How social media research can help Starbucks through taxing times
Barclays, Vodafone, Amazon, eBay, Google, Facebook, Starbucks, are among a number of global brands that have been placed under spotlight recently, regarding the tricky issue of tax.
In a previous post we discussed issues of negative publicity from the fallout from what the press saw as Waitrose’s misguided social media campaign. But this is altogether a potentially more damaging matter.
Let’s be clear, none of the above brands have done anything illegal. Owing to what some might point out as the UK’s labyrinthine tax laws, these brands have been “playing the system” and playing it well. In the case of Starbucks, a recent Reuters investigation claimed it had not paid any corporation tax in the UK since 2009. Despite Starbucks generating £1.2bn revenue in the UK in the last three years, it has declared no profit here, so is not liable to pay corporation tax.
While conforming to the letter of law, this recent exposé has hit Starbucks particularly hard, because it sits very uncomfortably with the brand values it espouses.
Starbucks has always promoted Corporate Social Responsibility: fair trade products, ethical sourcing, care for the environment, diversity and sustainability – are all practices that spring to mind when thinking of the Starbucks brand. Starbucks are at pains to highlight this in the responsibility section of their website: “We’ve always believed that businesses can – and should – have a positive impact on the communities they serve”.
Ethical practice is a large facet of the overall Starbucks “package” that helps customers to feel evangelical about the brand and advocate its many virtues (along with product quality and cafe ambiance) across social media.
So when the tax issue arose, customers made their displeasure felt strongly and Starbucks began to trend on Twitter for all the wrong reasons:
“STARBUCKS. Instead of writing my name on the cup, use the pen to complete your tax returns form”
“Probably the only thing worse than posting motivational tweets is to tweet about going to a Starbucks outlet”
“Why are Starbucks insisting on cash only with no receipts and when handing over the coffee insisting we leave via the back door”.
“Just negotiated 20% off my morning #Starbucks. If they won't pay tax, I won't pay it for them. Try it!!!”
YouGov's BrandIndex showed that the measure for Starbucks’ Reputation score fell from 4.6 (Oct 12) to -3.9 (Oct 18). In addition the overall Index score (which involves a bundle of measures including reputation, impression and recommendation) dropped from 1.7 to -3.9 during the same period.
However, as we know, brands can show great resilience and customers are often willing to forgive a brand if it shows contrition and acts to rectify its mistakes. There are a number of areas where Starbucks can utilise social media research to assess the full extent of the problem and, most importantly, gauge the effect on current customer behaviour.
While reputation scores show an overall dip in popularity and tracking studies may show a drop in sales in UK outlets further research is needed to discover more about the relationship between the two.
Firstly, an active web listening programme will help assess the scale of the problem. While the Twitter comments highlighted above were obviously negative, there were of course still many positive tweets over the same period, even from the UK – for example, about how great the coffee is and how customers would love a delivery service.
Also markets outside the UK were still overwhelmingly largely positive especially from the US, and India where there was a lot of positive buzz around the opening of the first Starbucks in Mumbai. So further analysis of Twitter comments would give an insight into the proportion and weight of negative sentiment and where that negative sentiment was localised (for example in the UK market).
Further analysis would entail identifying those key influencers and inviting them into a private online research community. This would enable Starbucks to engage more meaningfully with fans and critics alike and track behaviour over time. If fans of the brand are likely to alter their buying behaviour then Starbucks needs to sit up and listen.
Further engagement would also help Starbucks respond more positively to criticism in the future. The latest blogs on the home page from UK MD Kris Engskov, escalating to CEO Howard Shultz have been largely met with derision from critics and brand users alike.
While their current online community presence is focussed on ideas generation with MyStarbucksIdea.com it seems that Starbucks might benefit from getting the answers to some rather more prosaic questions about what customers feel about the latest disclosures, how the issue is affecting their buying habits and what they would like Starbucks to do about it. Only then can Starbucks move on from this particular issue.
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