Starbucks's Odyssey into NFTs Desperately Needs Guidance
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Marketing Oct 25, 2022

Starbucks’s Odyssey into NFTs Desperately Needs Guidance

Starbucks is entering the metaverse. Is this the best way to do it?

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Yevgenia Nayberg

The iconic coffee business recently unveiled Starbucks Odyssey, a Web3 offering through which Starbucks Rewards members can purchase and trade limited-edition NFTs to secure rewards benefits and earn digital badges called “journey stamps” that can be redeemed for things like virtual espresso-martini-making classes or international trips.

The Starbucks entry into the metaverse has attracted criticism as well as praise. Some have gone to the extent of suggesting that Starbucks is “ruining” its hugely successful Starbucks Rewards program with the new strategy. Others have suggested that the iconic coffee chain is falling victim to the chasing-the-shiny-object syndrome by jumping on the NFT bandwagon.

On the other hand, some might suggest—as Starbucks itself does in the announcement—that they are getting ahead of the competition, once again, by building on their “history of taking leading-edge technology, innovating, and making it accessible”—this time to those thirsty for virtual coffee-related experiences.

These judgments are premature. A better question to ask is this: What job is Starbucks trying to do for its customers with Odyssey? While it is certainly on-brand for the company to engage in experiential innovation, it is not clear if Starbucks has thought through the “why” behind this initiative. Without a sharper definition of the goals, Starbucks could be embarking on an Odyssey with no clear destination.

Learn from Digital Payments and Starbucks Rewards

I like to say that while technology is a tool, a fool with a tool is still a fool. Too often, business leaders chase after the latest technology trend, without first asking what problem they want to solve for customers and whether there is even a problem that needs solving.

Consider the history of digital payments—Apple Pay and the like. In the U.S., digital payments have been slow to catch on because there was no real problem to solve. Most U.S. consumers have ready access to debit or credit cards. It can take 10 seconds to pay with a credit or debit card, while it might take more time to open a payment app. In contrast, the value proposition of digital payments is more compelling in markets like India and China, where access to consumer credit is much more limited.

While most digital payment platforms struggled to gain traction, Starbucks was a stellar exception with its Starbucks Rewards program. Indeed, Starbucks mobile pay is second only to Apple Pay in the number of U.S. transactions, ahead of Google Pay and Samsung Pay.

The value proposition of Starbucks Rewards was not limited to convenience. The program offered other benefits, including storage of personal preferences and earning free coffee drinks. That’s why some have called the Starbucks loyalty program a virtual “punch card” at its core. It provided a clear, simple, compelling value proposition to consumers, who ate—or, in this case, mostly drank—it up.

Too often, business leaders chase after the latest technology trend, without first asking what problem they want to solve for customers and whether there is even a problem that needs solving.

— Mohan Sawhney

Starbucks is positioning its Odyssey initiative as an extension of Starbucks Rewards into the metaverse by offering innovative experiences and rewards that are not possible in the physical world. The general idea is compelling, but the Starbucks announcement lacks clarity on the job they want to do for their customers with the new initiative.

Pick the Job to Be Done

Knowing what job you want a new product or initiative to do for customers keeps you focused on the customer problem, instead of getting fixated on product features or technologies.

Ironically, when the late Harvard Business School professor Clayton Christensen suggested the “Jobs to Be Done” concept, he used a milkshake as an example. A milkshake can be a thirst quencher, a commuting companion, or an alternative to a carbonated beverage for children. The founding insight behind the creation of Starbucks was also an innovative job to be done: “meeting at the third place.” Before Starbucks, we “drank coffee.” After Starbucks, we “do coffee,” as in meeting over coffee in a pleasant atmosphere.

Applying the job-to-be-done lens, there are at least three jobs Starbucks Odyssey could do, based on what the company has said about the program.

The first could be to provide a virtual Third Place, the way Starbucks does in real life. This would be a “social job,” as it involves socialization in a coffee-themed environment. The second would be to engage customers through games and challenges and to offer them journey stamps for their participation, redeemable for virtual experiences. This would be an “entertainment job,” as it involves gamification. The third could be to enable loyalty-program members to earn, collect, and trade or sell Starbucks NFTs, like trading cards or other physical assets. This would be an “economic job” as it generates financial benefits for customers.

Any of these jobs could be a viable avenue for Starbucks to pursue. But the company needs to pick a lane by focusing on a specific job. For instance, if Starbucks focuses on the social job, it would be saying that they will use the metaverse to create a virtual place of connection for customers. The company would then work backward to design the features of the metaverse environment that would perform this job. These might include virtual “coffee lounges,” hangouts, coffee meetups, and even dating over virtual coffee.

Alternatively, if Starbucks chose to focus on the entertainment job, they would design immersive games, journeys, challenges, and interactive lessons on the history of Starbucks. Once you know where you are going in terms of the job to be done, the features will follow naturally. However, if you start with features, you can end up with a digital fishing expedition with no clear focus.

To be clear, the jobs focus does not go against the idea of experimenting. Experimentation is critical to illuminate more- and less-promising paths and use cases. But the process must start with thoughtful hypotheses about the customer jobs to be done.

Ultimately, Starbucks is being innovative with Odyssey. But the company needs to do better than throwing a bunch of stuff up against a wall to see what sticks. Starbucks should remind itself why its Rewards program was so successful. The job it did for customers was clear and compelling: “give me free stuff when I buy more from you.” By picking a lane and deciding on the primary job to be done, Starbucks Odyssey can boldly venture where no loyalty program has gone before.

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This article originally appeared in Fast Company.

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McCormick Foundation Chair of Technology; Clinical Professor of Marketing; Director of the Center for Research in Technology & Innovation

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