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Starbucks brews iBeacon strategy to support premium coffee play

By
December 8, 2014

starbucks 185Starbucks’ plan to begin using Apple’s iBeacons in its premium coffee stores next year blends the coffee retailer’s leveraging of mobile with its emphasis on upscale lines of java, although it must tread carefully in the technology space to avoid alienating customers.

Starbucks said it would bring out iBeacon technology in the coming year to allow customers at its premium-coffee Roastery and Tasting Rooms to access information about freshly brewed coffee via smartphones. The move further advances Starbucks’ mobile strategy, in which it is already a leader in mobile payments, at a time of stagnant sales and intense competition.

“Beacons can be a boon for brands, but they can also work negatively if they don’t create a positive experience for the consumer,” said Vanessa Horwell, principal and chief strategy officer with ThinkInk, Miami.

“One brand isn’t going to be as successful at brand messaging as another, because it depends on who their customers are. Starbucks already has a customer base that’s willing and expects different types of marketing campaigns, and a lot of people who frequent Starbucks stores are already loyalty program members or are using the Starbucks app,” she said.

“Starbucks is also experienced enough in mobile marketing to deliver a great experience to their customers. But beacon technology can be an intrusive form of messaging unless the brand’s marketer has created a level of expectation among consumers and unless consumers are aware that they’ve opted in and will receive something of value,” she said.

Bluetooth transmitters
Beacons use short-range, low-energy Bluetooth transmitters to send alerts to mobile devices nearby and trigger contextually relevant messages to consumers who are in or near participating stores.

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Home of upscale java.

Beacons may tell consumers to redeem coupons, earn points or pick up items on shopping lists. When a consumer walks into a participating retailer, the store’s beacon will communicate with the consumer’s phone and tell him or her about specials, discounts or coupons.

“The outcome can be very positive, because marketers have a much more robust picture of what customers are doing in and around their stores, and they can base their offers on data rather than assumptions,” Ms. Horwell said. “I think loyalty program members will appreciate that more than generic offers sent to them.”

Starbucks’ planned beacon deployment, however, raises questions.

“If consumers walk past Starbucks and another coffee store across the street and get a beacon message from both, will they be tempted to go into one versus the other based on their offer or based on existing loyalty to one of the brands?” Ms. Horwell said.

“Or will they end up tuning out altogether? That’s something marketers have to be very careful about – the overuse and abuse use of these new technologies.”

Starbucks plans to expand its Reserve coffee line to 1,500 locations globally, as well as open at least 100 stores designed to highlight rare coffees starting in Chicago, Los Angeles, New York, San Francisco and Washington, D.C. An additional Roastery is planned for Asia in 2016.

A Starbucks representative declined to provide further details about the company’s plans beyond its press release.

An early mobile pioneer, Starbucks has merged its loyalty platform, mobile app and in-store point-of-sale systems to create a powerful mix of mobile technology that loyal customers use and trust.

“Because of this success, they likely know more about their customers than any other retailer, all while delighting customers and speeding the path to purchase,” said Wilson Kerr of Unbound Commerce, Boston.

“Smart retailers and QSRs know that bridging the offline and online worlds via in-store mobile engagement is a top priority, but Starbucks is way ahead of the pack. “They have built deep trust and this allows them to try new things.

“Pushing offers to consumers is a very tricky business, even for Starbucks, so it is likely that the real purpose of their use of iBeacon if to verify mobile proof of presence, to track and validate marketing efforts designed to drive foot traffic,” he said.

Marketing initiatives
Starbucks could, over time, add more marketing initiatives that focus on real-time offers and coupons.

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Brewing up a response to stagnant sales.

“For example, real-time contextual interactions that combine where and when customers enter a store with their past purchase behavior are critical for mobile personalization initiatives,” said Sheryl Kingstone, Toronto-based research director of Yankee Group.

“This initiative is important since 43 percent of respondents to our surveys stated they would like to receive personalized information based on immediate location.”

Final Take
Michael Barris is staff reporter on Mobile Commerce Daily, New York.

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