Investing in technology is the future – and you’ll get left behind if you don't
The CEO of Starbucks has credited the chain’s recent growth to a change to a strategy of investing in digital technology, rather than digital ads, allowing them to dodge a change in consumer behaviour that has left many other retail companies out in the cold.
Starbucks – what makes its coffee taste sweeter?
The 'secret sauce' behind the Starbucks strategy isn’t the loyalty plan itself but the services and technology that exist around it.
Earning free drinks is nothing new, but enabling instant payment, being able to pre-order your drinks for pickup and partner with third party partner experiences, such as Spotify for music, or Lyft, has revolutionised the way consumers interact. This can be seen today, with Starbucks now processing over 9m transactions a month, accounting for 19 per cent of its payments. Where next? Perhaps a Starbucks savings account?
Other loyalty schemes – where do they fall short?
In comparing other similar UK schemes to Starbucks’s scheme, it’s quite staggering how much is missing.
No high street is complete without Nando's, a chain that has recently updated its loyalty scheme to be digital. Similar to Starbucks right? However, behind the scenes, it’s just an extension of the old paper card – and although Nando's has reported an increase in sales, the innovation is only surface deep.
In comparison, Coca-Cola’s loyalty app is applying new digital technology in ways never seen before, using location based technology and deploying thousands of iBeacons in its retail spaces and advertising.
By interacting via a suite of mobile apps and a marketing cloud built by some clever, technology-based salesforce, Coca-Cola can create customer experiences that can track customers and enable interactions to a standard that would rival those in the sci-fi thriller 'Minority Report'. For instance, being able to display a customer’s name on an electronic billboard of signage as they walk by, or tracking their most visited restaurants.
How can you take advantage of these trends?
For small companies, it can be difficult to match these schemes without the marketing clout and spend of a large global brand, but there are easy ways to take advantage of this trend in consumer behaviour right now.
- Payment – use recent changes in the payment area to create a sense of enchantment with your payment solutions. Adding Apple Pay (recently launched in the UK) to your payment terminals (which should be available already if you’re using contactless), or taking Bitcoin payment will push your acceptance with the same millennial group Starbucks is targeting.
- Use a Smart EPoS system to track buying behaviour, in real time. This will allow you to uncover trends in your customers’ behaviour, and integrate this into the larger customer experience, email frequent customers for latest deals or promotions. With the advent of the reliable iPad, this has got even easier to implement.
- Join a larger loyalty scheme – take advantage of high street groups and larger schemes to participate in local loyalty scheme, allowing you to gain insights into your consumer behaviour and drive customer retention without the expensive sunk cost of a program development.
Akin to the genius behind the famous McDonald's business model of being in real estate, and not fast food, Starbucks is leading the way for a new model of doing business in retail, evolving past the coffee shop to a lifestyle location, targeting young affluent groups with new technology and methods of doing business.
With the ever-lowering cost of deploying technology today even small brands can get involved with very little outlay, adding convenience for the customer and insight to the shop owner to increase customer retention by a magnitude. And, in this fast-moving digital society, this is just the beginning.
Jon Busby is digital director at Twogether