Last week, Starbucks reported its sixth straight quarter of same-store sales declines.
The turnaround plan set into motion nearly a year ago is ambitious, and while oriented in problems that need to be solved, the plan itself feels like it’s focused on the symptoms of the slump, not the root cause of the brand’s challenges: a lack of clear identity.
That may seem surprising as Starbucks is a strong global brand. But identity isn’t just about how recognizable a brand is visually; it’s about a brand having a clear understanding of what it is and who it is serving.
Earlier this year, a fantastic brand campaign, Hello Again, served as a reintroduction, if not a reset, to the Starbucks it once was and an aspiration to return to being a third place where customer connection is paramount. It felt like a catalyst for change, but in practice, the change that followed felt more frenzied than focused, more forced than genuine, throwing a lot of new and different things into the ecosystem. In an attempt to reposition the brand by getting back to its roots and a return to what worked in the past, it has omitted the single most important element in the equation: the customer.
Defining the new Starbucks
The decision to return to a third place squarely redefines Starbucks as a coffee shop. But is it?
For over a decade, it has pivoted away from that identity, even dropping the “Coffee Company” from the logo in 2011 as a way to broaden its appeal. In that time, it has drastically expanded its offerings, moving heavily into food and non-coffee drinks, and has become far more of a QSR than a coffee shop, competing across different dayparts and leading with ease and convenience over quality and experience.
Now it’s adding “Coffee Company” back into the end cards of their spots, investing $150,000 per store to design inviting spaces and, at the same time, exploring customizable energy drinks and launching a new protein-infused cold foam. The brand is giving jack of all trades in an already saturated, largely homogenous marketplace where relevance has given way to trend chasing.
Starbucks needs to land what it is before it reintroduces itself and says “Hello Again.”
With the present day experience feeling leaps and bounds from future aspirations, the focus needs to be rooted in a clear identity grounded in the value Starbucks brings to its consumers. Is it a space to gather? Is it more of a human connection? Is it about exclusive drinks only available at Starbucks?
Right now, the reinvention feels one-sided.
In order to calibrate and create effectively, Starbucks needs to identify and map out its audience, the segments within that audience and the prioritization of those segments to meet them where they are.
If it resets with a customer-centric lens, there are two opportunities it might consider that drive value, are ownable to the brand and create meaningful differentiation not just from the competitive set, but in re-establishing their own identity.
Starbucks Rewards
Once the crown jewel of loyalty programs and best-in-class marketing, Starbucks Rewards has become a shadow of itself.
Part of its initial novelty was the gamification that not only made earning rewards fun, it became a built in engagement loop. Anticipation around recurring sweepstakes such as Starbucks for Life were tune-in drivers that translated to sales drivers. Now, rewards are harder to earn, less valuable than before and challenges are generally designed to move the product or daypart that is most important to the company, not the customer; it’s become another generic loyalty program.
But it doesn’t have to be. In the spirit of reinvention, getting back to the best parts of what made Starbucks Rewards one-of-kind, modernized to the needs of today’s customer could be a simple unlock in the brand’s efforts to reposition and reintroduce itself.
Experience as a service
Transactional value may seem like it would breed transactional benefit, but the reality is — it’s table stakes. The cost of a product lined up to the value you feel it provides is baseline for business. For sales to skyrocket, value needs to be defined at a higher level.
It’s bigger than writing a name on a cup, or consistency across brand guidelines and customer service; it’s about brand expression through brand experience. If Starbucks is investing heavily in its stores, the decor alone won’t shift the tone. There’s a blank canvas of creative space to design what could be a memorable, recognizable reason to visit. Something that drives traffic and anchors Starbucks as experiential as much as functional, intentionally blending the best parts of the brand to best serve value to the customer.
It’s about establishing what Starbucks wants its customer to see, think, feel and do leading up to, during and following each store visit.
Cultural reinvigoration through product innovation
For a long time, this was where Starbucks thrived.
Over 20 years in, the brand power alone of the PSL is a testament to that. The frappuccino? Iconic. Now we’re seeing a swath of new products enter the menu board, which feel less like a test and learn and more untethered, absent of a clear audience or tie to the brand’s value (I’m looking at you Olive Oil infused coffee).
In a purposeful and well-intented pivot to lean into the voice of the customer, Starbucks recently launched a Secret Menu competition. Long held as the IYKYK version of popular but not publicized drinks, Starbucks aimed to elevate the creativity of their customer and lift their drink from secret to spotlight. But it lacked originality, with Taco Bell launching a nearly identical Fan Style program at the same time, and the rigidity in how one created the drink felt limiting and almost antithetical to the spirit of real innovation.
Competitors have played in the celebrity collaboration space — Dunkin’s Sabrina Carpenter partnership or McDonald’s celebrity-inspired meal orders. It’s not where Starbucks belongs, but it needs to decide on a clear picture of how it lives in culture. What does it influence, what does it create, who does it mobilize, what role does it play?
Real product innovation provides an opportunity for real differentiation and a reason to buy. This isn’t about chasing a cultural trend or paying to play in a space that is culturally relevant in the moment; it’s about applying creative problem-solving around how to embed in culture that taps into the best of what Starbucks can offer and speaks to its audience in a way that actually resonates.
It’s time for its next PSL-level product innovation.
A Venti-sized opportunity
The brand glass isn’t half empty, far from it. Starbucks has the benefit of a brand with the recognition, scale and affinity to build and grow in ways that evolve its identity, reconnect with its core customer and write the next chapter for how it’ll leave its mark in culture.
To win the hearts, minds and wallets of customers requires relevance, value and differentiation; you only matter if you mean something to the customer you’re servicing.
Brand can be a remarkable engine for growth. The caffeine jolt for Starbucks will come from a double shot of audience-led strategy and innovation that puts its product and experience in the heart of culture.
Jen Kling is a marketer and strategist with 20 years of experience building some of the world’s most beloved and iconic brands. She specialises in brand strategy, go-to-market strategy, integrated marketing, and brand partnerships.
