Latest / The Marketing Funnel Podcast with Fexingo: Awareness, Interest, Decision, and Action Stages / How Starbucks Rebuilt Its Marketing Funnel Around Mobile
Transcript
- Lucas: If these marketing conversations have sparked something you've actually used in your own work — a framework, a tactic, a way of thinking about your audience — there's a simple way to keep this show independent and ad-free. It's buy me a coffee dot com slash fexingo. That's it. Luna: Yeah, and honestly, if today's episode gives you one idea that saves you a meeting's worth of debate, that's the link. Lucas: Alright — back to today's story. I want to talk about a company that essentially rebuilt its marketing funnel around a single piece of hardware. The smartphone. And the company is Starbucks. Luna: I feel like everyone has opinions on Starbucks — the coffee, the pricing, the lines. But the marketing funnel story is genuinely fascinating. Lucas: It really is. And the reason I wanted to do this episode is that Starbucks doesn't fit the classic AIDA model anymore. Awareness, Interest, Decision, Action — those stages used to be linear. You'd see a billboard, get curious, walk into a store, buy a latte. Done. Luna: But now? Lucas: Now the funnel is a loop. And the mobile app is the center of that loop. As of early 2026, roughly 60 percent of Starbucks' US orders come through digital channels — mobile app, drive-thru, or delivery. That's up from about 40 percent in 2020. So the app isn't just a convenience feature. It's the primary way the brand reaches, sells to, and retains the customer. Luna: Let's start with the awareness stage. How does a mobile app drive awareness? Usually you think of TV or social for that. Lucas: Right, and Starbucks still does mass advertising. But the app creates a different kind of awareness — it's peer-driven. When someone uses the app to send a friend a digital gift card, or when you see a colleague tapping their phone to pay and earning stars, that's social proof. The app becomes a visible status cue. Starbucks Rewards has over 75 million active members in the US alone. That's a walking awareness engine. Luna: And the interest stage — that's where the personalization kicks in. Lucas: Exactly. The app knows your history. It knows you order a grande oat milk latte every Tuesday at 8:15 AM. So on Monday evening, it might push a notification: 'Your usual is waiting. Order ahead and skip the line.' That's not broad interest — that's interest triggered by behavioral prediction. Starbucks calls it 'anticipatory personalization.' They filed patents around it years ago. Luna: And the decision stage — the app reduces friction to almost zero. Lucas: Zero friction and zero mental cost. You don't have to pull out your wallet, you don't have to decide what to order. You open the app, tap 'reorder,' and it's done. The pre-load model — where you add money to your Starbucks account — means the transaction is almost subconscious. Behavioral economists call that 'pain of paying' reduction. When you're spending pre-loaded funds, you feel less of a sting than swiping a credit card. Luna: And then the action stage turns into retention. Lucas: Yes, because the action — the purchase — triggers a feedback loop. You earn stars. Those stars unlock rewards. The rewards bring you back. Starbucks found that members visit three times as often as non-members. The app gamifies the entire funnel. Every purchase advances you toward a free drink. That's classic variable ratio reinforcement — you don't know exactly when the reward will come, but you know it's coming. Luna: So the funnel is actually a flywheel. Lucas: It's a flywheel. And here's the part that most marketers miss: Starbucks didn't just bolt a loyalty program onto an existing business. They restructured the physical store around the digital funnel. In 2024 and 2025, they accelerated a shift toward 'digital pickup' stores — smaller locations with no seating, optimized for mobile orders. They also reconfigured existing stores with dedicated mobile order pickup areas. The entire store design supports the funnel stage. Luna: That's a huge operational commitment. Lucas: It's a bet that the funnel lives on the phone, not on the street corner. And the numbers back it up. In 2025, Starbucks reported that digital orders had higher average check sizes than in-person orders. Why? Because the app surfaces upsells — 'Add a pastry for 50 cents more' — at the exact moment you're confirming your order. The decision stage becomes a micro-upsell machine. Luna: Let me push back a little. Doesn't this create a risk of over-reliance on the app? What about customers who aren't digitally native? Lucas: Fair point. And Starbucks has acknowledged that. They still maintain a full in-store experience. But the trend is clear. In fiscal 2025, the company said its top 20 percent of customers — the ones who use the app most — account for nearly 50 percent of revenue. So the funnel is increasingly designed for that cohort. The risk is that you alienate the casual in-store customer. But the reward is deeper loyalty from the heavy user. Luna: I think the most interesting thing is how Starbucks uses the app to compress the funnel. Normally, awareness to action might take days or weeks. With the app, it can happen in seconds. Lucas: Exactly. And that compression changes the economics. A push notification costs almost nothing to deliver. But it can trigger an immediate purchase. Compare that to a billboard, which costs tens of thousands of dollars and might influence a purchase days later. The app-based funnel has a much lower cost per acquisition and a much higher frequency of engagement. Luna: But is there a downside to that frequency? Could customers get notification fatigue? Lucas: They could. And that's why Starbucks is careful about frequency. They use machine learning to determine the optimal time and message for each user. If you haven't visited in two weeks, you might get a 'We miss you' offer. If you visited yesterday, you get nothing. The goal is relevance, not volume. And it works — the app's opt-in rate for notifications is above 70 percent, which is remarkably high. Luna: So what's the takeaway for marketers who don't have Starbucks' budget or data infrastructure? Lucas: I think the core lesson is that the funnel should be designed around the channel where the customer already spends time — not where you want them to be. Starbucks saw that people were on their phones all day, so they built the funnel there. For a small business, that might mean using SMS or a simple app. The principle is the same: reduce friction, personalize the message, and create a loop that rewards repeat behavior. Luna: And don't ignore the physical world. Starbucks still has stores. The digital funnel feeds into a real experience. Lucas: Right. The store is still the moment of truth. If the barista is rude or the drink is bad, the funnel breaks. The app gets you in the door, but the product has to deliver. That's the part of the funnel that technology can't replace. Luna: I think for me, the big insight is that Starbucks turned a utility — mobile ordering — into a marketing channel. That's a pretty elegant move. Lucas: It is. And it's a reminder that the best marketing funnels are often disguised as services. The customer thinks they're just ordering coffee conveniently. They don't realize they're being marketed to at every step. Luna: Alright, next episode I want to look at a company that tried to copy this model and failed. I have one in mind. Lucas: I think I know which one you're thinking of. Let's save that for next time.