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Starbucks mobile pay explodes in popularity, next step suggestive selling
Starbucks mobile pay explodes in popularity, next step suggestive selling

Starbucks Mobile Pay explodes in popularity, next step suggestive selling

MARKETING NEWS - Jul 27th 2016, 15:50

Ordering by phone is proving to be popular with coffee drinking customers. Starbucks Mobile Order and Pay usage reached 5% of U.S. transactions in the third quarter 2016, up from 4% in Q2. 

The Starbucks Mobile app for iOS or Android provides mobile payment at the register and through Mobile Order & Pay, while customers still earn stars through the Starbucks Rewards loyalty program. The coffee company claims it has more customer-focused enhancements to its mobile app in the pipeline, and noted that morning, the company's fastest-growing daypart in the quarter, was driven by increased Mobile Order & Pay transactions, as well as strong performance from its core brewed and espresso product line-up and breakfast sandwiches.

Starbucks also recently launched mobile payment in China, and in Japan, its first-ever Starbucks mobile app, giving customers the ability to pay for their purchases and send eGifts.

Membership in the Starbucks Rewards loyalty program has increased 18% year-over-year to 12.3 million active loyalty members in the U.S. The vast majority of these customers now use the mobile app as the payment vehicle, accounting for approximately 25% of all transactions, according to Kevin R. Johnson, president, COO & director. Mobile Order & Pay was deployed less than one year ago and now represents nearly 5% of total U.S. transactions, close to 20% of all mobile payment at Starbucks.

"When you look at our busiest stores at peak, when Mobile Order & Pay is most valuable to our customers and most effective at unlocking capacity in our stores, we see an even more impressive trend," said Johnson. "In more than 2,700 stores across the U.S., Mobile Order & Pay represents more than 10% of total transactions at peak. In several hundred of those U.S. stores, Mobile Order & Pay represents more than 20% of transactions at peak."

Starbucks continues to make progress on app improvements, including menu functionality and response time, and enabling new features, including favorite stores, favorite items, favorite orders, and personalized recommendations, most of which Johnson said will be released over the next three months.

"Over the next several years, we will continue to enhance and expand personalization, both in our app and in other digital channels," said Johnson. "We are now driving personalized offers through e-mail, which are yielding extremely encouraging results. We are building a true, real-time, personalization capability which will begin to power personalized experiences and communications within our app. The digital flywheel is a powerful asset, with a clear innovation roadmap."

Starbucks recently made changes to its rewards program, which Chairman and CEO Howard Schultz described as a "one-time event, a once-in-a-decade change built on carefully vetted analysis."

"By anyone else's standards, our Rewards results have been outstanding," said Schultz. "We entered nearly 2 million new members year-over-year, representing 18% growth, and 300,000 net new members in Q3 alone, a time of year when we often see flat to negative membership growth."

The company saw the percentage of tender from Starbucks Rewards U.S. customers rise to 33% in Q3, up three points from last year, continuing a pattern in which revenue growth from Rewards customers typically outpaces revenue growth from non-Rewards customers.
"In the months ahead, we will be launching even more initiatives to fully leverage Rewards as incentives for customer behavior and to encourage greater ticket and attach," followed Schultz.
According to Matthew Ryan, EVP, Global Chief Strategy Officer, there's a direct linkage between the changes the company made in to its Rewards program and its ability to launch personalization moving forward.

"As you know, the past program only rewarded frequency. We couldn't reward any other behavior but that. We now have the opportunity, both in e-mail, which we've just begun, and this quarter, in our app, to do suggested selling."

Moving forward, Starbucks will be suggesting and making personalized offers within the app that will allow people to see things that are right for them while ordering.

"So at the moment, when somebody is there, we'll be able to suggest items that are additional purchases and reward that with a currency that now rewards not only frequency, but also spend," said Ryan.
2016 Stagnito Business information + Edgell Communications. All rights reserved 

Read more about: starbucks | retail | mobile |

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