Brief:

• Starbucks, the coffee chain with 27,000 stores in 75 countries, continues to ramp up mobile technology as a key part of its strategy to handle customer orders, payments and loyalty programs. The company plans to test a guest checkout feature for first-time users of its mobile application early in 2018, Matt Ryan, global chief strategy officer, said last week in a call with investors.

• Payments made with a mobile device increased to 30% of transactions in the U.S. stores in fiscal Q3 2017, compared with 29% in the previous three-month period. The chain’s mobile order and pay feature that lets customers order with the Starbucks app and skip the line generated 9% of transactions. That’s nearly double the 5% from a year earlier.

• While Starbucks’ mobile app has led to overwhelming foot traffic at some cafes, the company has added digital order managers to 1,000 stores to improve the ability to serve customers who order and pay through their phones.

Insight:

The Starbucks mobile app currently asks users to preload a Rewards card with money from another payment service before it can be used to pay for orders and earn points in its loyalty program, but the company's plan to enable ordering without the need for a preloaded card has the potential to help Starbucks attract new customers onto its mobile platform, thereby driving overall sales.

Bringing new customers into the fold is critical for Starbucks as competition grows for coffee drinkers. There are signs that growth in Starbucks' rewards program is slowing in the U.S., where membership grew 8% in the quarter, down from 18% in the year-ago quarter and 11% from the previous quarter. 

The company wants to keep driving people into its stores, and recognizes that mobile technology will be a key part of learning more about customer buying habits and creating personalized offers to encourage loyalty to the chain. In essence, Starbucks is building the kind of ecommerce strategies that have helped to drive growth for another Seattled-based company: Amazon.

Even as Starbucks builds out the functionality of its mobile app, the company is mindful of the in-store experience. As strategy head Matt Ryan explained in the call with investors, the chain wants to add digital tools that will help baristas to recognize customers the deserve specialized treatment, like celebrating a birthday or visiting a different store than their usual one. Mobile technology increasingly will be a significant underpinning of the coffee chain’s customer service.

Some of the other ways that Starbucks is ramping up its mobile strategy include creating a dedicated Mobile Order & Pay store and enabling ordering via Alexa in Ford vehicles.