Three years ago, on a business trip to South Korea, Starbucks CEO Howard Schultz was amazed to see how ingrained smartphones were becoming in everyday life; in Seoul, phones were not only being used for communications and browsing, they were creating close links between social media and mobile commerce. When Schultz returned to the U.S., he says, he felt he had glimpsed the future.
"We were very early on in realizing we had an asset with the Starbucks loyalty program and the Starbucks card. So we invested way ahead of the curve in integrating that program into the Starbucks smartphone platform."
But this year he went even farther, when Starbucks struck an alliance with Square that allowed store customers to make digital payments through their phones. He now sees these efforts as reflective of a larger revolution that has shaped his outlook for the Seattle-based chain.
"Any consumer brand today—whether Starbucks or a product like Tide—it is incumbent upon the company to create relevancy in all aspects of your customers’ lives," he says. "The price of admission is not good enough if your relevancy and market position is only where the product is sold. We said to ourselves that we have to be as relevant socially and digitally as we are when the customer is inside our four walls as when they’re outside—and we want to thread the equity of the brand and the Starbucks experience to multiple platforms—digital, social, mobile—that encompass all aspects of customers’ lives. This is a big thing we’ve learned for 2012, and I think companies that don’t understand it are going to left behind."
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