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Starbucks – Mobile Marketing Monster

Starbucks is clearly leading all other brands when it comes to mobile commerce. They are driving massive amounts of revenue and brand loyalty through their mobile channel. How are they doing it? And why are they succeeding so much more than other brick and mortar stores?

Mobile is not a siloed channel for Starbucks

The core of their mobile strategy is that it is not their mobile strategy. It is a customer engagement strategy. What I mean by this is that they coordinate all of the various communication channels holistically. Mobile is just one facet. You will notice a drive to various promotions via physical signage, emails, TV, radio and digital ads. However, the key here is that all of the ads are coordinated and consistent.  They are hitting each user multiple times with a similar message, enhancing share of mind and actual conversion metrics.

Auto-reload / stored value 

Starbucks is great at making it way too easy to reload your mobile payment system. A user can have the system automatically reload or top up the card when you hit a certain balance like $10. The minimum recharge amount is $15. A $15 balance equals at least three of those fancy espresso based drinks or for most people 3 additional visits. This is an amazingly simple way of keeping people coming back to use value they have already paid for. However, I think most frequent coffee drinkers under a certain income threshold use this feature to budget their spending per month. This becomes the equivalent of a  monthly recurring cell phone bill for many households.

Gamification

The most significant differntiator between Starbucks’s loyalty program and other retailers is the gamification element. There are multiple status levels, shortcuts to earn stars, and most importantly the goals are attainable quickly. What this equates to is that people realize the benefits of the loyalty program quickly. The app and website consistently reminds you of where you stand in terms of stars. If you compare this loyalty program to Panera Bread, Panera comes up short big time. The threshold to get benefits is way too high and when you do get a benefit, it doesn’t seem to line up with the time or money spent. Panera also does not push shortcuts or seasonal promotions via email even though their bakery items change quite often.

Geo-Fencing

Many folks with iOS devices benefit from the geo-fencing notifications a person gets when they walk or drive by a Starbucks. This is the equivalent of a impulse aisle constantly following you. It is a great digital offensive that puts local coffee shops in a bind. People are constantly being reminded of the Starbucks but rarely see the local coffee shops ads or promos. This helps keep the Starbucks brand name top of mind when you think of coffee or a place to meet up. These geo fence notifications along with an excellent retail real estate strategy make it easy to make a quick diversion and earn more points at a Starbucks.

Universal Currency

To enhance the loyalty program, Starbucks allocates stars for your in home coffee purchases too. This way more budget conscious coffee drinkers are still driven to the store every once in a while to enjoy a freshly made drink.  The stars earned for a physical purchase are the same currency that is earned for purchase in a Starbucks. The unified system keeps it simple for any consumer and encourages brand interaction at any budget level.

Starbucks is clearly doing a great job in mobile and showcasing that mobile is not a beast unto itself. It is a channel that needs to work well with other marketing efforts. Simplicity and making everyone feel like a winner is something the other brick and mortar retailers should take notice of.

Starbucks is currently leading because they have executed a few things very well. However, I would argue that the consumers are going to demand more very soon.

How Starbucks could take their app to a whole new level

Offers in App and Enhanced Push Notifications

Right now, discount offers primarily come through email and ask users to show the cashier a picture or print out. This is time consuming and not that elegant. The offers should really be in the app and have a coordinating push notification to alert the user of the promo of the day or for that specific time window. This can also be enabled by a passbook integration for iOS users.

The other enhancement I would suggest here is that Starbucks starts to use more enhanced push notifications with sounds and more time based push notifications. This combined with the geo-location push could prove to have massive returns.

Personalization 

Right now, the concept of a gold card or black card is largely lost because the pride in presenting a shiny object is taken away when you simply put your phone in front of the scanner. Enabling a custom icon, app skin, check out sound or other minor touches to the UI of the app could help distinguish ultra-loyal customers.  Staff should also be trained to thank these users in a different way to make them feel special. Allowing Gold status or higher members to share the love with friends is also a way of enhancing the pride aspect. EG – “You and a 2 friends get a free drink today since you are a loyal gold member!”

Order from your phone

The line at Starbucks is probably the most archaic thing about the franchise. Frequent visitors know what they want and need a fast lane of sorts. Being able to submit your order from your phone so the drink is ready when you walk in is going to be a consumer need very shortly. It presents a host of logistical issues but people will pay more for the express lane.

Integrate with health trackers

Since Starbucks represents a fairly affluent demographic, it is likely that a good portion of their customers already use health trackers. When you are serving drinks that frequently exceed 500 calories, it makes sense to have the Starbucks app “talk” to your fitbit, Jawbone Up or Nike. Also knowing when a person has exceeded their exercise goal is a good opportunity to present them with a treat or reward.

NFC / iBeacon / Bluetooth LE

Opening an app and showing a digital card is becoming a bit of a hassle especially if a person is on the phone while in line. Being able to tap your phone or receive special promos by being near the merchandise is where this app needs to go. It is faster, and payment tapping will get a major boost from the major credit card companies in 2014.

As CES 2014 kicks off, the retail sector should take notice not of the new gadgets but the willingness of the consumers to try them. How do you make a great app even better? Test new features aggressively constantly.