KEY TAKEAWAYS FROM STARBUCKS

MOBILE COMMERCE SUCCESS

Coca-Cola Co.
August 25, 2014

Michelle Evans | Consumer Finance Senior Analyst

Euromonitor International

@Euromonitor
@MEvans14

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Who is Euromonitor International?

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Euromonitors research covers industries, countries and consumers

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Consumer Finance Coverage

FINANCIAL CARDS
ATM
Debit
Credit (Commercial &
Personal)
Charge (Commercial &
Personal)
Open loop Prepaid
Closed loop Prepaid
Store

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CONSUMER LENDING
Mortgages/Housing
Consumer Credit
Auto Lending
Card Lending
Home Lending
Durables Lending
Education Lending
Other Personal Lending

CONSUMER PAYMENTS
Card Payment Transactions
Cash Transactions
Other Paper Payments
Electronic direct/ACH
transactions

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

A look at the current landscape of mobile payments

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

How Apple set the smartphone revolution into motion

Source: Baltimore Sun

He wanted to create the

first phone that people
would fall in love
with.He wanted to
create something that
was so instrumental and
integrated in peoples
lives that youd rather
leave your wallet at home
than your iPhone.
former iPhone product marketing manager
Bob Borchers said of Steve Jobs in 2012

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Smartphone availability equates to more advanced m-payments

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Potential benefits of mobile wallet adoption

Boost
Revenues

Move more people through the line more efficiently

Drive more frequent purchases from repeat customers
Attract potential customers during low peaks in business

Reduce
Costs

Lower processing fees paid by merchants

Potential for more secure payments and thus less fraud loss
Better align staffing to business needs

Enhance the
customer
experience

Connect with the on-the-go consumer

Further
brand
proposition

Richer experience creates stronger brand affinity

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New ways to advertise and market

Earn and redeem rewards in a more seamless manner

Provides a platform for an embedded loyalty scheme

New ways to reward the best consumers for their loyalty

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Starbucks emerges at the mobile payments poster child

Courtesy of Starbucks Corp

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Starbucks found immense success by pairing loyalty with payments

12
million
MOBILE APP USERS

6
million

MOBILE PAYMENTS
PROCESSED BY
STARBUCKS WEEKLY

15%
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OF TOTAL US SALES
MADE VIA MOBILE DEVICE

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Players of all types want to know Starbucks secret ingredient

Courtesy of Starbucks Corp

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Can Starbucks mobile payments success story be replicated?

50%
OF ALL MOBILE
PHONES SOLD IN THE
US IN 2011 WERE
SMARTPHONES

80%

OF ALL MOBILE
PHONES SOLD IN THE
US IN 2014 IS
ESTIMATED TO BE
SMARTPHONES

Courtesy of Starbucks Corp

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The eight keys to a successful mobile payments product launch

The right audience
Focus on security and privacy
Ease of use for the consumer
Funding source
Improved customer experience

Embedded loyalty component

Buy-in from staff
Re-engage user base
Courtesy of Starbucks Corp

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Best practice: Mobile success starts with having the right audience

Courtesy of Burger King Holdings Inc

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Quick-service restaurants have strong appetite for mobile payment

Numerous m-payment pilots globally, including Sweden,
Belgium, Canada, Japan and Thailand
Offering m-payments, order-ahead functionality and offers
McDonalds
through the Isis mobile wallet in the US

Wendys

Embedded within its My Wendys app

Funded via an attached credit card or gift card
Plans to offer discounts and rewards via app

Introducing app across 7,000 US locations

Users must load value onto virtual card
Burger King App will gives consumers coupons for deals

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Mobile is truly geared toward the younger subset of the population

Source: http://blog.leonardo.com/attracting-millennial-travelers-hotels-visual-story/

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Best practice: Must offer same level of security and privacy

46%
UK SMARTPHONE
OWNERS REPORT
PRIVACY CONCERNS

57%

US APP USERS HAVE

UNINSTALLED AN APP
OVER PRIVACY FEARS

Source: http://cs.njit.edu/academics/graduate/mscsp.php

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Best practice: Funding source for the mobile wallet is vital

Potential Funding mechanisms

Pay before:
Pre-paid card

Pay before: Pre-paid Card

Pay at purchase:
Direct bank transfer
Pay after:
Credit or charge card

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Courtesy of Starbucks Corp

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

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Pass-through transactions may be the most effective solution

Pay after: Credit or charge card

Courtesy of Isis

Courtesy of Uber

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Some wallets try to avoid traditional card network altogether

Pay at purchase: Direct bank transfer

Courtesy of Zapp

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Source: http://mobilemarketingmagazine.com

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

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Best practice: The ease of use for the consumer will be vital

Courtesy of Google Wallet

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What technology will power this future payment experience?

NFC
Chips

Pro: Connection automatically established in

less than a second.
Con: Not available on all smartphones - most
notably Apple devices.

BLE

Pro: Available on most smartphones since

2012.
Con: Connection must be established
manually, which would lead to friction at the
POS terminal.

QR
codes
Courtesy of PayPal

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Pro: Works on most smartphones and at most

requires downloading an app and imputing
card details.
Con: Consumer must open up a mobile app
and show the clerk the QR, which results in a
clumsy checkout.

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Best practice: Enhance the customer shopping experience

Increase in the
availability of
smartphones

Rise of locationbased
technologies
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Emergence of
big data

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

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Sending the right message to the right person at the right time

Apple Inc

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Location-based technologies drive a consumer-focused experience

Asset tracking

Inventory control
Price matching
Coupon issuance
Courtesy of Estimote

Product information

Instant payments
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Top brands already leveraging beacons for different functions

Courtesy of American Airlines

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Courtesy of Barclays Center

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Beacons are starting to find their way into store environments

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Best practice: Embedded loyalty component is a must

Courtesy of Starbucks Corp

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KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Survey indicates that consumers need a compelling reason to adopt

Why Consumers Have Not Adopted M-Payments

Security

Nearly half of smartphone users, who have not used mobile

payments, said they had not due to security concerns.

Privacy

Another third of smartphone users, who have not made

mobile payments, were worried about their privacy.

Uninformed

Some 41% of North American smartphone users were

unaware that their phones could make payments.

Convenience

Some 37% have not made mobile payments because of the

convenience of their current payment method.
Consumer Mobile Payments Survey: Driving Value and Adoption of Mobile Payments Consumers Want More
By Accenture

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Loyalty of the future will be about more than merely miles or points

21.9

AVERAGE NUMBER OF
LOYALTY MEMBERSHIPS
PER US HOUSEHOLD

9.5

AVERAGE NUMBER OF
ACTIVE MEMBERSHIPS

$16
billion

UNUSED PERCEIVED
VALUE IN REWARDS
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2011 Colloquy Loyalty Census

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Best practice: Mobile app success depends on staff buy-in

Train staff as to how to use the app

Educate the staff as to how to answer FAQs
Teach the staff about the apps benefits
Designate mobile captains at each location
Reward staff for sign ups

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Best practice: Work doesnt stop after user signs up

Courtesy of LeveLUp

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But the story of the mobile consumer extends beyond payments

Brand
awareness

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Engagement

Transactions

Loyalty

KEY TAKEAWAYS FROM STARBUCKS MOBILE COMMERCE SUCCESS

Mobile weaves into all the elements leading up to the purchase

Enables mobile-driven offers, coupons and discounts
Analytics allows brands to know consumers better
Deliver personalized products to meet those needs
Help consumer locate the desired product
Aid consumer in comparison shopping

Manage loyalty offers and rewards

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Mobile is the closest a brand can get to the end-consumer

Courtesy of Apple Inc

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CONTACT DETAILS
Michelle Evans | Consumer Finance Senior Analyst
Michelle.Evans@Euromonitor.com
@mevans14
www.linkedin.com/in/michelleevansmaclachlan

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