According to the Wall Street Journal, if Starbucks was a bank it would be ranked the 385th largest bank in the US. In Q4 of 2021, the company held about $2.4 Billion of cash on hand from customers “depositing” money into the Starbucks app. So what is it about the company's Brand Strategy that has people so willing to deposit their hard-earned cash? In this video Fratzke Partner and Executive Strategist, Ryan Fratzke, examines the brand strategies of today's business giants, including how organizations can transform cost centers into profit drivers.
Quick Disclaimer: These transcripts are auto-generated. They are best used in addition to the video. We cannot guarantee 100% accuracy.
Ryan Fratzke | 00:00:04:04 - 00:00:26:19
Is Starbucks actually a bank? No. It's the world's largest coffee chain. I know this, you know this. But in 20, 20, the chairman of South Korea and Hana Financial Group said technologies have allowed companies like Starbucks to become our rivals. It would be fine to call Starbucks an unregulated bank, not a mere coffee company. And listen, I can kind of see where they're coming from here.
Ryan Fratzke | 00:00:27:09 - 00:00:53:04
Starbucks is an investor. Data reveals that in Q4 of 20, 21, the company held about $2.4 billion cash on hand from customers loading or in other words, depositing money on to the Starbucks app. Keep in mind this money from an accounting perspective counts as revenue before a single cup of coffee is ever served effectively. Their customers are giving them a loan at 0% interest.
Ryan Fratzke | 00:00:53:13 - 00:01:20:21
According to the Wall Street Journal, if Starbucks was a bank, it would be ranked the 385th largest bank in the United States. So what is it about the company's brand strategy that keeps customers depositing their hard earned cash? I think it's their strategic flywheel in 2017. The company rolled out its digital flywheel strategy, focusing on four core pillars rewards personalization, ordering and payment.
Ryan Fratzke | 00:01:21:02 - 00:01:47:24
Since then, Starbucks has been innovating around these four pillars to remove customer friction. Here's how it works. Their rewards program incentivize customers to constantly be interacting with the brand, which feeds valuable first party data into their A.I. algorithms, enabling Starbucks to personalize the user experience. With real time data. From there, the system allows orders to be queued up from several different channels, including third party delivery apps.
Ryan Fratzke | 00:01:48:00 - 00:02:11:03
Essentially, customers are able to start their order from anywhere and decide where they like to pick it up or have it delivered. The cherry on top is their mobile payment system, which has more daily users than Apple Pay. And accepts credit cards. Each of these pillars perfectly feeds the flywheels momentum. Starbucks has made it a no brainer to load cash on their app because customers know it will enhance their experience.
Ryan Fratzke | 00:02:11:04 - 00:02:27:29
So here's a giant question for you. Has your team developed a strategic flywheel? I know it can seem like a huge undertaking, and it takes a ton of energy to get started. But stand on the shoulders of Starbucks because this could be the thing that gives your brand unstoppable momentum.
Fratzke Consulting breaks down this week's digital marketing, communications & culture and brand strategy hits and misses.