A Case Study on the Starbucks Digital Experience
In late 2018, the very first ‘virtual store’ emerged in a Starbucks in China, offering customers a digital and personal customer experience like no other.
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Equal parts visionary, engineer, explorer, and entrepreneur, Elon Musk has a uniquely innovative spirit that is apparent in everything he does. Though he’s known for such lofty ventures as SpaceX, SolarCity, and Hyperloop, Musk’s approach to Tesla Motor’s marketing may just be his most ingenious invention of all.
After all, when you’re trying to sell a $100k car—and an electric one at that—you’d better have an innovative marketing plan. Musk certainly appears to be up for the challenge.
To Elon Musk, inventions are just science projects unless you can turn a profit.
But grand ideas and a relentless drive to be on the bleeding edge of technological innovation seem to come naturally for Musk. In 1995, at the age of 24, he partnered with his brother to start a software company called Zip2. They developed technology that provided web-based city maps and guides to the newspaper industry. The New York Times and the Chicago Tribune were among the first clients. In 1999, Compaq Computer Corporation acquired Zip2 for $307 million, and Musk was a millionaire.
In that same year, Musk cofounded an electronic payment company that eventually became PayPal. When PayPal was purchased by eBay in 2002, Musk cashed in again.
Next was SpaceX, Musk’s most ambitious venture up to that point—and maybe still to this day. SpaceX is not your ordinary tech start-up. Its goal is to revolutionize space exploration and technology to allow humans to live on other planets. So far, under Musk’s leadership, SpaceX has celebrated some impressive achievements. In 2010, it became the first privately funded company to launch, orbit, and recover a spacecraft. In 2012, it became the first such company to dock a spacecraft on the International Space Station.
At the time of this writing, SpaceX’s next major mission will be to use its two-stage Falcon 9 rocket to boost the Deep Space Climate Observatory (DSCOVR) into orbit, with an eventual destination of L1 (a stable gravitational point one million miles away from Earth!). DSCOVR will provide the first-ever real-time views of our sun, relaying important data about potentially hazardous solar outbursts. After the Falcon 9 rocket sends DSCOVR on its way, SpaceX will attempt a pinpoint vertical landing on a targeted drone ship in the Atlantic Ocean.
But this mission can be considered a mere stepping-stone for Musk. In a 2011 interview with the Wall Street Journal, Musk boldly stated, “We’re going all the way to Mars, I think. … Best case, 10 years, worst case, 15 to 20 years.”
OK, back to Earth. Shortly after SpaceX, another trailblazing technology company caught Musk’s eye: Tesla Motors. Founded in 2003 by engineers Martin Eberhard and Marc Tarpenning, Tesla has been at the forefront of developing electric-automobile technology since its inception. With the use of revolutionary lithium-ion battery-cell technology and a power train designed around famed inventor (and company namesake) Nikola Tesla’s patented 1888 AC induction motor—and with a mission “to accelerate the world’s transition to sustainable transport”—it’s easy to see why Musk would be interested in Tesla.
Musk brought his passion and financial muscle to the Tesla project in 2004, becoming a leading investor and assuming the role of chairman of the board of directors. Success soon followed.
Musk boldly stated, “We’re going all the way to Mars, I think. … Best case, 10 years, worst case, 15 to 20 years.”
In 2006, Tesla’s first vehicle—the sporty, all-electric Roadster—won Time’s Best Inventions award in the Transportation category. By 2008, the Roadster went into full production, becoming the first production electric vehicle to travel 200 miles per charge.
Next up was the Model S, Tesla’s first luxury sedan. Full production began in 2012, and by the end of 2013, US sales had reached more than 18,000 units, exceeding company goals. In fact, the Model S ranked as the top-selling full-size luxury sedan (electric or combustible engine) in the US that year, outpacing models from Mercedes-Benz, Lexus, and Audi. The Model S also won several coveted auto awards in 2013, including Motor Trend Car of the Year.
Future plans include continuing development of the Model X, a crossover vehicle that’s comparable in design to an SUV. Tesla is also looking to make advances in autonomous-driving technology, mileage range, and overall safety—all while attempting to bring the price tag down to appeal to a broader demographic.
In a blog on his Science of Revenue website, entrepreneur Paul J. D’Arcy touted the significance of the quality and innovation in Tesla’s creations. “Tesla used electric technology to build a car that can’t be reproduced with a combustion engine. It’s as fast as a Porsche and gets the equivalent of 100 miles per gallon. It has very few moving parts. It is the most aerodynamic car made and has the most cargo space of any car in its class. It’s a sports car that seats seven.”
And stellar safety ratings are also part of the quality equation. In 2013, the Model S was awarded a 5-star rating by the National Highway Traffic Safety Administration (NHTSA)—both overall and in each individual category. Technically, according to a post on TechCrunch, the 2013 Model S received the highest safety rating ever given by the NHTSA—a combined 5.4 stars. The 2014 Model S continued that momentum by again earning 5-star NHTSA ratings across the board.
So Tesla certainly appears to be building a quality product. But selling an expensive, all-electric car to a niche segment of an established, oversaturated auto market is a different beast. D’Arcy described some of the many marketing challenges Tesla faces: “They are building a new luxury brand from scratch. They are evangelizing a new type of vehicle: an electric car. They are selling a $60,000–$100,000+ car that can’t go on a road trip. They must sell an entirely new model of buying and owning a car.”
No problem. To Elon Musk, inventions are just science projects unless you can turn a profit.
As with everything Elon Musk touches, you get the feeling that the future is bright.
It probably comes as no surprise, but Tesla does not follow a conventional approach to automobile marketing. Tesla is unique. Tesla is among the top three most-mentioned car brands across social media, and that alone is saying something, considering the brand is about 30 times smaller than its competitors. The company does not employ a chief marketing officer. It does not work with a large ad agency. In fact, it maintains only a small in-house marketing department. Instead, Tesla focuses on creating an engaging, content-rich online experience for its followers, through its own website as well as social media. The Tesla website offers a wealth of information, including in-depth product descriptions, press releases, and timely blogs.
Elon Musk, CEO and unofficial marketing guru of Tesla, guides the brand to success via social media marketing. Tesla doesn’t waste money on advertisements. They take a “less is more” route, relying solely on social channels and only posting when necessary. And when they do, they make it simple and sweet.
While most CEOs might be careful, strategic, or hesitant about what they post on social media, Musk doesn’t seem to care one bit. Musk doesn’t follow the rules like other CEOs. He takes risks, and doesn’t play it safe like a typical exec. He interacts with fans and is very vocal about his opinions, sharing almost everything, even personal—and often radical—thoughts and opinions. But why does this work? Musk knows his audience. And he knows that millennials especially are fascinated by authentic, original content that breaks barriers and has no limits. Musk knows this and he uses it to his advantage, creating the Tesla brand to be something that is unique and innovative, and using it to shape people’s perceptions.
Sharing his thoughts, opinions, and radical statements may be looked down upon by some critics, but he knows what he is doing, and he is doing it right. He is humanizing the brand, giving fans and followers an insider look at the brand behind the scenes, and creating a personal connection with his audience.
Seeing and hearing Musk’s inspiring, forward-thinking ideas only reinforces this important brand dynamic.
Involving the company’s lead product architect and majority owner in content creation certainly differentiates Tesla’s digital marketing from the competition. But it’s also part of the larger strategy of making the energetic Elon Musk the face of the company. Since Tesla’s early days, Musk has been out in front of TV cameras and making keynote addresses at niche technology conferences.
It’s been (and still is) a brilliant branding strategy. It allows consumers to put a face to the company and develop a personal connection to the brand. Seeing and hearing Musk’s inspiring, forward-thinking ideas only reinforces this important brand dynamic. Think Apple. Think Steve Jobs.
Using this strong brand identity as its foundation, Tesla has recently begun expanding its marketing reach through another revolutionary idea: the tiny, brand-centric storefront in a shopping mall.
“Few people have noticed the radical marketing technique at the center of Tesla’s sales strategy,” wrote Forbes contributor Simon Reynolds in a 2013 blog. “For starters, [the showrooms] are not located along main roads like every other car dealer. They are in shopping malls—right alongside brands like Zara, Bloomingdale’s, and Sees Candy. Secondly, the showrooms are only the size of a small shop, often only squeezing in a single vehicle into the space. … Most car dealerships would be lucky to get a hundred potential customers perusing the cars on their lot each day. But because of their location, Tesla gets tens of thousands of people walking right past their car, every single day.”
Tesla’s shopping-mall storefront model is a welcome change for many car shoppers as well—especially those who didn’t even go to the mall thinking about buying an electric car. And that’s all part of the plan. The Tesla brand is accessible to the masses, even if the vehicle price tag is not—at least, not yet. Building the brand experience is what’s most important to Tesla.
As we’ve seen through countless recent marketing studies, today’s consumer demands a customized, socially engaging buying experience. And this “experience” is as important as the end product. Tesla’s strategy allows the consumer to develop a more personal, emotional connection to the brand. Its marketers want to capture the passion of Tesla ownership and allow it to be easily and freely shared. It wants its fans to feel special and “in the know.”
By starting with a great product; then committing to building a comprehensive, ever-evolving online and social presence that nurtures brand loyalty; and finally pivoting to high-visibility, low-maintenance, brand-centric storefronts, Tesla may be changing the entire landscape of the auto market.
And though Musk once stated that Tesla didn’t expect to make a profit until 2020 (when future models are able to be priced in the $30,000–$40,000 range), his marketing tactics are already bearing fruit. According to a 2014 press release, “Tesla sales in the fourth quarter of 2013 were the highest in company history by a significant margin. With almost 6,900 vehicles sold and delivered, Tesla exceeded prior guidance by approximately 20%.”
In more recent years, Tesla has continued to produce some outstanding products for their audience including the Tesla Solar Roof. This eco-friendly invention allows for homeowners to not only generate free, sustainable energy from their home, but also to do it with style and without having large, unattractive-looking solar panels on top of their house. The tiles are made of smaller solar panels, allowing for functionality while also being aesthetically pleasing. Tesla’s Solar Roof will allow homeowners to generate sustainable energy from their homes which can then be stored and used in instances of power outages.
As with everything Elon Musk touches, you get the feeling that the future is bright. Soon we may be studying his marketing and branding techniques as much as his products—whether that’s here on Earth, on Mars, or on some distant place we haven’t dreamed of yet. So far with Tesla Motors, all the stars appear to be aligned—just as Musk had envisioned it.
Involving the lead architect and owner in content creation certainly differentiates Tesla’s digital marketing from the competition.
In late 2018, the very first ‘virtual store’ emerged in a Starbucks in China, offering customers a digital and personal customer experience like no other.
Read More