What lessons can Starbucks teach SA businesses about mobile tech?

The arrival in South Africa of the Starbucks coffee brand will present an ideal opportunity for South African businesses to learn from a leader in the use of mobile technologies in loyalty programmes.

Software and app development specialists Paradigm Group say local businesses have lagged in harnessing the full power of mobile in their loyalty programmes, but that the arrival of the Starbucks brand in the country next year should serve as a wake up call. Starbucks and Taste Holdings will launch Starbucks and its advanced digital offerings in South Africa next year.

South African businesses have tended to use mobile in limited ways. We see some, like Discovery Health and Vida e Caffe, moving to use mobile in their customer loyalty programmes. But on the whole, most companies venturing into the digital arena launch just a free standing app or engage in digital marketing. This does not deliver the full extent of the customer experience and relationship building benefits that mobile technology can offer both the company and its customers.

Local enterprises have a great deal to learn from the Starbucks digital loyalty programme, which is now seen as a global success story. We know that it took several years for Starbucks to perfect the mobile integration into its loyalty programme, so clearly, there will always be a learning curve in rolling out technologies such as this. However, the programme now delivers convenience to both customers and the business. It brings more foot traffic into stores, streamlines operations, and even cuts operational costs.

Part of the programme’s success rests on the automated ordering and mobile payment features, as well as the fact that the rewards offered are in line with what customers want.

In Starbucks’ recent fiscal third quarter report, the coffee giant attributed its strong performance in part to the growing loyalty programme and digital payment apps. The company said its mobile investments had been a worthy expense, with 10.4 million active members now on the ‘My Starbucks Rewards’ programme and mobile payments accounting for 20% of all its in-store transactions in the US.

This success illustrates that it’s not just about marketing or convenience – it’s about the strategy behind it, the total package and what consumers get in return for participating.

To successfully bring customer loyalty programmes to market, companies need to bear in mind that loyalty is a ‘relationship, not a scheme’. It needs to be a differentiator that does not complicate the life of the consumer or the cashier. Effectively integrating mobile into the loyalty programme demands a new strategy that involves stakeholders and systems across the company, including marketing, operations and sales. To be effective, you can’t simply launch a standalone app, you need a company-wide strategy,” he says. “Critically, mobile-based loyalty programmes must be secure, easy to use, and offer consumers something they want.”

Daniels believes there is unlimited potential for mobile-based loyalty programme growth in South Africa. “The necessary technologies and expertise are available here, and the barriers to entry are lower than they might think. South African companies simply need to learn from market leaders and use the available technologies and skills to innovate and differentiate themselves,” he says.