Will Starbucks Leap of Faith Pay Off?



In late March, as Starbucks was preparing to introduce its first offer on Groupon, the daily-deal service, the coffee chain’s chief digital officer, Adam Brotman, realized he had no clue whether the gambit would pay off. The discount wasn’t for anything crazy like bungee jumps or skydiving lessons–it was for 50% off a $10 Starbucks Card eGift–but to Brotman, the deal was just as risky because of how the company would be offering it. His team had to integrate Starbucks’s eGift platform with Groupon’s system for the one-off promotion, and it was about to go live to the world. “They’d never done deals at the scale we were offering, and we had never put our [eGift] platform through that type of pressure test,” Brotman says. “But we didn’t have the luxury to say anything other than, ‘We think we got this right, so let’s see what happens.’ There are times when we just completely don’t know how things are going to work.”

With 18,000 stores and 200,000 employees, rolling out any program at Starbucks–whether for a coffee flavor, an app, or a daily deal–is going to be risky, considering the employee training and consumer marketing involved. But the company seems almost to court risk in its willingness to move fast and push through innovation at scale, especially in the digital arena. The deal with Groupon, for example, brought in about $10 million overnight–despite traffic loads that crashed the site mere hours after it went public. In recent years, Starbucks has flipped the switch on a slew of high-profile digital initiatives, launching its own mobile app, integrating with Apple’s Passbook wallet service, and partnering with Square, Jack Dorsey’s mobile payments startup. The digital plays helped boost Starbucks’s shareholder return 38% last year, as revenue grew 14% to a record $13.3 billion. “We do not want to sit on our hands,” Brotman says. “If we feel excited about something, we’ll get it out there, learn our lessons, and correct the mistakes. It’s not always the most stress-free way to launch, but it’s the fastest.”

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