Starbucks
App Review
Starbucks was an early innovator in the area of turning
their gift cards into a prepaid funds account to purchase products at
Starbucks. They introduced their loyalty
program in 2008, leveraging their gift card, and began beta testing a mobile
app for the Starbucks card in 2009.
In 2012 Starbucks partnered with Square to process their
credit and debit cards, and invested $25 million in the startup. Customers could use the mobile Square Wallet
to pay and at the time it looked like Starbucks would stop future development
on their own mobile payment app.
In 2014 Starbucks stopped using Square and launched their
own mobile payments solution.
Starbucks has become the most successful mobile payments
solution in the world. According to a
Forbes article this past January, “the
giant chain of coffee joints claims up to 90% of the $1.6 billion spent in U.S.
stores using a smartphone in 2013, and 2014 probably wasn’t much different
despite the introduction of Apple Pay in October. In its holiday
quarter report, Starbucks said momentum continued to build for its mobile
app, which allows customers to pay for a Frappuccino with a wave of their
smartphone at the checkout counter.
In its
first fiscal report of 2015 ended Dec. 28, the company said it had more
than 13 million mobile users in the U.S., up from 12 million reported in
October. They made some 7 million mobile transactions a week, constituting 16%
of transactions.”
Now let’s take a look at how it works and how it rates
against the questions posed in my earlier post.
The first step is to purchase a Starbucks Card, their gift
card, which can be loaded from $5 to $100. Registering the Starbucks Card
online is the next step and you automatically join their loyalty program.
Registration
The online registration is simple and easy starting with
the creation of your profile with a User Name and Password. The site asks for your address, whether you
want to add Facebook and Twitter, contact information and preferences.
You add your Starbucks Card by entering the card number and
Card Security Number from the back of the card. Setting up the Auto-Reload
feature is easy by linking your PayPal, Visa, MasterCard, Discover or American
Express card to your account. You pick
the reload dollar amount and set the threshold dollar amount that activates the
reload.
Auto-Reload
Note:
I wonder if Starbucks will add other ways to
reload, such as linking your bank account.
Cheaper transaction cost for Starbucks and maybe they could offer richer
rewards for people that elect this feature versus a card.
Their online site allows you to transfer funds from other
Starbucks Cards you may receive as gifts, you can view your last six months of
transactions, report lost/stolen cards and much more.
Rewards
Program
The Starbucks Reward program is based on frequency wherein
you earn stars for making purchases.
Upon receiving 12 stars, you receive a free drink or food reward. The rewards do have an expiration date.
Rewards
Note:
I
believe Starbucks will need to rejuvenate their rewards program to make it more
engaging to customers and to drive customer behavior in that benefits
Starbucks. Today it is a frequency
program, and does not take into account monetary attributes such as buying more
than one item, size of drink or type of drink. The customer that buys a Venti coffee
for $2.35 earns the same as the customer who buys a Venti Latte for $3.95. Also, there is no bonus for recency…meaning
no bonus for coming daily or coming in during slow hours.
At
Point-of-Sale
Very easy to use the app at the point of sale. You can use the Starbucks app to pay or add
your card to iPhone Passbook. After your
place your order, place your phone in front of the barcode scanner and you are
done! No need to get a receipt or leave
cash for a tip, as you receive a message to your mobile device wherein you can
see what you purchased and leave a tip.
Now let me respond specifically to my list of questions and
ratings from the original blog article. The
rating is from a general public perspective, on each of the category questions
listed here, on a scale of 1, 2 or 3.
• 1
(Confusing, Needs Work)
• 2 (Okay,
Average)
• 3 (Easy,
Better Than Most)
The rating is based on the individual wallet, and not
compared against other wallets, since I have not worked with all of the wallets
as of today. I will do an overall rating at the end of my e-wallet journey.
1. How is the wallet marketed/advertised to the
general public? What media
channels? How do I know the wallet
exists? What is the message to me?
The
advertising is everywhere. Rating: 3
2. Why do I need this mobile wallet? (Isn’t this the first question that needs to
be answered in a manner that is simple and straightforward for the general
public?) What issue does it address? How
is my life better by using the wallet?
This
is a key question to be answered by all the wallets/apps. In the case of Starbucks it is an easy answer…if
you want to receive rewards, you have to get a Starbucks Card, register it online
and use the card and/or mobile app to make purchases. With auto reload, using your mobile device to
make purchases is easy and you are never out of money. The card can be added to iPhone
Passbook. Also, peer pressure plays a
big part…you see others using their mobile device and you want to as well!
Rating:
3
3.
Is it a payment-only wallet? Does it have loyalty/rewards? Other benefits?
This
is intended to be a prepaid card with a loyalty program. This is a merchant-centric app and can only
be used at Starbucks. Rating: 3
4. How do I get the wallet? Download from iTunes app store? Scan a QR code? Go to a web site?
You
download from the app store. Rating: 2
5. Now that I have downloaded the app to my mobile
phone, how difficult is it for me to register/set up? Are there a few simple steps or do you need
to be a nuclear engineer to figure it out?
Does it ask from my bank account information? My debit/credit card number?
Set up
as described above was very easy and straightforward. Rating: 3
6. Where can I use the mobile wallet? How many stores (real brick-and-mortar
stores) not online stores - use it at Point-of-sale (POS) locations? Transit?
The
app can be used only at Starbucks and can be used for in-store purchases and
you can order online. Rating: 2
7. What is the POS set up –stand alone tablet?
Integrated cash register? Typical card
reader POS? Contact-less/NFC?
The
Starbucks Card is a barcode that is scanned at the POS. Easy for both merchant and customer to use. Rating: 3
8.
Is the POS experience easy? Hard?
Confusing? Does it actually work?
Easy…easy…easy. Rating: 3
9. What information do I get sent to me after the
sale? Do I get my receipt emailed to
me? A text message? Is the transaction listed on my wallet? Did I earn points?
I
received a mobile message immediately after the transaction with details of my
transaction and the ability to leave a tip. Rating: 3
10. Are there fees? Do I need to reload my wallet
(manually or automatically)? Is the transaction a prepaid card? Or my debit/credit card? Does it use the Automated Clearing House (ACH)
network?
No
fees. The app is a prepaid card linked to a bank card. Rating: 2
Starbucks is the leader for merchant-centric
payment/loyalty apps. They set the
standard for everyone else!
Next up will be Square.
