Delivering on digital for Starbucks - a CTO to-do list

Profile picture for user slauchlan By Stuart Lauchlan March 22, 2017
Summary:
Starbucks new CEO remains committed to digital development. Now it's up to the Chief Technology Officer to deliver on that.

Starbucks App feature better
Mobile Starbucks

In the first part of this two-part look at Starbucks digital destiny as tech champion Howard Schultz steps down as CEO, his successor Kevin Johnson demonstrated that he’s just as much of an enthusiast as his predecessor.

With the technology commitment still there, the person charged with delivering on that is CTO Gerri Martin-Flickinger who emphasises the important of digital innovation chiming with the Starbucks essential mission statement:

At its core, Starbucks is all about the importance of human connection; one person one cup of coffee and one neighborhood at a time. I truly believe the technology when done well helps enrich and enhance the human connection. Over the last several years, we’ve innovated to make our mobile application even more personalized.

The mobile application is only three years old, Martin-Flickinger recalls, but has evolved rapidly:

We started this mobile payment, giving customers the ability to pay from their phone and track reward. It was less than two years ago that we enhanced this application to allow ordering and further extending our brick-and-mortar stores with added digital convenience. And this year, we extended this experience to make it personal.

We leverage Artificial Intelligence and Big Data. We switch data from many different sources, including a customer’s past purchases, information about trend, weather data, as well as product availability at a store. And then we give each and every customer personalized offers and recommendations to anticipate and delight. And that’s not all. We also surprise customers with gains that are developed just for them, giving our customers rewards and opportunities to try new products or visit more frequently.

It’s that personalization that builds the necessary human connection:

Our customers have made it clear that these personalized experiences are enriching their connection to Starbucks. We’ve seen a tripling of personalized marketing sales lift, reflecting a more engaged member base. The growth in Mobile Order and Pay (MOP) has been impressive. Our highest volume MOP stores are seeing more than 20% of their transactions through MOP at peak.

With this volume we recognize the need to continue to streamline and enhance the in-store experience. We’re using and testing text notification to let customers know their orders are ready, allowing our customers time to relax and improving the experience at the hand-off plane. We’re also introducing technology to help abreast manage the production of orders, so they can focus on the customer engagement.

Voice

Next up is voice. Martin-Flickinger explains:

The way we interact with technology is also radically changing. I love to ask a question, how many of you took a typing class to learn to use a computer? How many of your kids took typing? If your kids are like my kids, they use one finger and they point-and-click. I would suggest to you that the next generation won’t even do that, they will use their voice.

To that end, Starbucks earlier this year began introducing voice ordering in the mobile app. This feature has already rolled out to about 100,000 customers and should be rolled out nationwide in the US by the end of the year.

What all this leads to is a scenario where customers can order coffee at home from their Amazon Echo, for example. There are lots of ways all this can develop, argues Martin-Flickinger:

As you can imagine, the opportunity for voice and other settings becomes quite intriguing. Our technology foundation is allowing us to embrace conversational commerce very, very rapidly. It only takes a little imagination to think about where conversational ordering will show up next.

On a more prosaic level, the Starbucks gift card has been one of the staples of the firm’s customer enagement for years, but this too is getting a digital makeover. Martin-Flickinger explains:

Over the years, giving and receiving Starbucks’ gift card has become iconic. They’re given for birthdays, holidays, thank you, business events or just because. Traditionally, our customers have purchased gift cards from our stores and other retailers. Now customers can also purchase them digitally in our MOP app or on our website. But what if we let gifting occur in other channels? What about social channels, the virtual places for you engage with your friends, your colleagues and loved ones every single day.

So the aim now is to make is as easy as possible to deliver gift cards via social and comms channels with the minimum of effort:

Earlier this year, we released an add-in for Microsoft Outlook 365, which many consumers and businesses use for email. The add-in allows you to get someone a Starbuck gift card without ever leaving your email session with just a few clicks. What an amazing way to quickly send a thank you or birthday gift. This Spring we’ll release Starbucks gifting for iMessage. This will allow our customers to give a Starbucks Gift Card within an iMessage conversation on an iPhone or an iPad.

Martin-Flickinger cites the example of two co-workers iMessaging one another:

One co-worker wants to thank his colleague for job well done. Without leaving the iMessage conversation, he’s able to select the gift card and pay with Apple Pay with just a few taps. The recipient can redeem the gift card right from their iPhone using Apple Pay.

Digital China

That comes next month to customers in the US. But beyond the domestic market, digital is seen as a way of opening up new markets, most notably the lucrative Chinese one. Molly Liu, VP of Digital Ventures for Starbucks China, explains:

Our 2,600 stores across Midland China serve as an attractive surplus destination that brings people together over a cup of coffee. As we expand the experience to the digital platforms, we saw a unique opportunity for Starbucks to create deeper social connection digitally. To encourage and cultivate a behavior of everyday kindness and appreciation among family and friends, a behavior truly needed in today’s fast developing China.

Social gifting of the type described by Martin-Flickinger can play a major role here, says Liu, hence a partnership with Tencent, which runs China’s largest mobile social network, WeChat. With over 889 million active users, many of them logging everyday and about half of them spending at least 90 minutes on the app, this is an important outreach platform for Starbucks to promote its social gifting cards:

My first gift was sent to my best friend from college. We no longer live in the same city and haven’t met for a long time. My biggest regret was not being able to be there for her when she most needed my support. When I browsed through the social gifting offerings, the ‘thinking of you’ card caught my attention and I immediately picked it, paid with retail pay and easily selected [my friend] from my recent contact list. This new feature also allows me to edit to attach text, photo or video in my gradients.

I wrote a personal note to encourage my friend to find more time to relax in a Starbucks store - and the coffee is on me for sure. She received the gift instantly and replied with a big smile. If you think about it, 25 seconds were all that it took for me to make up for this long-overdue reconnection. And her big smiley face reply really made my day.

Sending a gift is a convenient and rewarding experience. Receiving one could create a memorable moment of surprise and delight in anyone’s life. I just received such a surprise gift from my little boy Harry this morning. He knows that I need coffee to overcome jet lag flying from China. So, he sent me a latte together with the heart-melting video.

It’s only six weeks since this feature was introduced in China, but it’s getting good traction, says Liu:

Our customers are falling in love with this innovative feature for the seamless experience, emotional attachment and personal touch. Many customers purchased more than one gift and keep coming back. When it takes, receivers start to purchase a gift and pass their love to other people as well, which in this is a truly viral social phenomenon.

My take

The digital direction is still firmly in place.