Starbucks brews up faster digital customer experiences

Profile picture for user slauchlan By Stuart Lauchlan August 11, 2013
Summary:
Starbucks digital ambitions will be boosted by a ten-fold uptick in wifi speeds courtesy of a tie-up between Google and Level 3. But it's only part of the wider digital thinking.

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As one who's just had to spend a deeply unproductive week sitting in my local Starbucks tapping into its wifi, I'm deeply jealous of those of you in the US where the net access is about to shoot up tenfold.

(I was exiled to Starbucks thanks to a failure by BT that took the best part of a week to address by the carrier. BT also provides the free wifi in Starbucks which made it particularly ironic when that ran with all the speed of a slow-thinking tortoise!)

The US uptick is coming courtesy of Google which, working with Level 3 Communications, will be providing wireless Internet service at Starbucks’ US locations, taking over from AT&T.

The new Google WiFi will initially be seen at new Starbucks locations over the next month. and then be rolled out to its remaining 7,000 locations across the country over an 18 months period.

Jeffrey K. Storey, CEO at Level 3, said:

"We are working with Google to provide Starbucks with a differentiated experience for their customers. We will do the things that we do best - building and managing and maintaining and delivering complex network services to support that infrastructure.

"Google will do the things that they do best and making sure that they provide a differentiated Wi-Fi experience that they will at some point, use that portal and that interface to, for example, maybe offer seasonal drink coupons to the customers as they walk in.

"Google will do what it does best in that relationship, and working with Starbucks to make that a differentiated experience for their customers. We will do the network stuff."

Digital customers

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Adam Brotman

According to Starbucks Chief Digital Officer Adam Brotman, it's the next step in the relationship between the coffee giant and Google.

Brotman has responsibility for delivering on Starbucks wider digital thinking which is key to its customer experience strategy:

"From the digital perspective, we spent the past several years building an engine of digital touch points with our customers that not only allows us a deeper relationship with our customers, but also pays off with incrementality for our business."

A critical tool for Starbucks is its loyalty card program which has seen a 100% year-over-year growth in dollars loaded via Starbucks mobile apps and web properties.

The coffee firm now stakes a claim to being the eading retailer in the mobile payment space. Brotman states:

"More than 10% of all transactions in our US stores are made with the phone. Mobile devices have become increasingly important part of the customer experience at Starbucks as the fastest and easiest way to pay in our stores and we will continue to bring more innovation to this space.

"One of the things that's allowed us to get such a big lead in mobile payments is that we did not try to go for example, right to the cloud or right to some sort of tap to pay, although we do plan in the future on implementing whatever is suited and most convenient to our customers.

"Where we've done a barcode, where we've done other things has given as an ability to be nimble, to be fast and it's given us the lead in the space."

Elsewhere Starbucks recently passed over the 4 million Twitter follower mark, and while its global Facebook following allows the firm to engage with our customer's everyday around our brand and topics of interest to these customers.

All of this indicates the importance of digital thinking to the firm, reckons Brotman:

"Our internal measures tell us that these various digital initiatives have added demonstrable impact to our US business with the promise of even greater growth in the months and years to come. We are not resting on any of our previous successes.

"We currently have a robust pipeline of developments in each area of our digital ecosystem and we expect to deliver a number of improvements and innovations through our existing programs as well as introducing new concepts and new platforms."

One such new initiative is a partnership with Duracell Powermat to trial wireless charging for our customer's mobile devices in select Starbucks stores in Silicon Valley. Brotman explains:

"The installation of multiple wireless charging Powermat services in our stores will allow our customers to recharge their smartphones quickly and effortlessly. This is a kind of improvement to the digital experience that our customers expect from Starbucks and the kind that we will deliver at scale moving forward."

Cross channel

Starbucks is also bridging the digital and non-digital worlds. As examples, Brotman cites:

"We have begun the roll out of integrating our digital loyalty program MSR with channel in United States with the ability to earn stars and buy packaged copy down the grocery aisle. We've just started that and we do plan on expanding upon that in the future.

"Secondly, we have fully integrated My Starbucks Reward our mobile app enter card program with Teavana. And you can actually go into Teavana stores and use your Starbucks card and earn loyalty points in those branded stores as well."

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This is all very US-centric of course. But Brotman said work is underway to accelerate the digital strategy globally:

"In China, for example, we already have 2.5 million My Starbucks Rewards members and that's without a mobile payment platform or eGifting in place. We [have] also made mobile payment available to apps on Android and iOS to Starbucks customers in our Hong Kong market and we are already seeing strong response from that.

"In fact, these iOS and Android apps became the number one free application in the store Hong Kong app store, within less than a day of having launched them."

China is now becoming big business for Starbucks:

"With now approaching 1,000 stores in China. That market for us is progressing to a size and scale where we believe we have the opportunity just as we've done for many, many quarters now in the US to deliver stable consistent healthy comp growth through great experiences in stores, through product innovation.

"China is now becoming a large market for us. Significantly more opportunity ahead and we believe we can continue to drive average unit volumes and comp growth within that market."

But the rest of the world will be getting a shout out as well:

"Once the full breadth of our digital plan comes fully online in CAP and EMEA to complement we're doing elsewhere, the potential for digital creates similar incremental impact to our business in those markets is as strong if not stronger using digital than anywhere else in the world."

Brotman concludes:

"I truly believe that no other retailer is as far along as Starbucks in terms of building an end to end digital customer experience across a variety of digital touch points both in-store and out of store, across channels, and now across geographies.

"We are truly only just getting started."