Starbucks’ Schultz: Social Media Is Key to Building Brand Trust

Starbucks new digital network launching this fall will include Snagfilms, and promote "Waiting for Superman," CEO says


Starbucks' new, in-store digital network will include the documentary streaming site Snagfilms along with news and other content, CEO Howard Schultz said at TheGrill conference on Tuesday.

In an address that discussed the coffee giant's turnaround since Schultz re-took the reigns of the company in January 2008. Schultz said he came late to the digital revolution.

“We were way behind,” Schultz admitted.

Quickly ramping up to a major Facebook and Twitter presence has made Starbucks a leading brand in social media.

It has also led to the Starbucks Digital Network, Schultz said.

He announced that the documentary streaming site, Snagfilms, would be an SDN partner. The company will also help promote the education documentary, "Waiting for Superman."

“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 said Tuesday, speaking at TheWrap’s media and entertainment industry conference TheGrill.

A series of missteps by the company in the mid-2000s eroded that trust – including a neglect of the social media revolution.

On his 2008 return to the CEO office, Schultz said, rebuilding trust with the customer was the priority. And social media had become an invaluable tool for recapturing those customers who had turned cynical.

“It has become paramount that brands understand that trust isn’t something you build through traditional marketing,” Schultz said. “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. Because if it’s just marketing, (consumers) will see right through it.”

To that end, Starbucks has become the No. 1 brand on both Facebook (about 14 million connections) and Twitter (more than 1 million followers), and Schultz has insisted that those voices be authentic reflections of the company’s values.

That philosophy will extend to Starbucks' next initiative: The company is soon to launch the Starbucks Digital Network, a channel that can be accessed only users of Starbucks’ free wi-fi, which is now available at each of its more than 10,000 domestic retail stores. The channel will include premium content from SnagFilms, the Wall Street Journal, USA Today and other content partners, curated by Starbucks and appearing on the first screen of anyone who logs on.

“There are 30 million people signing up for wi-fi access at Starbucks every month,” Schultz said. “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.”

Starbucks will continue selling CDs — a strategy that, despite the decline in music and CD sales overall, has remained robust at its retail stores. That strategy required some tweaking, however; at one point, Starbucks had gone from four CDs to something like 20, an overreach that Schultz said was part of its trust erosion.

In other words, they got a little greedy — and the sales reflected a consumer awareness of that.

“We’re dealing right now with a consumer whose confidence in things that they once believed in are at the lowest levels in the history of polling,” he said, adding that the last thing companies should do is turn away from that cynicism, or try to cover up what's causing it.

“We’ve got to completely allow ourselves to engage in conversations,” Schlutz said, “that we’d normally be afraid of.”

And from there, to project a message that’s authentic.

“In this environment, whatever medium you’re using," he said, "there’s an unbelievable avalanche of interest if you’re honest.”