Starbucks: Mobile App Payments and Gamification
Starbucks is no stranger to reinvention. Using social media engagement to return to its community-centered
roots, Starbucks bounced back from a 28% profit loss and store closures during the economic recession. It is
with the same drive for innovation that Starbucks launched its mobile payment options and rewards system.
Starbucks debuted some new tech -their app in 2011 initially as a loyalty rewards card. The app has evolved
into a mobile payments system, which customers can use to order and pay for drinks in advance. By the end of
2014, 16% of all transactions (13 million users) were processed through the mobile app. Furthermore, these
customers had an average of 7 million mobile transactions each week. A year later, mobile app payments rose
to 21% of all Starbucks transactions in the US.
Another popular platform is the Starbucks Rewards
loyalty program. The program uses gamification to
incentivize customers with gold stars each time
they use the app or rewards card. The gold stars
can then be used for rewards, such as free drinks.
They can also view member events and receive
special offers through the app. Starbucks had a
record setting quarter shortly after the program was
launched with $3.6 billion in revenue – an 11%
increase. And in 2015, active members in the
program grew by 28% to 10.4 million.
By the end of this year, a quarter of U.S.
smartphone users — 55 million people — over the age of 14 will make an in-store mobile
payment. More than 40 percent of those people will have done so through Starbucks’s mobile
payments app, according to new data from research firm eMarketer.
The Starbucks app, which launched before the other three top payments apps — Apple Pay,
Google Pay and Samsung Pay — has long been the most successful payments app. It’s likely
going to maintain that lead over the next few years.
The Starbucks app lets users pay with their phones and earn credits toward future purchases.
That usage is significant: Starbucks said its mobile order-and-pay system accounted for 12
percent of all U.S. transactions in the quarter ended April
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Here are some ways Starbucks has utilized technology to improve its business:
1. Mobile Ordering and Payment:
Mobile App: Starbucks has a mobile application that allows customers to place
orders and pay for their drinks using their smartphones. This has streamlined the
ordering process and reduced wait times in stores.
2. Starbucks Rewards Program:
Digital Loyalty Program: The Starbucks Rewards program is integrated into the
mobile app, encouraging customer loyalty through rewards points and personalized
promotions. The data collected from the app helps Starbucks understand customer
preferences and behavior.
3. Digital Innovation:
Innovative Technologies: Starbucks has explored innovative technologies such as
augmented reality (AR) and artificial intelligence (AI) to enhance the customer
experience. For example, they have experimented with AR features in their app and
AI-driven suggestions for personalized recommendations.
4. Data Analytics:
Customer Insights: Starbucks uses data analytics to gather insights into customer
preferences and behavior. This data is crucial for making informed business
decisions, such as menu adjustments, marketing strategies, and store locations.
5. Mobile Order and Pay:
Order Ahead Feature: The Order Ahead feature on the Starbucks mobile app
allows customers to place their orders in advance and pick them up at the store,
minimizing wait times.
6. Digital Marketing:
Personalized Marketing: Starbucks utilizes digital channels for targeted and
personalized marketing campaigns. This includes sending personalized offers and
promotions to customers through the mobile app and email.
7. Supply Chain Management:
Technology in Supply Chain: Starbucks uses technology to manage its supply
chain efficiently. This includes inventory management systems and logistics
optimization to ensure that products are available at the right locations and times.
8. Employee Training and Communication:
Digital Training Platforms: Starbucks has implemented digital training platforms
to enhance employee training and development. Additionally, digital communication
tools are used to facilitate communication between employees and management.
9. Social Media Engagement:
Online Presence: Starbucks maintains a strong online presence through social
media platforms, engaging with customers and addressing their concerns. Social
media is also used for marketing campaigns and announcements.
10.Digital Menu Boards:
Dynamic Menu Displays: Some Starbucks locations use digital menu boards that
can be updated in real-time. This allows for flexibility in displaying promotions, new
products, and pricing changes.
Starbucks' commitment to leveraging technology reflects its efforts to stay competitive, enhance
customer experience, and adapt to evolving consumer preferences. It's essential to check for the
latest updates to understand how Starbucks continues to integrate technology into its business
operations.
