Starbucks on the smartphone
Posted on 29. Oct, 2010 by Sherry Mazzocchi in Uncategorized
Starbucks has new perks for New Yorkers. A free mobile app lets customers pay for peppermint mochas and pumpkin lattes with their smartphones. In 300 locations all over the city, users can wave their iPhones or Blackberrys under scanners to pay, not having to wait for change or a receipt. Designed to be convenient and increase customer loyalty, the app ultimately a sacrifices Starbucks’ hidden revenue stream for the intimate details of customers’ habits.
Nearly one in every five Starbucks transactions is made with a card. But not everyone who has one uses it. While there is no expiration date or inactivity fee on the cards, the company ultimately keeps all of the unused money on cards. During the past three years, that added up to a tidy $50 million.
As more customers adopt the new technology, revenue from those unclaimed cards will dry up. The new app allows users to sync up and refill their old plastic cards automatically, easily keeping track on their smartphones. Otherwise, they might lose or just toss out cards with less than the price of a venti left on them.
A Starbucks company spokesperson refused to comment on any cost/benefit analysis they might have undertaken to determine how much revenue this will cost them. But Starbucks will be able to mine user data like never before, giving them a huge competitive advantage.
Apps transmit more than just sales information back to the developer. Some apps transmit GPS information, phone numbers, contact data, web surfing habits and even photographs stored on smartphones. It could also follow you on Facebook and Twitter. While it is not clear exactly what Starbucks is getting in return for the free app, it could be more than customers bargained for.
A window into users’ daily habits and GPS locations alone will allow Starbucks to amass detailed customer profiles including personal preferences, their sex, personal income and education levels. They know the identity of customers who visit each location and where they live. Using data mining techniques, companies can attain a fuller picture of their clients’ lives, all in real time. And, unlike purchased data, it’s extremely accurate.
Parsing this kind of information can create better resource management for gigantic companies like Starbucks. But there is no clear cut line on how much data collection is informative or just downright intrusive.
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