Starbucks and the Art of Persuasion

The coffee chain was smart enough to push mobile by not initially pushing mobile. It's an approach that can work for your business too, internally and externally.

By Evan Schuman
Tue, January 14, 2014

Computerworld — Business would be so much easier if we didn't have to deal with human beings, with all their fears, hesitations and general avoidance of anything new. Human beings have a tendency to resist all your great ideas to make things better, be they your employees saying no to your aggressive cloud program or your customers ignoring your attempts to move them to mobile payment or biometric identification. And it can seem that the harder you push, the more they resist.

[ Starbucks CIO Brewing Up Much More than Free Wi-Fi ]

Maybe the answer is to stop trying so hard. Maybe the model you should emulate is the go-slow -- you might even say decaffeinated -- approach taken by Starbucks. The coffee purveyor seems to have some insight into how humans think.

Starbucks is considered the most successful U.S. retailer when it comes to handling mobile payments and, for that matter, mobile anything. So what makes it so different from everyone else? Pretty much everything. Most retailers interested in moving their customers to mobile payment would have seen the 2013 holiday shopping season as an opportunity to push their mobile app and encourage their shoppers to load dollars onto the mobile apps of their intended gift recipients. Not Starbucks, though. Although it is very interested in moving customers to mobile payment, it chose to not push mobile at all during the holidays. Instead, it encouraged the purchase of old-fashioned, plastic Starbucks cards, the kind that fit neatly into holiday stockings.

But wait; how is that a mobile-payment strategy? Ah, well, as soon as January rolled around, Starbucks launched a massive campaign to encourage people to take those plastic cards and use them to pour digital dollars into a Starbucks app. How did things work out? For starters, Starbucks sold a lot of Starbucks cards. On just one day (Dec. 19), the chain saw 2.4 million new card activations. In the fourth quarter, sales of cards totaled $160 million, "a significant increase over last year," said Starbucks spokesperson Linda Mills, who declined to give an actual percentage. She added that while Dec. 19 is now the title holder for new card sales, two other days (Dec. 23 and Dec. 24) also broke company records.

And what about the conversion of all those Starbucks cards to smartphone payment apps? It's still early in the month, so Starbucks isn't saying. But this isn't the first year that Starbucks has pursued this strategy, and the company will say that January is typically its No. 1 month for mobile conversions. And as I said earlier, Starbucks is generally thought to be the mobile-payment king of American retail.

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