Loyalty-focused smartphone apps have become pretty much a standard among big consumer brands and most of these apps are pretty much the same. However, there are reasons that customers actually love Starbucks' (NASDAQ:SBUX) mobile app, and why the app has been the most successful in the industry. For the reasons below, it will probably continue to be the most successful for a long time. No other business can really compare to how well Starbucks is integrating its app into its business model, and the new additions to the app will continue to make it the best app of its kind out there.
Mobile payments that just get better and better
Starbucks didn't invent mobile payments, but it was one of the first companies to make them widely successful as a day-to-day function for consumers. The Starbucks app was launched back in 2009, and started accepting mobile payments in 2011. Starting with the bar code scanner placed at the register of only a select few stores around the country, which decreased waiting times and made payments incredibly easy, Starbucks grew the service to the incredible numbers it posts today. Now, the Starbucks app processes more than 6 million payments per week in the U.S., which accounts for 15% of the total transactions of the coffee chain, and is on track to process over $1.5 billion in sales in 2014, according to an estimate from Business Insider.
With the introduction of Shake to Pay, customers who are already on their phones checking emails or reading news while in line for their coffee, can then simply shake their phone to pull up the barcode of their Starbucks Card to pay for their coffee and snacks. Shake to Pay for iOS was announced in March; it launched on Android last month. The app also started allowing customers to tip their Starbucks barista directly from the app with a simple click following the payment. By looking at how customers were interacting with their device while in the store, Starbucks found ways to improve its payments app.
Happening now: More customer and partner integration
Now that nearly every company is following this lead with in-app payments and customer loyalty programs, how is Starbucks continuing to stay ahead of the tech curve? The answer is: total customer integration. This means giving people more options within the app to make their time at Starbucks easier and more enjoyable. This includes features like pre-ordering and pre-paying to have your drink waiting for you to pick up, as well as instant downloads of your favorite newspaper just as you are getting your coffee to sit down.
Starbucks is even teaming up with other companies, like the car-ride service Uber, to offer even more expansive experiences through the app. In fact, you could even say Starbucks is creating a kind of VIP experience for its customers. Straight from the app, you can order your black car service to pick you up and take you to your local Starbucks, where your drink is already waiting for you when you arrive since you've ordered and paid ahead of time through the app. It will also have your favorite daily newspaper loaded on your phone ready to read along with your coffee, and then have your private driver return you home, all without ever leaving the app. Now that's the kind of app that stands out.
What to look for in the next few quarters
Shake to Pay and mobile tipping were the big releases of the early part of the year. Then integration of Uber and other company partnerships were introduced at the beginning of the fall. What will be the next big innovation? It's hard to say, but given the track record, it's likely that there will be more app innovations announced in the next few quarters.
Through MyStarbucksIdea.com, customers and Starbucks-app lovers have a forum to submit and share ideas to make the Starbucks experience better. This isn't limited to the Starbucks' app, but it allows tech-forward consumers to discuss and even vote on what tech innovations Starbucks can make to keep customers loving their Starbucks experience, meaning there will be a wealth of ideas for app developers to work with.
And if it's not directly related to new features, it might be about new areas of monetization. There have reportedly been discussions of Starbucks licensing its app technology for other companies to use with their own brands. With the success of the Starbucks app so far, there could definitely be other companies willing to pay major sums to get the same advantages.
Foolish final buzz
Starbucks is the industry leader for many more reasons than just its great app, but the app is certainly one very good example of why Starbucks is such a strong company. The app shows Starbucks' commitment to innovation and forward-looking customer integration. As was true with the array of new features added in the last few quarters, customers and investors should expect to see more headlines in the coming quarters on how well the Starbucks app continues to do. Whether that means more features, more integration, or even licensing the technology, I expect continued app development will be a good thing for Starbucks customers and investors alike.