Starbucks and ROI on ‘Tweet-a-Coffee’ Campaign

Unknown

Return on investment (ROI) is the benefit to the investor resulting from an investment of some resource. A high ROI means the investment gains compare favourably to investment cost. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. In purely economic terms, it is one way of considering profits in relation to capital invested

In the past, most marketing involved one-to-one communication. Traveling salespeople knew their audience well, and went door-to-door to deliver custom personal messages about their products to willing buyers.

Nowadays, Brand marketers are using many approaches in an effort to be part of the conversation, and are leveraging multiple social channels to do so. These programs are far more complex than the one-to-one and one-to-many paradigms. It’s very easy to just start measuring your ROI by counting how many Twitter followers and Facebook friends you have. Or you could be a bit more advanced and measure retweets and likes.

Overview

On the 28th October 2013 Starbucks partnered with twitter to launch their ‘Tweet-a-Coffee’ campaign across the US. The initial idea was all about buying anyone, anywhere (within the US) a coffee as a small gesture of kindness, and according to Adam Brotman, the chief digital officer at Starbucks, Twitter had the strength to help them achieve this.

In order for the campaign to work users had to link their Starbucks and credit card account to their twitter profile, then by tweeting @tweetacoffee with a twitter friends tag, an eGift worth $5 was sent to their desired recipient.

Discussing

Almost half of Starbucks’ total business comes from its primary target market of men and women aged 25 to 40, it’s this group alone that account for almost half (49 percent) of the brands total business. I believe for this campaign especially this target market was Starbucks most desired as people of this age are more likely to be cardholders and active on social media.

Twitter and Starbucks have worked together to help bridge the gap between our online and offline worlds, this is something beneficial for both brands. It’s a great opportunity for Twitter to become a direct response marketing channel while Starbucks now has information for all their gifters and recipients in their system, which could have massive longer-term impact on the ROI of this campaign. For this campaign, they aim:

  • An engaging campaign that customers wanted to interact with.
  • Enticing new and existing customers to be more active or to set up an online account with their brand.
  • Bridging the gap between our online and offline lifestyles meanwhile connecting multiple people across the US.

StarbucksTwitterCampaign

Research firm Keyhole tracked all the instances in which someone used “@tweetacoffee” in conjunction with a friend’s Twitter handle and found that

  • More than 27,348 twitter users with 36,711 posts and US$183,555
  • Some 34% of users bought multiple gift cards
  • 32% of the purchases occurred on the first day.

The tangible benefit

It’s a validation of the idea that social media can have a very direct ROI. While most campaigns that organizations run are brand-building campaigns, there is certainly a great opportunity for Twitter to become a direct response marketing channel as well.

The intangible benefit

Starbucks now has information for all these gifters and recipients in their system, and this can have massive longer-term impact on the ROI of this campaign.

As these users continue to be customers, Starbucks now has a tie-in between the Twitter accounts,  credit cards,  mobile devices and their customer list (and they have it for 54,000 people gifters and recipients) which is something to be excited about! Even tech companies have struggled so far with creating a link between these different IDs for their customers, let alone consumer brands.

The strength and weaknesses of the ROI approach.

In 2013 Starbucks spent $11 million on digital advertising and a whopping $93 million on advertising as a whole. It’s clear to see that the ROI for this campaign alone wasn’t a huge success for Starbucks, with their total of $11million spent on digital media and a return of only $180, 000 from the Tweet-a-Coffee campaign, it seems that a few pockets have been left empty.

However it hasn’t all been for nothing, this Starbucks campaign was about a lot more than just $180k in eGift sales. Starbucks gave their audience a simple but strong motive to tweet, the idea of gifting a friend and receiving a little something for themselves in the process, the incentive that if you buy one, you get one free. The brand now has strong links with twitter, access to its online customer list plus access to their customer’s card details and mobile devices, a huge achievement that will provide them with knowledge they never had before. The campaign has also given Starbucks exposure online and enabled them to create a community and engagement centre for not only themselves but new and existing customers.

It was about customer understanding, identification and targeting that will help them for a very long time!

State Library of QLD with network effects

square-logo-slq

In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When a network effect is present, the value of a product or service is dependent on the number of others using it. Telephone is an example. The more people who own telephones, the more valuable the telephone is to each owner. This creates a positive externality because a user may purchase a telephone without intending to create value for other users, but does so in any case. Online social networks work in the same way, with sites like Twitter and Facebook becoming more attractive as more users join.

Direct network effects: An increase in usage leads to a direct increase in value for other users. For example, telephone systems, fax machines, and social networks all imply direct contact among users. An example is online gamers who benefit from participation of other gamers as distinct from how they benefit from game developers.

Indirect network effects: Increases in usage of one product or network spawn increases in the value of a complementary product or network, which can in turn increase the value of the original. Examples of complementary goods include software (such as an Office suite for operating systems) and DVDs (for DVD players). This is why Windows and Linux might compete not just for users, but for software developers.

Cross network effects: An increase in usage by one set of users increases the value to and participation of a complementary and distinct set of users, and vice versa. An example is developers choosing to code for an operating system with many users, with users choosing to adopt an operating system with many developers.

State Library of Queensland presently bring some basic online services by using their e-services. They includes access One Search (online library resources), and book a computer. They also have Twitter and Facebook account with thousand of followers. This could bring more value for them because they have many followers and users. However, their online content need to be upgrade which user can interact with and access easily on many platforms not online on the desktop web browsers and online contents for different group of people like play-study area for kids. For the direct network effect, the more the new users use and get involved on the services on their website, the more value they gain. For the indirect network effect, users often visit their website and use their online services, new users could be brought by currents user and their interesting online services. So they could find other social networks like Facebook and Twitter to keep in touch with new updates and events for SLD. On the other hand, cross network effect could happen when their users spend much times on their online contents, they interact with Library and other users by feedbacks and comments. Library can gain more value from the feedbacks and comments of users and their frequent of visiting the pages.

Netsmart – Professional Service Company

Professional services are occupations in the tertiary sector of the economy requiring special training in the arts or sciences. Some professional services require holding professional licenses such as architects, auditors, engineers, doctors and lawyers. Other professional services involve providing specialist business support to businesses of all sizes and in all sectors; this can include tax advice, supporting a company with accounting, or providing management advice.

Netsmart Technologies is an American company that develops and sells health information technology, including electronic health records, especially for organizations and entities in the behavioral health field. It was founded in 1992 although its technology origins go back to 1968 with the founding of Creative Socio-Medics, which it acquired in 1994. Netsmart has since grown via many other acquisitions. It is headquartered in Overland Park, Kansas.

At Netsmart they are trying to change the world. Literally, the work they are doing helps their clients provide better care to some of the nation’s most vulnerable populations. They take their leadership position in health and human services seriously.  Netsmart is the knowledge and technology partner for more 23,000 health and human services provider organizations nationwide, including 450,000 care providers and 40+ state systems.

LinkedIn, Twitter, Facebook, and their own Blog are their official social channels to communicate with their customers. It’s really convenient to contact them by many ways. They use the social network to introduce, advertise and interact themselves to customer. Most of following from their LinkedIn, Twitter and Facebook account more than Google+, and YouTube.

Besides that, Currently Netsmart offers many solutions and services for their clients including social media consultancy services that can help organisations:

Screenshot 2015-10-10 17.55.35

Especially, Netsmart, a market leader in behavioral health care information technology, has earned the “Best-of-the-Best” distinction from Service Performance Insight (SPI). The recognition is based on an annual SPI in-depth analysis of professional services organizations to determine which are performing above industry benchmarks in such areas as client satisfaction and managing large project volumes.

Morover, rapidly growing Netsmart began utilizing FinancialForce PSA (Professional Services Automation) in 2014. The cloud-based enterprise resource planning platform allows Netsmrt to effectively deliver solutions to health and human services provider organizations nationwide as they improve the quality of life for millions each day.

As the relevant value levers associated with implementing Enterprise 2.0 as published by McKinsey Global Institute (2012), I think they focus on marketing and sales with  derive customer insights, the use social technologies for marketing communication/interaction, and generate and foster sales leads.