech?

Barbara Spiering: We need more. Let me start with that. We need more women in technology. I know that I have a very atypical journey because most of my career in technology I have reported to women. But when I talk to my peers, I have several who have never reported to a woman until they came to Starbucks and our CTO for the last couple years, Gerri Martin- Flickinger, was obviously a woman. We should be able to look up and see somebody like us, and be inspired by that, and the only way to do that is to really focus on the young talent and make sure that we are encouraging young girls to join STEM programs. Making sure that as we bring on interns and hire that we are looking for strong women to come in. Looking at areas where they're underrepresented, like security, SRE functions, and saying, " Hey, how do we get women into these roles?" And create visibility for others that are coming along to go, " Oh, someone like me is there. Okay, they want me." And we're really respecting that it's a different journey and different conversation and having those conversations makes us stronger as a technology organization.

Tim: Absolutely. And as a company. And just culturally.

Barbara Spiering: As a world.

Tim: It makes you better people.

Barbara Spiering: Yeah. It does.

Tim: We have strong women on our team, great leaders, and our chief product officer at the wider CM Group, who is part of Cheetah now, is also a woman. So, there are a lot of strong women out there and that's good advice. Hey, if you're hiring, go find a strong woman.

Barbara Spiering: And let them show up as a woman and not by playing by the men's rules.

Tim: Sure.

Barbara Spiering: Bring your feminine self and celebrate that.

Tim: Well, this has been great. I appreciate you having us. It's been a great conversation. I want to end with one inspirational thought from you. There are people, brand marketers right now, of all genders, across the globe, large and small organizations, watching, going, " Yeah. Starbucks, they do great things, personalization, et cetera." How can someone get this sold upstairs if they know they need to personalize, they know they need better technology? Do you have any advice on how to go make the case upstairs to get that started in their own brand?

Barbara Spiering: The numbers speak for themselves, first of all. Cheetah provides case studies that talk about the value of personalization, the ROI compared to the spend, the case makes itself. But as important as that is, you need to understand the message that you want to send to your customers and why you want to have that dialogue, because the personalization won't be effective unless you understand what you want to say and what relationship you want to have. So, when you bring the two together, powerful. You need to bring them together.

Tim: Got it. So, understand what your brand is about and make the case based on data that says, " If we personalize, we'll get this result in."

Barbara Spiering: Bring the head with the heart and that's your message.

Tim: Bring the head with the heart. I love that. The head with the heart. And this is from somebody in technology. Well, this has been great.

Barbara Spiering: Thank you.

Tim: I appreciate your time. I hope to see you again soon. Everybody out there watching, appreciate you watching another Signals Executive Series session here with Barb from Starbucks. We'll see you on the next one. Well, that was a great trip to Seattle and my first cup of coffee. Still not sure that drink is for me. Needed some inaudible. What happens in Seattle, stays in Seattle.

DESCRIPTION

Starbucks has built an incredibly loyal customer base by taking a more human approach to its brand experience. Their relationship marketing strategy is rooted deeply in personalizing every touchpoint, and across all 4 stages of the relationship marketing cycle. With over 60% of all Starbucks orders being completely custom, they have mastered personalization at scale and customer engagement both in-store and online.

Barbara Spiering explains why your brand’s purpose must be driven by both the head and the heart, and why your technology should be seen simply as a tool that helps make every interaction with your audience more human. She’ll also discuss how important it is to personalize everything you do, and how critical clean data and a strong platform are to executing successfully.  

We also discuss the importance of zero-party data, privacy and the future of women in technology.