Starbucks Grinds Out Mobile Commerce

With nearly 20 million MAUs, Starbucks brews up success in mobile commerce.

Starbucks boasts over 20 percent of their U.S. transactions run through mobile.  They introed a basic QR code app for mobile payments and loyalty, then added mobile ordering; which, get this,  accounts for 15 percent of those payments (3 percent of total transactions) for Starbucks! (market cap $80, billion), who’s threatening McDonald's (market cap, $98 billion) for the largest restaurant chain in the world.  All very impressive for a coffee company, not exactly a tech giant.

What can we learn from “the bux?”  They’ve proven a streamlined mobile experience can increase sales and strengthen customer loyalty where others have faltered, so what’s so special about the their mobile app? and how can it be better?

Let’s dig in for a closer look.  In the name of this blog, I forged through slightly acidic, serviceable coffee, foregoing SF’s slightly over the top coffee culture (hit me up in comments for a list of my favorites).

THE GOOD

Overall, the app's great.  Admittedly, we’ll mostly focus on its awesomeness and nitpick about enhancements - but hey, that’s what we do here.  If you haven’t already, download the Starbucks app or check out this blog, which gives a good account of the customer experience.  So what's the big deal with the Starbucks mobile app?  its focus on the Must Have user experience: Order/Pay, Loyalty, Newsfeed.  We’ll drill in on each, but first a quick word on Usability.

USABILITY

Not to take anything away from the usability, which is intuitive and clean.  The UI elements are practical and legibility rules over aesthetic, it’s intuitive and just works.  Here are a few highlights:

• Top Nav, covers discoverability of core use cases:  Pay, Stores, Gift, Order… and Music (um, we’ll get to that in a moment).  With a horizontal set, the first and last are most discoverable as we tend to focus on the edges.

• Strong Sense Of Home, aside from the Order flow, all other nav options stay within one tap (or slide) away from home.  By keeping users close to home, there’s less chance of getting lost or confused.

• Slide Up Transitions, help reinforce the strong sense of home.  Pay, Stores, Gift, and Music all slide up from the bottom and at any time can be swiped down returned to home.  This allows the user to bail out of any navigation path, with ease.

This's all great! however, clean UI and Usability are not enough, it’s the Must Haves - Order/Pay, Loyalty, Newsfeed - which drive adoption and usage.

ORDER/PAY

The core purpose of the app is making purchasing easy; both in-store and order ahead for pickup.  We could spend an entire blog on Order and Pay - and we may - but for now, here are highlights:

• Shake to Pay: Interesting, and no, not in a shake-weighty sort of way; more in a no-taps-to-pay, way. It gives you an out at the point of sweat.  Morning rush, you’re at the register, behind a line 20 deep, instead of hunting for the Pay button, just shake, shake it on.  Faster than pulling a card out of your wallet, your savior from the stinkeye.

• Order Flow: Actually, Reorder flow, is the real standout. No messing around with saving favorite orders, naming, or bundling items to the order.  Once you order, you’re good to go for your next reorder.  If order items and location are the same, five taps to skip the line, done. 

• Add Item: Clean list, with Favorite items at the top, search feature above those, and categories below.  This considers all types of shopping use cases: convenient favorites, hunters, and gatherers, respectively.  
• Map UI: Especially in the Order flow is intuitive with helpful iconography like green dot stores are open, grey are not; launch directions; and locate yourself on the map…  it all just works, with no explanation needed.  The pulsating blue dot is you and the green check mark icon (reinforced from the location selection) is your destination, your order awaits.  It’s like a game: caffeine hunt.  

LOYALTY

Loyalty has a price and Starbucks pays it with rewards.

When merchants take their foot off the pedal with loyalty - offers and rewards - the mobile commerce engine comes to a grinding halt.  Starbucks gets it and the app gets to the heart of the matter, answering how’s my progress towards rewards?  Loyalty is recognition for my patronage and that’s why it’s front and center, perhaps the first UI element to catch the eye.  Points and rewards, keep me coming back, I guess loyalty does have a price.  Loyalty is given the size and space it deserves; displaying progress towards rewards.  Tap for loyalty program details: tier based on earning two stars for every dollar spent, 125 stars earns a freebie.  It’s clear and to the point.

NEWSFEED

How to ensure an app stays fresh? devote 75% of the home screen to a newsfeed: a content delivery pipeline to users.  When I’m not in some task like ordering this is where I go.  This is in-app messaging, clear and simple: featured items with direct links to order; games to earn loyalty points; and even offers.  The content is always changing, which gives users another reason, other than ordering or paying to open the app.

OPPORTUNITY FOR IMPROVEMENT

The app is a hit with both users and critics alike; but it’s not without flaws, products can always be better, here are a few improvements I hope they’re considering.  

• Two-Tap Pay, should be one-tap pay.  Shake to Pay is awesome, but not everyone will get it or use it.  For the rest, Starbucks should clean up the Pay usability.  Move the QR Code to the initial Pay screen.  It’s not clear why the extra step: the total already shows, so no added balance inquery fee to the bank; and they’re not adding the step for security like fingerprint ID.  Here’s an updated version that removes a tap, now one-tap pay.

• Music, is the answer to which one of these things is not like the others?  It’s a distraction, takes the coveted end position from the main attraction: Ordering; and users may be better served if it were a separate app, Starbucks Music - similar to what Facebook did with its Messenger app - or just slip it into the sub nav menu.  Another thought is to replace the “stars to reward” message in the green border with, song now playing at nearest store + music icon to open the Music app.  

Starbucks App Home Reimagined.

• Top Navigation, is slightly cramped, I’ve an iPhone 7 Plus and have more than once selected the wrong link.  I’m nitpicking here, the Top Nav should be bigger, bolder, with more padding between choices.  

I’ll save the rest for when I’m feeling more obsessive, stay tuned.    

THE FUTURE

In the future, core use cases of Order/Pay, Loyalty, and News won’t change, but the techniques and technologies used to engage with customers will.  While Apple Watch, Passbook is a great start, the future will have tighter integration with wearables and location aware engagement.  A not-so-visionary future scenario could use machine learning to know it’s been longer than normal since your last coffee and when you approach a Starbucks your watch simply asks you to confirm your “usual” orders and replies it’s awaiting at the nearest store.    

THE BOTTOM LINE

Back in 2013, CEO Schultzie said it best “No single competency is enabling us to elevate the Starbucks brand more than our global leadership in mobile, digital, and loyalty.”  Their mobile app is where these all come together, it’s a mobile ordering, payment, loyalty engine used to connect with their users.  At its core these Must Have use cases are what grabs and holds users.  The app, stresses function as the aesthetic, the real reason for success is its focus on: Order/Pay, Loyalty, and Newsfeed.  They’re winning here and winning in mobile commerce.  Keep on the lookout for app updates, they happen often, and in the meantime it’s all you need for your caffeine fix, so keep your card in your pants.

Pep Talk: Facetime Video Messages

Welcome to 2017, it’s good to be a product guy, cool tech abounds: autonomous cars; AI layered onto everything from natural language processing to credit scores; wearables track our health; phones are essentially minicomputers to keep us constantly connected (saving us from real human interaction - I’m half kidding).  But honestly we can do better.  As a child I imagined this time to be way more advanced, think Jetsons.  Am I being unreal?  What do you think? let me know in the comments.  As I come off of a short break and move this blog to a quarterly, I’ll add in Productpep Talks: quick hits which cover one specific product and focus focus focus on how it can be better.     

Quick rant, video calling:  When it comes to video calls, we’re way behind.  They existed even before Skype (2003) and over the last 10+ years, not much has changed.  Bandwidth, connectivity, video quality, still frustrate the majority of calls and most just revert back to the voice call.  Over the past year, my team had members in Seattle, Denver and SF we tested Google Hangouts, Skype, Skype for Business (disaster), Join.me and none were as reliable as a voice call and most caused frustration: drops, delayed meetings due to setup, and frustrating lags.  This is one of the most over-solved problems of our time, so why can’t these companies just get it right?  OK, rant over.  While at iceberg pace, this tech will improve and video calling will soon be usable, even preferred, I guess we just have to be patient, meh.

For one-on-one personal video calls, I’ve been using Facetime; quick catch-ups with friends and family - mostly while driving in the car - it works well.  Of course, to play everyone must have newish iPhones but the video and voice quality is fantastic, all is good.  That is until someone is unavailable, then you’re left with this:  

“Call Back,” “Cancel,” “Leave a Message” (iMessage)... that’s all, Come On!  This is a video call, we’re supposed to be futurists leaving the past behind… and BTW, I’m in the car and should not be texting (sure I can use Siri to text, but that’s a separate flow).  So Facetime, this is your Productpep Talk (trademark, 2016 - not really).  

Facetime Video Messages.  

Facetime, you had me at hello.  You’ve been great.  Even Siri, my stylish female British operator, can place calls “Hey Siri, Facetime Tim Cook.”  “Placing a Facetime call to Tim Cook.”  The video is serviceable to good and audio speakerphone clarity is crisp.  My iPhone 7 Plus made calling friends and family fun again.  That is until they’re not available.  Why can’t we keep the fun rolling?  Leave a video voicemail?  Skype can do it (sort of).  Snapchat has made a $20 billion business out of this.  So why can’t we just have a tiny, 20 second, video voice message…. iVideo Message… Video iMessage… Videomail or whatever the Apple marketing genius bar wants to name it.      

Today...

• I can leave an iMessage for missed Facetime calls
• I can create a video and attach it to an iMessage (but in a separate flow)

Let’s combine the two and leave a video message, 20 sec limit.  I mean, Snapchat can do this, why can’t you?

Something like this:

Update to leave Facetime, Video Messages.

Recipients would find Facetime messages in Phone, Voicemail section, soon to be named something else.

Video Messages display in the same list as Voice Messages.  Option for voice only or full vid.

Okay, good talk Russ.  Let’s get back in there and bring us the Video iMessage we all want; and don’t leave me hanging.  

Uber, Everyone’s Private “Driver?”

CEO, Trav and celeb-investors like Chris Sacca are hot for driverless Uber; irrational exuberance or sooner than we think?

A Less Esoteric Uber Logo.

Uber has aggressively dropped in on the 3rd wave of the internet: On-demand everything.  And as the 2nd wave, Social, had Privacy hurdles, this generation must overcome Regulations.  

But suspending the regulations conversation for now, does it make business and product sense for Uber to launch into driverless?  Let’s just ease off our silver space suits for a moment and take a pragmatic look at what this could mean for Uber, considering: Unit Economics, Customer Experience and Safety. 

Uber owning/leasing a fleet of driverless cars is a drastically different company, from business model to customer experience. 

A driverless Uber company goes from a marketplace pairing drivers with passengers (and food, see UberEATS) to an owned, operated fleet of on-demand delivery service vehicles.

Let’s take a look under the hood and compare Uber with and without drivers, for a moment, forget our infatuation with robot cars shuttling us around, and drill into key business drivers for this uber shift.  

UNIT ECONOMICS

Beyond initial shock and awe, does a driverless Uber make good business sense?

Revenue

Let’s start with the obvious, no driver.  This frees up a seat, increased capacity; for popular five-seat cars, a 25% increase.  While this revenue bump is somewhat limited to UberPool, it’s a boost to this growing segment.  A good start.  

Driverless cars can’t quit and they don’t stop: bio-breaks, sleep, errands, anything; and aside from refueling and routine maintenance (required regardless) they’ll essentially be running and earning almost 24 hrs a day, three times the average 8 hr shift for drivers.  

Here’s the revenue determinants:

• 25% increased capacity for UberPool rides,

• Increased volume with 24/7 fleet service, and

• 20% driver cut going back to the house (Uber)

Cost

Can the revenue increase make up for the added CapEx and OpEx cost of owning and maintaining a fleet of cars?

Without revealing my source, let’s assume Uber goes with electric driverless cars.  And electric has lower maintenance and fuel cost, plus federal tax credit advantages over standard cars.   But unlike most other robot replacing employees comparisons; Uber doesn’t pay driver salaries and we all know they don’t cover benefits, eh hem, so the cost comparison just comes down to the 20% payout to the driver, which isn’t much.  

Can a slight increase in volume and capacity and recouping the 20% rider’s share make up for:

• CapEx for new Uber Driverless fleet

• Fuel/charging

• Maintenance and Repairs

Unit Economics Winner: Driverless

USER EXPERIENCE

Imagine it, your UberPool pulls up and there’s no one behind the wheel, another passenger is in the back seat, you get in and are whisked away to the next stop.  Is this going to improve your Uber experience?  In our “extraordinary is the new normal” society, the wow-factor has a three month shelf life.  Afterwards, driverless must either lower the cost or prove to be safer.  Then there’s this:  I actually like chatting with my driver; Uber drivers see a lot and usually make for interesting conversation.  Sure, sometimes I’m banging on email, oblivious to my rideshare; but call me old fashion I would miss the human interaction.  
 

Customer Service

There have been great stories of Uber drivers going above and beyond, like walking up three flights of stairs to help someone with her heavy luggage.  Then again, there’s the high profile negative press from malicious drivers.

Let’s focus on the service and Uber’s biggest complaint: Surge Pricing!  

With driverless, Uber takes full control of the supply.  Surge pricing to get drivers on the road, gone!  Long waits for drivers at odd hours, gone!  

Without the time lag to get drivers on the road, a fully deployed fleet of driverless cars will allow Uber to realize the purest form of predictive algorithms; placing cars where demand is expected.  A basic example is having cars swarm to downtown San Francisco just before rush hour.  

Wow-factor

Okay, Driverless wins this round.  But, soon after launch, we’ll be blasé about driverless cars as they become just another appliance.  Nevertheless, at least for a little while, it’ll be cool being shuttled around, sans driver.  

Customer Experience Winner: Driverless

SAFETY

The Top 3 causes for driving accidents are: distracted driving, impaired driving (DUI), and speeding.  All caused by drivers.  Then again, driverless cars could usher in a new set of accidents: Outdated map, Dirty sensors, Faulty GPS.  Still I trust the machine to make less mistakes than humans.

Safety Winner: Driverless  

BOTTOM LINE

While Driverless offers a cool, wow-factor which could increase user adoption.  Uber already has a phenomenal business model.  Their marketplace is built on the fundamentals that car purchase, fuel, insurance, and maintenance, are paid for by the driver, all for a 20% share of payout.  This is an on-demand free cash machine.  There's risk in turning this on its head for the chance to run a 24hr fleet which doesn’t stop for food or bathroom breaks; and grow profits against huge CapEx and OpEx expenses.  So why change the winning formula?  

There must be something more.  

Uber sees the pothole up ahead: drivers as paid employees with benefits.  

And with it, overnight, Uber will wake from its unicorn dream as a boring old taxi company; not very sexy to investors.  This is why the Driverless option makes sense; not for the unit economics of today, but as a hedge against a taxi company nightmare of tomorrow.