Big news this week as Starbucks coffee drinkers can now use their smartphones as a payment method at nearly 6,800 of the Seattle-based coffee shops nationwide. The app allows users to attach Starbucks giftcards to a user’s Blackberry or iPhone and then scan a barcode on their phone at the point of sale, and can also be charged with value via PayPal or any major credit cards. The message coming out of Starbucks HQ seems to be that they’ve opted for a barcode-based payment system today, but are planning to take this technology in some pretty interesting directions, such as Near Field Communication (NFC) in the future. Starbucks also has the ability to add value to its customers reward cards for taking surveys, and will now presumably be able to complete this entire process of presenting a survey offer, accepting customer responses, adding value to the customer loyalty app and accepting payment all on a single smartphone. The functionality being utilized for this rewards app is very similar to the Digital Wallet software available from companies like Google and Accelitec, and the fact that Starbucks has now taken the lead should serve as sign to other brands and retailers that now is the ideal time to be targeting customer loyalty by creating and launching rewards applications for smartphones.
Starbucks has tried a variety of media plays in the past (magazines, music) as brand extensions, with varying success. This digital program is a horse of a different stripe, however, and appears to be a platform that will keep the brand in a position to leverage new technology to drive loyalty benefits. It makes their stored value card initiative look positively, well, old-school.
“Imagine a Starbucks patron is reading a review in the free version of the New York Times about a Chardonnay and suddenly their iPhone buzzes. A text coupon arrives in your mobile inbox and you are offered $5 off a wine purchase of $20 or more from a local wine purveyor. The coupon has a timed code and expires in 3 days, nudging you to act. The era of the hyper-relevant advertisement is upon us. And that example is just scratching the surface.”
This is part of a larger, quickly emerging trend of location-based, personalized, opt-in promotions and marketing. A key development appears to that this does not stitch together commodity services like Foursquare, but is retailer-branded and unique to the experience at Starbucks. That has enormous differentiation benefits.
Although it is retailer-specific, the hypothetical contemplates an affiliate program that may – or may not – dilute the underlying purpose of getting people to and keeping them in a Starbucks, but in any case adds a level of operational complexity we won’t likely see in the near future.
We look forward to checking it out – at one of the dozens of Starbucks within shouting distance.