Schultz: Social media saved Starbucks

Starbucks sold its first cup of coffee 1971. By the 1990s it was opening a new store every day of the year. But customers wandered away to other brands toward the middle of 2005 and the company started closing stores a few years later. With increased competition from McDonalds, Dunkin Donuts and gourmet coffee shops on every other corner, that could have been the peak of Starbucks.

CEO Howard Schultz, who wasn’t at the helm when the coffee company experienced its decline, returned in 2008. Just a couple of years later, the brand is perking up (promise that’s the only coffee pun) and he credits social media with saving Starbucks.

Schultz told those at a media and entertainment industry conference called TheGrill yesterday, Starbucks turned to social media to rebuild customer trust.

“If you give a customer an understanding of what your values are, and they share those values, and they believe it, they will pay a premium,” Schultz says. “Trust isn’t something you build through traditional marketing,” Schultz says. “You do that through integrating social and digital media. It is a science, as well as an art, to understand how to do this in a way that is authentic and genuine, and not just marketing.”

Starbucks has mastered social media. They are the number one brand on Facebook with over 13-million fans, and they have more than 1 million Twitter followers.

There is no mystery as to why Starbucks has such strong social media connections – they work at it, and they are authentic. Those are the two keys to social media success for individuals or companies. It really seems like you’re talking with someone through Twitter, not just getting links about products from some corporate PR department intern. They take it seriously, but they also have fun.

The company will extend its social media brand through the Starbucks Digital Network, launching soon. It will be a channel that can be accessed through the free wi-fi available at about 10,000 of the chain’s coffee shops. Schultz says the network will include content (and ads) from SnagFilms, the Wall Street Journal, USA Today and other partners.

“There are 30 million people signing up for wi-fi access at Starbucks every month,” Schultz said in his speech yesterday. “As this third place (after home and work) in America, we have a really unique opportunity to do things that have not been done before, to integrate a national footprint of our stores with the social media networks that we’ve been building.”

Here’s a link to the video interview.

(AP Elaine Thompson, file photo)