The success of Starbucks’ mobile payment network proves that you don’t have to be a huge name in tech, or even a tech company at all, to be a leader in the critical new field on which all commerce will soon depend.
One of the most successful franchises in the U.S. and, for that matter, in the world, Starbucks has always been a trailblazer — as the company has managed to implement innovative strategies in sales, branding, and technology alike.
They were one of the first establishments to seriously and successfully use gift cards, and they now boast what is arguably the most successful mobile payment system currently in use today.
Starbucks launched the easy-to-use mobile payment app in the spring of 2009 in just 16 stores, and its success was so immediate that its implementation quickly spread to stores nationwide.
All of the design and development for the app was done in-house, using extensive tests and surveys to design the perfect program long before any final product was announced.
The payoff? According to Forbes, Starbucks raked in an incredible 90% of the $1.6 billion spent using smartphones in American stores in 2014. The app boasts more than 13 million users in the U.S. alone, and is responsible for over seven million mobile transactions each week — that’s 16% of Starbucks’ total in-store sales.
What Starbucks Does Right
So what makes this particular mobile payment network so successful? Apple Pay and Google Wallet have been getting all the recent media attention, but I still think that Starbucks’ program is far more successful, well-designed, and resilient than its competitors’.
At the most basic level, it’s so successful because it’s one of the most popular and recognizable franchises in the U.S. — America loves coffee and will continue to buy theirs at Starbucks as long as they keep giving us tasty specialty drinks and house blends.
Credit must also be given to their cleverly developed loyalty program, “My Starbucks Rewards,” through which customers can track their purchases and even score free drinks. The loyalty program motivates customers to continue to buy coffee — specifically Starbucks coffee, and it’s done so by creating a unique “branded currency.”
Starbucks’ brand loyalty is unparalleled, and it would be only slightly hyperbolic to state that nothing short of an apocalypse could lure away its most loyal customers.
Starbucks’ plan is also ambitious, and they undoubtedly intend to expand their mobile payment strategy however they can. CEO Howard Schultz himself explained that they have no plans of slowing down mobile growth — he even wants to expand the currency into one that could potentially be used at other retailers.
Starbucks has also been testing out new features, like an order-ahead service that allows you to pick up your pre-ordered drink in a store of your choice. They tried it out in Portland and will soon launch it in many more stores — clearly, Schultz and his mammoth company aren’t intimidated by the rise of other mobile payment platforms like Apple Pay and Google Wallet.
Though their brand names certainly come with an implied level of trust and success, Apple and Google are going to need to do a lot more than just offer a quick payment method if they want to be as ingrained in their users’ lives as the Starbucks app is.
Efficiency and speed are now obvious criteria for mobile payment systems — Starbucks has a unique product and a loyalty program that’s pretty tough to beat.
Such systems are the new payment frontier — when developing their overall sales strategy, companies need to consider how a mobile payment system makes sense within their business model.
In my opinion — and in that of most experts — Starbucks nailed it, and I think that other companies could come up with equally successful programs if they invest early enough and incorporate their mobile strategy into their broader business infrastructure quickly and cleverly.