Starbucks bad coffee, great marketingPosted: August 12, 2013
While I don’t think Starbucks have made a great contribution to improving the quality of coffee (outside of the US), I think their mobile payments strategy is brilliant. Let me rephrase and correct my last statement, their customer management strategy is brilliant.
Techcrunchrecently reported that Starbucks mobile payments solutions now account for over 10% of their North American turnover. Starbuck’s were also quoted in the article that their digital initiatives are paying dividends.
I am sure there is a little bit of gaming of the 10% of turnover number; however 10% is an impressive number and sows the seeds for future growth. What makes the number more impressive is that we are talking about a low involvement, low cost item (coffee) where cash to date has been the fastest and most convenient way to pay in the past.
Linking mobile (online) payments with the purchase of offline goods and services via mobile apps is still clunky; you either have to be a geek or face standing in a really long queue to use the services. The ability to pay via your mobile phone is still really waiting for the mass adoption of NFC.
Starbucks is onto a real winner with their digital strategy by being able to increase their customer’s convenience while capturing customer information and profiling their coffee habits at the same time. This is something few retailers outside of the ecommerce space have been able to crack.
Outside of Australia, where there is few surviving Starbucks left, this digital data is gold. As customers move from one outlet to another they can receive uniform and hopefully an enhanced customer experience. Over time Starbucks will have the ability to build stronger relationships with their customer base and identifying their most profitable segments.
The ability to data mine and create unique promotions for customers is limitless.
I agree with the Techcrunch article that Starbucks initiatives are an island, that sweeping changes within the retail industry to improve the customer experience is still sometime away.
Starbucks and Apple are continually quoted because there are few other large retails innovating.
Few retailers are investing in enhancements to their POS (point of sale) equipment to empower their staff with information about customers. Even at Apple stores the POS solution only really improved the experience post-purchase.
I know that changing POS equipment and integration into CMS and ERP solutions is not easy or cheap but if retailers do not make the changes they will be facing imminent death.
Those retailers that embrace the technology and empower frontline staff will be well positioned for the continuing changed in customer shopping habits.
Retailers, start to build initiative that bridge the gap between your customers, frontline staff and IT systems so that Starbucks is not the lone island showing the way.
Author: +Richard Brock