Starbucks’ New WiFi Plan: Building Customer Loyalty

Howard Schultz’, CEO Starbucks, announcement yesterday on two changes in Starbucks’ WiFi services demonstrates how even a large corporation must pay attention to customers on a local basis. The announcement took place at the Wired Business Conference “Disrupted By Design”. I’ve written about Starbucks before and how they shift their business model to meet customer expectations.

There is a lesson for small and local businesses in this change at Starbucks.

First, starting July 1, 2010, WiFi service at Starbucks will be free. This move reinforces the neighborhood/community aesthetic at the heart of Starbucks’ marketing. The free model follows a trend already instituted at most airports and many other public spaces. Moving to a for-pay model is a disconnect in the “public plaza” feel Starbucks customers expect, especially after experiencing the free model outside the Starbucks store door.

This is the second step to free WiFi service at Starbucks, a couple of years back they shifted from a pure for-pay model with T-Mobile to ATT with a model featuring  two-hours free daily with a registered Starbucks card and small service charge following the first two hours in a day. Granted, that’s not an expensive proposition, but just typing it cramped my fingers and it confuses many less technically comfortable customers. This change is much easier for customers to understand and act on.

Second, a new Starbucks Digital Network will be introduced later this fall. A partnership with Yahoo! and featuring free access to paid sites such as the online Wall Street Journal and other premium sites, the Starbucks Digital Network offers a new reason for Starbucks to be the preferred choice for customers. McDonald’s wired up 11,000 of their restaurants in 2009 and offered free access to customers and McDonald’s coffee business is major competition to Starbucks, so this new Starbucks access model is probably a response to McDonald’s marketing.

Main Street businesses are always looking for a way to build loyal customer relationships and gain an edge over their competition. Small businesses can use this example from Starbucks as a guide for another way to find a way to differentiate themselves from their competition. Of course, a small business will probably not get the national or international news coverage nor will they probably be able to swing a deal with Yahoo! or other major corporations to present exclusive offerings, but small businesses can find equally enticing draws for their local customers.

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4 Comments

Filed under Business, Small Business

4 responses to “Starbucks’ New WiFi Plan: Building Customer Loyalty

  1. What I would like to see more of sooner than later is Starbucks sustainable initiatives as simple as replacing plastic silverware with organic/potato based silverware like Nike uses at their campuses. Or offering the Eco friendly bottled water – Green Planet Bottling’s One (Plant-Based) Bottle at a Time Approach http://www.greenplanetbottling.com

    Besides offering Wi-Fi how is Starbucks meeting the next generation on sustainable innovation?

    • Mike

      Excellent thinking, Melissa. Many small and local businesses have already taken this step. I am thinking of Burgerville and truly neighborhood-focused coffee shops.

      These steps are generally developed organically in a small business based on customer feedback. A corporation the size of Starbucks needs additional time to sift and develop this type of response, but I imagine what was announced a few days ago is only the beginning of a series of steps to align Starbucks with customer expectations.

  2. Despite knowing full well that the free Internet is designed to bring me in and get me to spend more, drink more, eat more- I totally fell for it. Last time I was in NYC I actually sought out Starbucks using the map function on my phone, and sat there posting to my blog while sipping iced lattés almost every single day. Never would have done that otherwise: I want to believe I’m a supporter of local businesses, but when push comes to no wifi, well, there I am.

    • Mike

      I’m afraid we all fall into that trap. Starbucks was a guilty pleasure during a sabbatical trip to Europe a few years back. The kids said it felt like a quick return home no matter what the address. Whether in the plaka or on some street corner in Paris, the familiarity was comforting to them (and I’ll admit to me, too). At the same time, we would never trade the local seafood, the Greek ice cream, the Italian gelato, French breads, and many other local items. In actuality, all brick and mortar businesses are local to some degree, and some businesses that appear local actually return less locally than one would think. I guess it’s all in how you wish to measure “local.”

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