Starbucks plots real-time personalisation as it looks to boost loyalty

Speaking yesterday (21 April) on a call following the coffee chain’s first quarter earnings, COO Kevin Johnson said that following investment in new technology, Starbucks can now target communications to individuals based on what it knows about their tastes and interests. However the plan is to expand this to its mobile app.

“This will enable us at the very moment a customer orders to provide relevant suggestions and recommendations and, when appropriate, incentivised offers to delight our customers,” he explained.

Matthew Ryan, the company’s global chief strategy office, added that the aim is to “catch customers in the moment” so that messaging becomes more targeted and more personalised. It should also help Starbucks managed its offers and deals “more economically” he claimed.

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Starbucks has invested heavily in digital technology over the last few years, launching a digital loyalty programme and services such as mobile order and pay. Johnson said loyalty remains the “cornerstone of our digital flywheel” and the company has made changes to its scheme in the US to “reward its most loyal customers” by basing rewards on how much they spend, rather than visits.

This, he claimed, has resulted in 280,000 new ‘Rewards’ members in the past week alone, and he expects upcoming personalised engagement to help accelerate that still further. It has also addressed an operational challenge, where customers would pay for each item separately in order to gain the most points therefore creating additional work for its staff, slowing service and lengthening lines

On mobile order and pay, Starbucks’ chief digital officer Adam Brotman there had been 8 million transactions using the service in the first quarter, up from 6 million in Q4. He also highlighted that at the busiest times in its busiest stores, mobile order and pay can account for up to 20% of sales.

Starbucks is planning to add more features to this service as well, including the ability to store customers’ favourite stores, favourite orders and recommendations. It recently added the ability to redeem rewards within the ordering process which Brotman said had created “great customer excitement”.

Overall, Starbucks revenue was up 9% in the quarter ending 27 March to a record $5bn with like-for-like sales up 6% globally. In Europe, same-store sales were up by 1% but sales fell 4% to $268.3m primarily due to the shift in portfolio towards more licensed stores.