Stealing Starbuck’s Strategy for Viral Growth and Customer Retention

Designing addictive products

Three-to-four-million people buy Starbucks coffee every day. And in the US alone, there are more than 250M cups of coffee (of any brand) purchased on a daily basis. That’s a lot of freaking caffeine. And it doesn’t even include homebrew…

But it wasn’t always so.

Source: Tumblr

Habits are hard to build and harder to break. And when it comes to business and profitability, the one thing that trumps a habit is an addiction. And if coffee is anything, it’s addictive. It makes you feel great, more productive and, over time, your tolerance increases. From a small to medium, large to multiple cups a day… coffee can become an all-consuming need you can’t function without.

And that’s exactly how you want to build and market your business, especially in B2B.

How to design enterprise addiction

Coffee is addictive, but so is heroin. That said, it’s a lot easier to get someone to try a cup of joe than to clamp a vein and jab.

There are many reasons, but some of the more important are: ease of access, ease of use, additional hits (ie, upsells) cost, risk and social stigma. And each are critical to building a killer viral product.

1. Easy access

Before there was a Starbucks on every corner, there was a coffee pot in every home. And before that, somehow, people functioned without coffee…

Starbucks Locations Nationwide — Source: ThinkNum Media

The law of induced demand basically says, the easier it is to do something favorable/enjoyable, the more likely people are to do it. It’s the reason your waist expands when there are cookies in the house and why we order too much junk from Amazon’s one-click wonder.

The easier it is to get someone to try something, the easier it is to get them hooked.

Look at Slack and Salesforce… that’s as bottom-up vs top-down as it gets. With Slack, a team signs up and starts chatting and soon, the entire company is on board. It’s free to signup, sets limits on usage and allows anyone with a pulse an easy interface to get work done.

It doesn’t take much…

2. Easy use

No one likes to feel dumb, so keep it simple stupid.

Complexity kills conversions. It takes a team to setup Salesforce or InfusionSoft, and an army to run it. That’s a lot of manhours and a big commitment.

Products that succeed virally don’t require hand-holding. They’re fast, easy and intuitive, and grant early wins. How quickly can you hook someone?

“At Facebook, if we could get someone to seven friends in ten days, they’d stick.” — Mark Zuckerburg

What are your sticky metrics? What’s the level of lock-in/winning an ideal customer needs to experience (and in what timeframe?) to keep on them on the caffeine train?

And how can you build your product or onboarding to get businesses from A) to adept as efficiently as possible.

Powerful functionality often requires complexity, but to take advantage of that takes time. The sooner a business integrates your product or service into their workflow, the less likely they are to EVER leave.

3. Sell addiction “hits” (ie, sample-like upsells)

It’s the free sample strategy, and Starbucks does this wonderfully. How often do they come around carrying trays of new treats or drinks? You could put on the pounds just sampling the ever-changing array. And that’s exactly the point.

Source: Flickr

Samples are an upsell —an easy, addictive way to get you to buy more. But presented in such a friendly way, they just seem nice.

B2B businesses could learn a thing or two from the baristas. How can you constantly offer new products and perks to your existing customers? It’s much easier (and cheaper) to upsell than acquire new.

Slack scales with team size. Oracle offers a million and one services. Some companies add higher and higher tiers of hand-holding support.

Whatever it is for you, think about how your product/service is positioned and what else you could offer. And most importantly, get creative with “the ask.”

“Hey, Bob, we’re rolling out a new AI-powered autoresponder for sales. Since you’ve been a longtime customer, would love to hook you up with three months free…”

Once you’re in, if it’s valuable/addictive enough, no company’s will roll back your really nifty service. Who wants to go back to answering their own emails…

4. Don’t forget cost

Nothing beats free. And freemium can be a great way to go. But so too can cheap, or free for a time. The cable companies are notorious for introductory pricing, and people hate them for it. But Starbucks raises prices $0.10 and no one says a thing. It’s addiction, it’s habit. I NEED my coffee.

And like Netflix’s incremental increases, if you’ve locked a business or consumer into your product offering, it’ll take a lot more than a small price hike to push them over the edge.

Source: Statista

Cost is really a function of upsells and overhead. And it will determine your go-to-market strategy. A freemium-based sales force isn’t going to fly.

But, if you’ve built a business with multiple tiers/upgrades, a funnel focused on maximizing customers and driving them further down the value chain can prove massively profitable.

5. Derisk the value proposition

Coffee’s pretty mild. Heroin, not so much. And while the analogy isn’t perfect, the same is true of Slack and Salesforce. There are products and services we KNOW we don’t want to use.

The addictive ones are especially problematic, and for many, especially in the business side of things, we avoid like the plague.

It’s usually due to complexity, time commitment or potential for failure.

And for startups, the failure rate is huge. That’s why many enterprises avoid buying from upstarts like it’s an ideology. They’ve seen too many come and go to risk their business’s future on a flier. You need to be established and demonstrate credibility to make the big sale. That means case studies, testimonials and customer referrals (for more on an effective referral strategy that goes beyond give one, get one, see this post).

But investment and media coverage also “derisk” a business, at least from the perspective of established players. The more money you’ve raised (here’s a step-by-step guide on perfecting your pitch deck) or the more Mashable articles featuring your cool tech, the less likely mid-level managers are to get fired/flack for using your service.

“No one ever got fired for buying IBM.”

[If you’ve liked this so far, you’d like my 15-page guide to acquiring customers and reducing churn – subscribe below!]

6. Reduce social stigma

Friends make the best salesmen. And how many cups of coffee do you see a day? Coffee meetings are the norm these days, and the coffee machine’s trumped the watercooler as the hang out of choice. There’s more pressure around drinking coffee than any other drink, except perhaps beers at a bar.

And if everyone else is doing it (and getting a productivity advantage), wouldn’t you be foolish not to try? Maybe there’s something to this whole coffee cult…

The same could certainly be said of Zendesk, Intercom or Mailchimp. Anything to increase efficiency…

And many businesses build this stigma/social sharing right into their product. Want to use Mailchimp’s free version? There’s gonna be a monkey logo in the bottom right of your emails. Using Box or Dropbox for file storage. Same deal when you share projects with collaborators, clients…

It’s a brilliant little bit of virality built right into the product. (For more on the 5 types of network effects and how to hack them, see this post).

Starbuck’s other sneaky tricks

Howard Schultz engineered something special with Starbucks. He built a scalable, saleable franchise that attracts aficionados and casual coffee drinkers alike. And he did it by building systems, iterating and focusing on every little detail.

There’s a lot for founders to learn. Here are the basics.

1. Create the right environment

As I write this, I’m sitting in a Starbucks, sipping coffee. I work from here almost every day. And rather than feeling alienated for taking up space, the staff knows me by name, says hi and enjoys my presence. How’s that compare to calling Bluehost or your bank?

Places to sit, coffee-themed creative art, relaxing music for ambiance… the more you’re able to get your customers to hang out in/around your product (or company), the better. Slack and Salesforce users have the applications open constantly. When something becomes your home/hub, you’d do just about anything to avoid being evicted…

How many businesses would grind to a halt without Gmail?

What could you do to make your product more “core” to your customers’ workday?

2. An actually loyal loyalty program

Remember those punch cards… Coffeeshops and pizza parlors used to give customers a freebie every five or ten visits. Starbucks did the same, before their app. Now, their loyalty program is the envy of every retailer, customers download and pre-load the app, receiving minimal incentives (short of free refills), and love every minute of it.

They can order ahead, skip the line and take that first refreshing sip faster, every time. Plus, Starbucks can avoid the 3% credit card fees… it’s a win-win. Plus, Starbucks gets your data and a direct channel to market to its millions of customers.


This strategy can be harder to adapt, but incredibly valuable if you pull it off. Generally speaking, a simple loyalty program won’t cut it. Everyone has one. What makes your’s special?

Here, I’d recommend freebie upsells again:

“Thanks again for supporting us. How about a five month free upgrade…” 

Or, another strategy: the prepay:

“Buy ten months and the last two are on us.” 

The upfront purchase helps cash flow and can be a great tool to increase LTV/average retention.

3. A smart display case

Upselling sweets is a little easier than additional services, but the concept’s the same. As you’re waiting in line to order, you’re assaulted by tasty treats your body craves. And coincidentally, businesses also crave things: increased revenues and quick fixes especially.

What are the obvious upsells you have and how are you positioning them in the checkout process to increase your LTV? Are you pushy, or simply putting them out there?

Starbucks doesn’t shove prepackaged muffins down your throat, and neither should you. At the same time, if you don’t offer, they aren’t buying.

Amazon does a good job of this, offering upsells as “suggestions.” Other customers also bought… I’m like other customers, right? Maybe this is perfect for me. It feels automated and authentic for some reason, it feels helpful.

Visual aesthetics are important here. Make your nudge less intrusive and fit into the flow and you’ll find increased success.

4. Prepackaged = easy to buy

To have a one-click checkout, you need turnkey products. The more hand-holding or customization a product or service requires, the harder it is to scale. That’s why Starbucks doesn’t make fresh food. It’s fast food in the simplest sense of the word (hence how they serve 500–750 people a day per location).

One-off offerings take time and cut down on conversions. And to scale, every little optimization counts, leading to exponential results in the long run.(Counting cards in blackjack only yields a several percent advantage over the house, but it’s enough to make it banned in every major casino.)

The same applies to pricing tiers: the fewer and simpler, the better.

For most business, price anchoring around the low, medium and high tiers yield the best results (the highest LTV).

“I can’t afford the Porsche but don’t want the Ford Focus… how about a Camry.”

This is especially important when it comes to product overwhelm. The more options consumers/businesses are presented with, the harder it is to choose the “right” one.

Have a million options? That’s why ecommerce stores feature the most popular products first, masking the complexity behind algorithms and additional searches.

Closing thoughts

There are a lot of things that go into creating a viral, addictive product or service that businesses bake so far into their systems they’re unable to ever escape. But those are the keys to true profitability and longevity. And they’re there for the taking.

Which of the strategies fit your startup? Any thoughts on other coffee-esque creative ways to capture your ideal customer?

If you’ve liked this, you’d like my 15-page guide to acquiring customers and reducing churn. It builds on Starbuck’s systems and takes you further into the world of supercharged sales, creating organic flywheels that power your profits from here to IPO. Grab your free copy here just for entering your email.

NOTE: Many of the tactics in the post above and the free guide obviously apply to non-SaaS startups/businesses. The beauty of SaaS, however, like coffee and heroin, is the recurring nature of the purchase and addictive have-to-have-it quality.

So, what do you think? I hope you take a second next time you step into a Starbucks (or any other store for that matter), to see what they’re doing right, what could be improved and steal the best strategies for your business.

That’s innovation really, finding what works from whatever source and building upon it in your own way. Go pirate your way to profits!

The more you seek out ways to scale, the more successful you’ll be building something incredible.

And if you’re interested in additional ways to grow faster, I work one-on-one with founders and CEOs to uplevel their organizations, marketing, sales and much more. Let’s chat.


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