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Loyalty apps work for Starbucks

News, 28 July 2015

SEATTLE, WA: Mobile transactions at Starbucks now account for 20% of all its in-store sales and have boosted footfall by 4%, the global coffee brand's CEO has said.

Speaking as Starbucks revealed an 18% increase in third quarter revenue to $4.9bn, Howard Schultz attributed its success to the different approach he said the company has adopted in comparison with other bricks and mortar stores, pymnts.com reported.

He said there had been a seismic shift in consumer behaviour over recent years, yet many traditional retailers responded to the challenge by simply increasing their digital ad budgets without concentrating on the in-store experience.

"We, on the other hand, took a very different approach," he said. "By further enhancing our already world-class digital technologies through the introduction of capabilities like Mobile Order & Pay and soon to be delivery and expanding our loyalty program, we are driving traffic."

"Mobile Order & Pay" allows customers in the US to pay for their coffee via their devices and Starbucks is rolling out the service to 4,000 locations.

In addition, the "My Starbucks Rewards" loyalty program has grown to 10.4m active members, up 10% from the same quarter a year ago, with 6.2m of them choosing to take out "gold" membership.

"Bringing in new customers and deepening our connection to our existing customers, elevating the Starbucks brand and our customer experience and streamlining our in-store operations are key to our success," Schultz asserted.

And in another development, Starbucks announced that it is teaming up with ride-sharing company Lyft to allow all Lyft drivers to become gold members of the Starbucks loyalty program. It follows a similar offer made to users of the Spotify music service and readers of the New York Times.

Data sourced from pymnts.com, Wall Street Journal, Seeking Alpha; additional content by Warc staff