How to Boost Loyalty with a Mobile App: The Starbucks Example
The implementation of mobile loyalty programs is still low in many industries, but Starbucks has shown that mobile loyalty apps have the potential to deliver customer satisfaction and significantly boost profits. Plastic cards have long defined loyalty card programs, but their low-tech capabilities have made them a less attractive solution. Starbucks is now able to reach its loyalty program members before, during, and after every transaction with its mobile app, which is extremely valuable.
Starbucks is the number one company, not in the US, but in the world, for mobile payment and transactions. Their mobile payment system allows users to turn their smartphones into digital wallets. Users simply display a bar code on their phone’s screen at checkout and the cashier scans the bar code to deduct the funds from the customer’s prepaid Starbucks card account.
On December 5, 2011, Starbucks disclosed that it has handled 26 million transactions via its mobile payment system, making it the first and largest consumer adoption of mobile payments to date. Starbucks’ mobile app, which was released in January of 2011, handles between one and two percent of its overall sales. Starbucks’ customers are also reloading their Starbucks mobile apps after they run out of credit, demonstrating that the mobile app has increased customer loyalty. Starbucks made a whopping $110.5 million in sales with its mobile apps in 2011.
A Single, Mobile Experience
Starbucks’ mobile payment system is also tied to its loyalty program, so customers can manage their loyalty program accounts using the same mobile app that generates the barcodes. An e-gifting feature was also added to the Starbucks mobile app last June, enabling users to send the electronic gift of Starbucks from their phones. The Starbucks prepaid card, loyalty program, and e-gifting feature have converged, forming a single, mobile experience.
Why Follow the Starbucks Example?
Mobile loyalty programs have the ability to make up for lost sales and the poor performance of conventional loyalty card programs because they reach customers throughout the entire purchase cycle. Customers who interact with brands via mobile also tend to be more loyal because mobile phones are such personal devices. In addition, mobile loyalty programs enable companies to collect important data about their customers’ purchasing behavior.
Mobile loyalty apps are in the early adopter stage and some kinks still need to be worked out, but they present an enormous opportunity for businesses. Advancements in technology have made digital media a primary avenue for accessing information, so mobile commerce will likely change the way that consumers interact with brands and buy all types of products and services – not just lattes.
Want to learn more about Starbucks’ Loyalty Program? Read Why Starbucks’ Loyalty Program Is So Successful
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