The Starbucks Question: Should Businesses Text Coupons To Nearby Customers?


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I get this question about 90 per cent of the time when I speak to an audience about mobile marketing:  How far away are we from me getting a text message when I walk by Starbucks with a coupon for 10% off coffee?

I’ve been getting this question or slight variations of it for the last five years. One interesting side note is that it’s almost always about Starbucks, too. Sometimes it’s McDonalds, but I’d say 9 out of 10 times it’s Starbucks.  

So for the last 5 years, this has been my answer: 

Never. And here’s why. 

First of all, unless I’ve given my permission to Starbucks to send me a message, they’re technically spamming me by texting me as I walk by the store.  Generally stores don’t like spamming people.   

But let’s say you opted iin to get messages as you walked by Starbucks, or better yet, you downloaded their app and said, “Yes! Please share my location so I can get offers as I walk by a store.” 

I’d like you to try this exercise on your way home from work today. Count the number of Starbucks you walk or drive by. I personally pass four Starbucks every day  — so which one of those is going to send you the message? All of them? Now include other stores like McDonalds and Walgreens.  What if they also wanted to send messages? How many of each of those do you pass each day? I’ll bet it’s anywhere from five to 20 stores.  That means you could get up to 20 messages on each leg of your commute from these places.  That’s a lot.

But let’s say you can select the exact store you want to get an offer from. 

You’re still going to need a lot more than 10 per cent off to get someone to divert their path into your store.  Think about it.  As you leave work today and you’re either walking to the train or driving home, think about what it would take to divert you into a store that you hadn’t intended to go into. 10 per cent off a $4 coffee?  No way. I don’t know about you, but I know it that I can be standing on the El platform waiting for the train exactly 4 minutes after I walk out my office. I get angry at people if they’re walking slowly in front of me because usually I’ve checked TrainTracker online to know that the train is going to arrive in 5 minutes. Risk missing the train by going to Starbucks for a 10 per cent coupon? No way.

But let’s say you’re plenty early leaving work, it’s a nice day and you have ample time to dash into Starbucks and get a delicious cup of coffee.   

It’s probably not during the time you normally drink coffee.  How can I confidently say this? Because the last thing Starbucks needs is to incentivise you to come in during peak time to get a discount on coffee. So that leaves the afternoon. Who wants a coffee in the afternoon? 

Yes, plenty of people want an iced coffee in the afternoon. There are also plenty of people who will give Starbucks permission to send them messages from their preferred store, have time to jump into a Starbucks store for coffee, and are looking for coffee at non-peak times. 

Who are these people? They’re called EXTREMELY LOYAL EXISTING STARBUCKS CUSTOMERS, and they’re very profitable for Starbucks for exactly the reasons I’ve just listed.  The last thing you want to do is give them a discount!  In fact, these people run into Starbucks all the time just because they see the green mermaid.  That’s all they need to be incentivized to go in.  Starbucks know this–it’s why there are so many stores in the first place.   

So what’s a store to do?   

As an entrepreneur, I’m an optimist. That’s why it was so hard to write this post. The entire time I’m thinking to myself, “If you just got a better offer, it might work,” or, “One of the stores might be better than the other, but the person might not know it.” The thoughts kept flowing on how to make this idea work.  So here’s what I’ve come up with: 

1. Have people sign up for really cool specials that are truly once-in-a-blue-moon incentives.   

2. Tell them that these are intended to get them to try new things, and that you value their feedback if they do you this favour.  They are your loyal customers and you really do care what they think. You promise not to send them dumb offers as they walk by.   

3. When it’s time to send an offer, target that offer to your loyal customer for something they’re not buying right now. If you’re Starbucks, now is a great time to give your loyal customers an incentive to buy Via. So offer them 75 per cent off Via today only. 

Then, when they buy Via, ask the customer on the receipt or package to text in their thoughts.  Did they like it? What did it remind them of? Either ask them qualitative questions that get meaty, thoughtful answers, or ask them on a scale of 1 to 10 how likely they would be to recommend Via to a friend.   

Now you’ve not only incentivized your best customers to try something new, but you’ve also got real data from them on what they think. Data you can slice and dice in endless ways. Maybe people in the South think Via tastes great, while people in the East think it tastes a little bitter. Maybe people buying Via in the afternoon would definitely promote it to friends, while people buying Via in the morning are less likely to be promoters.   

Oh, and that data is in real time. You don’t even have to organise a focus group or send out a survey. That stuff takes months. You can know what your customers are thinking now.  

So there’s my long winded answer to the the Starbucks question. And now I need cup of coffee. What do you think?