Hold the press!
A recent study by a social media agency has found that Starbucks' social media sentiment has taken an almighty hit in the wake of disclosure that the company has not paid any corporation tax for the last 3 years. Not the biggest revelation to hit trade press in recent weeks. This situation can't have improved much in the wake of further allegations that the cost of Starbucks' increased tax bill is set to be born by low-paid staff members.
Starbucks' experience is a salutary lesson to other brands in what David Jones, Havas' Global CEO, has called "the age of damage". Often touted as one of the darlings of social media marketing, Starbucks has eschewed traditional 'image based' approaches to building their brand (i.e. spending lots of money on advertising and media) in favour of a more authentic and meaningful approach centred around product quality, customer satisfaction and word of mouth. The company has also made a concerted effort to present itself as a sustainable and socially conscious business in order to build a community of brand advocates from the ground up.
All well and good...this has been a very successful strategy for Starbucks (or perhaps not, given that the company claims to have made losses in 14 of the 15 years that Starbucks has operated in the UK). However, it does rely on the company’s behaviour meeting the ethical standards they present, and recent revelations prove that this has not been the case. In an era in which customers increasingly demand complete transparency from the companies they purchase from, it was only a matter of time before Starbucks’ behaviour would be exposed and this spells big trouble - all the time and effort that the company has invested in building up its brand image over the years has more or less crumbled in an instant. Now the company finds itself the subject of intense scrutiny in the same forums and platforms that it relied on so heavily to build its tribes of fans and followers - and facing a momentous challenge to rebuild its tarnished reputation from scratch.
So where to now for Starbucks? It will be interesting to see how they react - will they stick to their tried and tested strategy of embracing social media marketing as a cure for their current ills, redoubling their efforts? Or is the tide now flowing too strongly against them, requiring a more drastic plan of action? Perhaps they will decide that now is the time to reappraise their traditional reluctance to spend on paid media and embrace brand advertising. This is certainly a challenge that any media agency would relish, but there is a very real danger that this would, quite rightly, be perceived by consumers as just papering over the cracks, leading to further backlash.
The major issue that Starbucks faces is that the company has lost the trust that consumers placed in its brand. And like any relationship, once trust has been lost, it’s a difficult task to win it back. It will need to start with genuine contrition on the part of Starbucks, and a commitment to behaving in a more ethical, transparent and responsible fashion. Considered communications planning and a smart digital strategy can help Starbucks to engage consumers in that message over time and perhaps encourage them to once again place their trust in the brand. But to paraphrase George Harrison "it's gonna take patience and time" and perhaps "a whole lot of spending money" too.
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