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Starbucks? experimental bent boosted by loyal following on mobile

Starbucks? view of mobile as the future of retail, not just marketing, has earned it both users? trust and the freedom to test new features, auguring well for its continuation as a dominant brand, a Mobile Marketer analysis shows.

Mastering payments on smartphones with unrivaled panache and penetration, the coffee retailer?s mobile application now averages more than 6 million weekly transactions and is used by more than 120 million customers, making it one of the most-used mobile apps in America. Starbucks? successful diffusion of its brand ensures that customers will be receptive to new initiatives, boosting its prospects for the future and the rollout of its Order and Pay feature even as critics say its innovative edge has gone missing the past few years.

?Because Starbucks has such a long and successful and long track record, they have gained the trust of the users of their app and are therefore in an enviable position, regarding the testing of new features and functionality,? said Wilson Kerr, vice president of business development and sales for Unbound Commerce, Boston. 

?Since Starbucks customers associate the app with utility, inconvenience and even savings, they are far more likely to be willing to receive special offers, or location-based messages, or even home screen pop-ups.?

Starbucks, Seattle, did not respond to media inquires.

Latest technology
Blazing its own trail, the coffee giant has excelled in both payments and marketing on mobile. Its strategies have featured the latest technology, such as QR codes and augmented reality, as well as traditional channels including SMS, mobile advertising and applications.

Showing its mobile marketing prowess, the coffee retailer promoted an in-store Happy Hour special offer, by using opt-in SMS to deliver users a fun, engaging trivia question and encourage them to upload videos onto their social media platform, rewarding the first 100 responders with a redeemable coupon.  Additionally, it used device recognition to ensure a quality user experience. 

Mobile Order and Pay feature.

?Starbucks is a mobile-first brand; they don?t see mobile as a separate marketing channel, but as an integral part of their customer experience,? said Guillaume Lelait, general manager at Fetch.

?What Starbucks really understands is that it?s not just about payments. It is about the ability to get important data and information about your customers in order to improve the overall experience,? he said.  

Starbucks vaulted into mobile payments prominence with the 2009 introduction of its application, establishing itself in the market ahead of the competition and the subsequent rush to bombard consumers with ads encouraging app downloads. 

?As an early adopter, Starbucks was able to get consumers excited about the app at a time when there was less noise in the mobile ecosystem and it was easier to get people to download your app,? said Shuli Lowy, marketing director for mobile with Ping Mobile. ?In mobile, being first to market makes a big difference.?

The program initially started with just 16 select Starbucks stores in Silicon Valley and Seattle and at any U.S. Target Starbucks store. It expanded to 6,800 company-operated stores a year later.

The app?s success has been partly due to its smooth payment gateway, which lets consumers pay for drinks and reload their balance quickly. A recently introduced tips button lets consumers tip baristas from their phones. 

The app also encourages loyalty through its stars rewards program and through its re-engagement strategy. The star rewards program reminds users how many more drinks they need to get their free drink or proceed to the next rewards level. Showing consumers how they are progressing in the loyalty program encourages them to return.  

Starbucks has taken great care to think through its reengagement strategy in light of research showing that more than a quarter of downloaded apps are opened just once then never used again due to a lack of consideration about how to drive people back into the app after generating the download. 

?Starbucks built a solid reengagement plan which provides a free download each week,? Ms. Lowy said. ?That download gives consumers a reason to consistently come back into the app.? 

My Rewards program.

The app also acts as an inbox, giving the retailer a direct link to its user base, and a channel to deliver coupons, free iTunes songs and apps and information about in-store promotions. 

Starbucks? app success figured in the brand?s being chosen Mobile Marketer?s Mobile Marketer of the Year in 2010 and 2012. Since that high water mark, its mobile achievements have been somewhat anticlimactic.

?Over the last two years the app has not done much to innovate the experience,? Ms. Lowy said. ?While the user experience has seen several refreshes and small features have been added here and there, the app?s functionality is not dramatically different than it was back in 2009.? 

Starbucks? biggest oversight on mobile may have been preloading defined values into the app.

?People are reluctant to load the minimum required amount (i.e. $25) when buying a coffee for $2,? said Chester Ritchie, senior vice president of Worldpay.

In the months ahead, the biggest opportunity for Starbucks will lie in modifying the app to take payments as they happen or as users consume activities within the app. 

The app could make a comeback with the Order and Pay feature, in beta mode and available in select locations. Order and Pay lets consumers pre-order and pay for drinks before they arrive in stores?making the checkout process quicker and smoother.

Ahead of curve
In the meantime, Starbucks remains ahead of the curve. It has successfully merged loyalty, in-store payments, synched reloading of gift cards, location awareness, and personalization into a powerful mobile commerce engine that drives more than 10 percent of revenue and is responsible for millions and millions of in-store mobile transactions per week.

Twitter-promoted drink giveaway.

?Starbucks was the first brand to successfully harness the power of brand loyalty in a way that added utility and convenience to the customer experience, via a mobile app,? Mr. Kerr said.

?Since they have many years of usage data, they are in a position to personalize the app experience and potentially tailor it to the specific tastes and purchasing behaviors, of each customer.?

Final Take
Michael Barris is staff reporter on Mobile Marketer, New York