01/08/2013 05:19 pm ET Updated Dec 06, 2017

Starbucks: Social Media Revenue Based on Relationships

The Challenge: How can brands turn their social media fans into revenue? For Starbucks, success through social media begins with a commitment to relationship-building, not sales.

Many companies concentrate social media efforts on getting as many fans as possible, but focusing just on the number of fans misses their true value -- they are loyal customers who have raised their hands to say they want a relationship.

The real win is achieved by engaging with customers. An Ad Age study found that only 1 percent of the Facebook fans of major brands engaged with the brand pages in a given month. One-time promotions to increase the number of fans rarely produce long-term benefits. IBM's Yunchun Lee writes, "That isn't to say that CMOs shouldn't strive to build a fan base. The issue is how to do this in a productive way. There are no short cuts. Winning a loyal customer begins with matching a great product or service with a flawless and repeatable customer experience." Social media marketing requires a long-term commitment to enriching the customer experience.

Starbucks is a great example of a company taking the right approach. In an interview with Adweek, Starbuck's Alexandra Wheeler said that the firm's social media strategy "isn't a marketing initiative. It isn't a PR initiative. It's cultivating and creating great consumer value and great consumer relationships." Starbucks treats its fans to a steady stream of special deals and a richer experience than they'd get solely by going to a store, including interesting background stories on coffees and great photography of merchandise. Starbucks also encourages fans to share all of this with their friends, which spreads the good will and increases the likelihood that posts will appear more widely in newsfeeds.

The results?

1. Starbucks continues to add 300K+ fans every week to its already huge 33 million strong base on Facebook. It also has over 3 million followers on Twitter.
2. According to a joint study by comScore and Facebook, Starbucks organically reaches more non-fans than fans with its posts on its Facebook brand page. This means that fans engaging with or forwarding content more than doubles the reach of the fanbase - a process Facebook calls amplification.
3. The same study also shows that exposure to a Starbucks post leads to 38 percent increase in in-store purchases.

Key Takeaways for Marketers

1. Don't just add fans, build a genuine connection with them.
Although a large fan-base is valuable, it should be based on a genuine connection with the brand. Make it a long-term strategy to identify why consumers love your brand and use social media to build on this.
2. Make engagement worthwhile.
Deliver content that fans want and will forward to others. Great photography, stories about coffee, exclusive deals -- even taking a stand on controversial issues -- are ways Starbucks does this.
3. Use the brand page as a listening tool.
Fans give invaluable information with their likes, comments and user-generated content. Respond to any complaints, or proactively offer solutions as customer needs arise.

Ernan Roman is President of the marketing consultancy, Ernan Roman Direct Marketing.
Recognized as the industry pioneer who created three transformational methodologies: Integrated Direct Marketing, Opt-In Marketing, and Voice of Customer Relationship Research.

Ernan was recently inducted into the Marketing Hall of Fame.

Clients include Microsoft, NBC Universal, Disney, Hewlett-Packard and IBM.

2010-12-08-ernan.jpgErnan was named to "B to B's Who's Who" as one of the "100 most influential people" in Business Marketing by Crain's B to B Magazine.

His fourth and latest book on marketing best practices is titled: Voice of the Customer Marketing: A Proven 5-Step Process to Create Customers Who Care, Spend, and Stay.

Ernan is also the co-author of "Opt-In Marketing: Increase Sales Exponentially with Consensual Marketing" and author of "Integrated Direct Marketing: The Cutting Edge Strategy for Synchronizing Advertising, Direct Mail, Telemarketing and Field Sales."