starbucks presentation

Beth Wernet Pam Jue Meghana Khandekar Shelly Ni

Q : What brought you to Starbucks, the first time you ever went?

"Weekend morning Starbucks runs with my dad are one of our most important father-daughter traditions."

- Kylie, 15 year Starbucks customer

A : Friends or family

"Weekend morning Starbucks runs with my dad are one of our most important father-daughter traditions."

- Kylie, 15 year Starbucks customer

Super regulars16-20 x mo.

Regulars8-12 x mo.

Occasionals1-4 x month

4%customers

17%customers

79%customers

20%revenue

37%revenue

43%revenue

Who goes when?

Super regulars16-20 x mo.

Regulars8-12 x mo.

Occasionals1-4 x month

4%customers

17%customers

79%customers

20%revenue

37%revenue

43%revenue

What's interesting here?

"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, it's belittling the very role that it created for itself, and for its customer. It isn't easy for all of us who used to love our cozy neighborhood Starbucks."

- Ray Oldenburg, writer behind 3rd place idea.

Coffee Trends

Starbucks Trends

Starbucks Trends

Strategy

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.

Strategy

Introducing: Starbucks Coffee Breaks

How it works

Starbucks Mobile 100 million mobile payment transactions since program launch in January 2011

2 million mobile payment transactions/week

$3 billion loaded onto Starbucks Loyalty Cards (mobile & physical) accounting for

25% of all store transactions(Nov 2012)

October 2012 launching mobile payment partnership with Square, increasing payment capabilities

How it works

Increased functionality to add & manage contacts

Starbucks Coffee Breaks

Increased functionality to be built into Starbuck's existing mobile app

Select nearby friends

Select meeting place

Message multiple friends at once1 2 3

How it works main app flow

How it works main app flow

Via Square GPS,grouping and discount earned display automatically

Friends receive invitations and can accept or decline

Optional: Originator of the Coffee Break can allow invitees to add additional friends to the group

4

5

6Meet in store for a Coffee Break!The more people you can recruit, the bigger discount you will receive

1 Friend = 10% off 1 drink2 Friends = 15% off...10+ Friends = 50% off

Friends can be saved and organized into more permanent grouping

Message all group members to organize meet ups in advance, or anyone who's nearby for an impromptu coffee break

How it works app flow - saved groups

Group Stats Store Stats

How it works app flow - group & store stats

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)

$177M - 422M

5 - 10% increase in annual US customer traffic (225,000 - 450,000 more visits / year)

12 - 36 MONTHS (GLOBAL)

$450M - $3B

5 - 30% increase in annual global customer traffic (400,000 - 2.4M more visits / year)

Estimated Revenue

Facts from Annual Report: 60 million / week$13.3B / year revenue75% of revenue comes drinks bought in store10,000 US stores17,000 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

Estimated Revenue

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

Model

Americans spend $40 bil on coffee

35 mil premium

36 mil low

8 mil Starbucks

79 million buy coffee away from home

62 million take coffee breaks

Coffee Market in US

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

6 months: start with US, all stores

pilot program: analog and update to the app side by side. try to get people to adopt the app.

timing:try out discountsif you want to continue taking advantage of discounts, DL the appapp DL card? usually costs money, but you get a coupon code to DL it for free

app + square - most convenient for barista & customeranalog - widest adoption1/4 of customers can participate if payment can only be made using app + sq

between now and april - dev the app, marketing campaign, user testing, in april:1-3 months before the app launch and after: once a week (set by SBX) bring a friend for hump day. (work on wording)use the card/app anytime

Mockup facebook/email integration? (App could send invite via facebook to user w/o app, accepting directs to coupon code as well as prompt to download app)

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

Launching the Program

6 months: start with US, all stores

pilot program: analog and update to the app side by side. try to get people to adopt the app.

timing:try out discountsif you want to continue taking advantage of discounts, DL the appapp DL card? usually costs money, but you get a coupon code to DL it for free

app + square - most convenient for barista & customeranalog - widest adoption1/4 of customers can participate if payment can only be made using app + sq

between now and april - dev the app, marketing campaign, user testing, in april:1-3 months before the app launch and after: once a week (set by SBX) bring a friend for hump day. (work on wording)use the card/app anytime

Mockup facebook/email integration? (App could send invite via facebook to user w/o app, accepting directs to coupon code as well as prompt to download app)

Risks

● Customers don't use it● A competitor will launch

something similar

Costs

$1.03 million in US

● App Design/Development● Print and Online Advertising● Training Baristas

Risks & Costs

Large & loyal customer base

5 Million active Starbucks card

members

Mobile Payment leader

Square Partnership2 mill mobile

transactions per week

Locations

17,600 locations worldwide

10,700 in US

"Third Space"

Free WiFi

Starbucks Evenings

Starbucks Strengths

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 MeetUp/Eventbrite

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

United States

- online education

increasing, 2010 6 mil+ in the US signed up for a least one online class

- 31% of total enrollment

were online enrollment in higher education

- 10% growth rate in

enrollment

- Funding $22 mill

- 197 courses in 18 subjects

- 1,755,551 students from

196 countries have enrolled in at least one course

- meet-ups organized by

students in about 1,850 cities.

- Funding $15 mill

- 18 courses

- 753,000 students

worldwide have signed up since January

- meet-ups

organized by students in about 450 cities.

- Non profit $60 mill

- 8 courses, expanding to 25

in 2013

- 370,000 “unique learners”

and 31,000 new students this semester, aiming for 1 billion students

- meet-ups organized by

students world wide: Tunisia, Pakistan, New Zealand, Latin America.

Future Online Education

Future Global Profits

Model:

Total # of groups globally within online education, MeetUp & EventbriteAssume 25% of groups use social groups discountApproximately 10 people per group, meet 2 times per monthSpend $30.90 per visit

Online Education: $590 milEventbrite/Meetup: $215 mil

Total: $805 million first year

"if you decide to join [a group], you can cut your risk of dying over the next year in half."

- Robert Putnam, Bowling Alone

"Coffee is a gift to mankind, coffee unites, coffee entertains, and coffee educates."