KCSA PUBLIC RELATIONS, INVESTOR RELATIONS BLOG

Growth by Technology: Starbucks and the Ever Evolving New Frontier

Posted by on October 13th, 2015

It is easy to say that this new age of mobile technology is rapidly transforming day-to-day life.  We have smart phones (some of us, more than one) and dozens of apps that do just about everything except take out the trash (although, I believe there are cleaning service scheduling apps and they will take out the trash, so maybe there is an app for everything … but I digress).  We use our apps all the time, and that is generating a lot of attention from the folks that make business their business; so much attention, in fact, that major companies are taking notice and taking action in very strategic ways.  There is money to be made—a lot of it.  Anyone in the business of doing business is looking at mobile technology as a means to further growth.

Starbucks, already an early rider on the mobile digital bandwagon, announced this week that a Silicon Valley veteran would become the corporation’s first Chief Technology Officer. By hiring former Adobe Systems, VeriSign and McAfee Associates executive Gerri Martin-Flickinger to lead their technology team, the coffee giant has boldly announced that it is adding more caffeine to its global mobile technology strategy for growth.

Starbucks is a great business example of the sign-of-the-times and the amped-up focus on mobile technology to expand a company’s reach and therefore its revenues.  And, it seems that if you cannot expand your reach to support your growth initiatives on your own, then you partner with someone who can help with that.

By crossing over and partnering with “app”-based companies, Starbucks has firmly positioned itself in environments where it could not formerly go.   Not only can Starbucks attract more customers, but the company can also give even more incentives to its hoard of devotees, i.e., current gold cardholders (if you are a Starbucks aficionado, you probably have one and if not, it is the Starbucks loyalty program) to buy more, and that generates more growth and keeps brand loyalty strong.

This past July, Starbucks teamed up with the mobile-based ride-sharing service, Lyft Inc., in a deal that allows riders and drivers who use Lyft’s mobile app to earn Starbucks loyalty “stars.”   These “stars” can be redeemed for food and drinks at Starbucks stores.  Just before that, in May of this year, Starbucks struck a similar deal with Swedish music-streaming giant Spotify, whereby subscribers can earn “stars” to use as currency on Spotify (a first for Starbucks) and at Starbucks retail outlets.

Additionally, these deals perk business for Lyft and Spotify by strengthening each brand’s image through association with Starbucks and they allow Starbucks to expand its potential customer base (by millions!) and provide more incentives to Starbucks loyalty program participants to earn and spend more.  These partnerships have the potential to be not just a customer loyalty tool, but also a source of revenue from other companies willing to pay to use them to attract or retain their own customers.

Both agreements contain benefits for Starbucks employees too.   A win, win, win for Starbucks: using technology to grow by the millions, maintain customer loyalty and keep employees happy.

This wave of merging mobile app technology with long-term business growth isn’t new.  But it is surely evolving.  Which high-level tech exec will be tapped next and who will businesses partner with to accelerate the next expansion in this mega-membership, hyper-caffeinated, mobile tech-driven business world?