Before the start of the pandemic, using your mobile as a payment method was already increasing exponentially. In the United States alone, mobile payments are projected to reach $161 billion by 2021. Globally, the mobile payment market reached over $3 billion in 2019 and is expected to grow to $12 billion by 2024. These figures appear to be an underestimate, now that the move to cashless transactions is accelerating, as a result of Covid-19.
Whilst Apple Pay, Google Pay and Samsung Pay may seem like the big players in the market – one of the most incredible success stories in the world has been Starbucks.
Starbucks launched its mobile app back in 2009. Then it began offering in-app payments in 2011. Until 2019, Starbucks was the most popular mobile payment app in the US. It’s now in second place, behind Apple Pay. This is an incredible achievement considering that Apple Pay, an open mobile wallet allows users can make payments at a vast range of merchants while Starbucks users only have one option.
The bottom line? Starbucks mobile app has significantly increased sales and they’ve done it by using a closed mobile wallet. So what can be learnt from their success?
1. Mobile payment solutions are not the same – choose wisely
At Tappit, we help organisations choose the right cashless and contactless solutions for their audience. For businesses who want to replicate the Starbucks success story, the good news is that it can be quick and easy with a closed mobile wallet.
By choosing a closed mobile wallet like Tappit’s Mobile Pay, businesses can create a seamless in-app experience, understand every customer and build loyalty and incentivise their consumers to make even more purchases. The even better news is that your app doesn’t need a major overhaul – the solution simply integrates and works within your existing app.
These benefits are not available to merchants who go down the open mobile wallet route.
2. Data analytics has underpinned Starbucks' success
When you choose a white-label mobile pay solution – it is your business who benefits. Your business gets the data and insights which enable a full understanding of who your customers are, when and what they purchase. You can even combine other data sets to get an even more detailed picture of your consumers.
Contrast with Apple Pay, Google Pay and Samsung Pay closed mobile wallets, where you gain no further understanding of your customers.
And the addition of a closed mobile wallet embedded into the app has enabled Starbucks to collect transaction data on its users purchase behaviours. This valuable data has allowed the business to drive additional sales through personalisation and loyalty programs.
The mobile app enables Starbucks to offer 1:1 customer personalisation at scale. The app uses machine learning to provide customers with personalised recommendations based on their purchase history. These are personalised offers, delivered just at the right time.
“We continue to leverage the advantages of our mobile app to elevate the personalization of the customer experience and deepen customer engagement.” says Kevin Johnson, CEO of Starbucks. As a result, mobile orders represented 26% of US Company-operated transactions in Q2 , up from 18% a year ago. As we have seen each quarter, our digital channels convenience has proven successful in driving demand."
3. Incentivise your customers with rewards, and loyalty discounts
A major factor of Starbucks’ success is down to its ability to combine payments and its loyalty program.
Starbucks loyalty programme is baked into the mobile app for a seamless experience. When users pay via the Starbucks app they accumulate rewards and discounts on future purchases. By October 2021, the programme had close to 25 million members. A massive 53% of spend in stores is done via the loyalty program.
The mobile payment app for Starbucks is an extension of its retail experience and there is a clear return for customers. Users get loyalty points, coupons and perks like mobile ordering. Aside from some savings, customers get time savings. The focus on its own transactions meant Starbucks didn’t have to cut multiple partnerships just to get rolling.
Contrast with Apple, Google and Samsung pay systems: The apps really don’t save you much time and it’s unclear how the customer benefits.
4. The future is a blend of the physical and digital
Starbucks’ mobile app enables users to pay in store, order ahead, customise orders and collect rewards too. One of their major successes has been to combine the physical and digital world to great effect. Personalised offers for example, delivered digitally to a user’s phone, can prompt them to visit a physical store to redeem an offer.
Contrast with the other mobile pay leaders: Google, Apple and Samsung have broader strategies, their mobile pay efforts are more about services revenue and keeping customers on their platforms. The mobile payment app integration with the broader platforms isn’t clear.
5. Starbucks consumers had a real choice
The Starbucks app isn’t preinstalled on phones so its market lead is based on real usage and customer preference, not on manufacturing.
And the great news is that any organisation with vision and focus can have their own, in app mobile wallet solution. At Tappit, we work closely with our clients to ensure the integration, roll out and consumer marketing is efficient, improves the customer experience and most importantly improves your business’ bottom line.
If you’d like to know more about how we could help your organisation become the star and earn more bucks – we’d love to hear from you. Get in touch!
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