Mobile apps are everywhere these days.
There are mobile apps for games (e.g.Candy Crush), messaging (e.g. WhatsApp), transport (e.g. Grab) and social networking (e.g. Facebook). You might have used them on a casual basis but have you ever considered that mobile apps may also serve as an avenue to increase sales and revenue for businesses?
Mobile apps can be part of your larger marketing strategy where you can retain your customers’ attention amid intense competition. In order to do so successfully, you have to convince your customers that there are benefits using your mobile apps. When you are able to do so, you will be able to increase customer loyalty and ultimately be more profitable as a business.
Case Study : Starbucks
Let us look at a case study involving Starbucks – a Fortune 500 companies with 21,000 cafes in 66 countries.
It is one of the most successful F&B companies with $16.4 billion of revenues and $2.07 billion in profits. The Starbucks card mobile application was launched in 2010 as a simple 2D bar code to emulate its physical loyalty card. Today its mobile app accounts for 20% of Starbucks revenue in the United States.
Before we go into a grand analysis of Starbucks and its mobile app, let us first look at the core product of Starbucks: premium coffee. If you wanted coffee, there are various options. You can make it yourself, buy it from your coffee shop downstairs or your favourite cafe. For premium coffee, we have Coffee Bean, Dunkin Donuts and even MacDonalds offering it.
In other words, coffee is a commodity even if it is premium. While quality of service is one of the hallmarks of Starbucks, there are no lack of high quality cafes such as Coffee Bean, Costa Coffee and so on. So how did Starbucks maintain its position at the top of the heap amid such intense competition?
The answer would provide us insights about doing business in the 21st century. Starbucks’ edge lies in its Starbucks Card mobile app. Ever since it was launched in 2010, it had gotten steady momentum and acceptance from its customer base. We have data since 2013 to support it.
The Starbucks mobile app allows its customer to buy coffee over mobile and to skip the queue. Hence it provided massive convenience to coffee lovers especially in the morning rush hours. The second major benefit of the app is that regular customers are given free coffee after accumulating certain number of stars. This is a loyalty program that would entice its customer to buy high priced coffee from them over its competitors.
Besides allowing its customer to accumulate stars for free coffee, Starbucks also added an element of gamification by encouraging them to earn stars to reach the next level. In its initial program, customers will get 1 star for each store purchase regardless of purchase amount. In other words, if I purchased 1 cup of coffee for $6 and if I were to purchase 10 cups of coffee for my colleagues for $60, I would be awarded 1 star.
The intention was good which was to encourage frequent visits to its cafe. However this created its own problems. Those who purchased 10 coffees would then demand for each coffee to purchased individually and this created 10 times the work for its staff. The queues got longer and their customers started to complain.
After listening to their customer’s feedback, Starbucks started to make changes to its mobile app. Instead of 1 star per visit, they started to give 2 stars per dollar and made adjustments such that a free coffee is given for every $62.50 spent. This excludes a mystery day per month where you can get double the stars.
The Mobile Point
My point for telling you about Starbucks’ changes is to illustrate the importance of getting regular feedback after you roll out your mobile app. You can easily replicate Starbucks method of creating a sales channel from your mobile app and to maintain customer loyalty. A competent mobile app developer will gladly do this for you.
Whichever business you are in, the most important task would be to actively solicit customer feedback from multiple channels such as your own website, Facebook and even on the app itself. Nothing is perfect and there are always areas for improvement.
By creating another sales channel, it would increase your sales figure and allow your company to be perceived as modern and trendy. This would draw in the young market segment and also reduce your cost of sales over the years. Your customers can buy their product while they are walking towards your store. This would reduce the downtime of your operations and allow your client to grab and go which would increase the sales per square feet.
The last but frequently under-appreciated benefit of having a mobile app is analytics. You can see your customer purchase patterns according to time, age group, location and other factors with a simple click. As a result, you can tailor appropriate promotions for periods where your store has lesser customers. You can create your own version of double star days. This would boost the overall profitability of your business.
Luring In Customers
While it is important to find a strong mobile app developer in Singapore, it is also important to have the appropriate incentives for your customers to download and create an account for your app. For example, Dash gave customers $5 each to create an account on its mobile banking application.
This has to be done to overcome customers inertia and their perceived risk of using your mobile app. Starbucks chose to use free coffee to lure in customers and apparently that is enough. The top barrier against mobile payment is the security aspect especially when the phone is stolen. Customers do not want to expose their credit card information and this is exactly what Starbucks did as quoted from its Singapore website:
“The monetary value that you load onto your Starbucks Card is a pre-payment only for the goods and services of participating Starbucks stores. No credit card, credit line, overdraft protection or deposit account is associated with a Starbucks Card.”
In other words, even if your Starbucks Cards is hacked due weak passwords, you would only lose the coffee money pre-paid into it. It is like losing your Ez-link card. That said it is advisable to turn off the auto-reload feature. Your credit card is perfectly secured. Starbucks’ more recent move was to team up with Apple Pay to provide payment with its bio-metric (e.g. Touch ID based on fingerprints) security feature. This is to give its customers an additional layer of security assurance as Apple Pay is much harder to be hacked into. If you want mobile payment to take off, security is essential.
Mobile app is now the new frontier of digital business that cannot be neglected. Starbucks is not the only major corporation that is using mobile app.
67% of Fortune 500 are already using mobile apps to connect with their customers. Isn’t it time for your company to join the revolution? This is what Starbucks CEO Howard Schultz have to say:
“That said, Mobile Order & Pay is fueling both revenue and profit growth in every market in which it has been deployed with customer adoption starting faster and accelerating with each new phase we roll out. By enabling our customers to order ahead and avoid waiting in line, Mobile Order & Pay is enabling us to capture more on-the-go customer occasions, and the data is clear.”
If your business has an online presence, the logical next step would be to extend it to mobile. Come talk to us and we will guide you towards a successful mobile business case.