Starbucks profits triple. Is it all because of social media?
01/21/10 08:31 AM Filed in: #socialmedia
#in
The
biggest debate within the business world seems to
be quantifying the ROI of social media investment
and use. A recent survey showed that almost 30%
of businesses are taking a "wait and see
attitude" towards investment in social media
while others are increasing their investment.
Starbucks earned $241.5 million, or 32 cents per share, for the three months that ended in late December. During the same period last year, when the recession was in full force and Starbucks was closing stores and laying off workers to cut its costs, its profit was $64.3 million, or 9 cents per share. Was it due to the millions of followers on their Facebook page? The answer to that would be no and yes.
Over the past year Starbucks has made a lot of changes to get profits back on track including the closing of stores, new prices, layoffs and new marketing programs to revitalize the brand. This past weekend Starbucks even resorted to an FSI with discount card for its new lunch sandwiches. So the answer to the question about social media ROI is that social media works best when part of an integrated comprehensive marketing and branding strategy. It alone is NOT the reason for the great comeback but as part of their integrated strategy it sure is adding value for consumers and customers.
Will this trend continue? That is a question that needs to be answered. I'm sure that a lot of profit increase was from the introduction of their instant coffee which was heavily promoted and finally seeing the results of changes to the business (reducing costs). Now that Starbucks has posted a profit investors and the Street are going to be looking for this trend to continue.
Social media alone was not the reason but it sure helped.
Starbucks earned $241.5 million, or 32 cents per share, for the three months that ended in late December. During the same period last year, when the recession was in full force and Starbucks was closing stores and laying off workers to cut its costs, its profit was $64.3 million, or 9 cents per share. Was it due to the millions of followers on their Facebook page? The answer to that would be no and yes.
Over the past year Starbucks has made a lot of changes to get profits back on track including the closing of stores, new prices, layoffs and new marketing programs to revitalize the brand. This past weekend Starbucks even resorted to an FSI with discount card for its new lunch sandwiches. So the answer to the question about social media ROI is that social media works best when part of an integrated comprehensive marketing and branding strategy. It alone is NOT the reason for the great comeback but as part of their integrated strategy it sure is adding value for consumers and customers.
Will this trend continue? That is a question that needs to be answered. I'm sure that a lot of profit increase was from the introduction of their instant coffee which was heavily promoted and finally seeing the results of changes to the business (reducing costs). Now that Starbucks has posted a profit investors and the Street are going to be looking for this trend to continue.
Social media alone was not the reason but it sure helped.
