The Starbucks IT Roller Coaster Is Now On Top

As the number of retail alternative payment experiments soars, it's sometimes helpful to see what the non-traditional retail payment veterans are doing. Starbucks CEO Howard Schultz gave us a good hint last Thursday (Nov. 4) when the $10.7 billion coffee house reported that its customers in fiscal 2010 "loaded more than $1.5 billion on Starbucks Cards."

As a payment card, it's CRM On Steroids, in that almost no customer with the card would likely forget to use it. That makes it an impressively complete record.

Let's put those numbers into context. That $1.5 billion represents more than 14 percent of all the chain's revenue. That loyal piece of plastic is used to pay for, according to Starbucks, "nearly one in five consumer transactions," and that reflects a 20 percent increase compared with the prior year.

More stats: Nearly 2 million customers have joined the program since its launch 10 months ago, and more than 1.25 million have made at least 30 purchases.

The history of Starbucks, especially when it comes to IT and related mobile and Web efforts, is an impressive rollercoaster. In its earliest days, the chain demonstrated an understanding—nay, a mastery—of social networking long before Facebook or MySpace existed.

Starbucks made its shops a cool and fun place to go, to hang out and to talk. It was a place to meet with friends and business associates, to take a meeting and perhaps to even connect to Wi-Fi and work for four or five hours.

But the Web was just starting to catch on and, even when it was several years old, Starbucks never seemed to take the Web seriously. Starbucks never achieved Web buzz and it started seeing per-store figures drop sharply.

Starbucks then stayed on a bad path, spotting the great marketing trends but falling way short in execution. An initial CRM Web effort deservedly fell flat, and a powerful mobile launch was marred by an application that seemingly couldn't do anything productive. Even an impressive idea for mobile gift cards was tripped up by a major security hole.

The rollercoaster of Starbucks strategies is now on an upswing. A well-thought-out mobile-to-in-store program and revised mobile payments seem to be working.

Hopefully, the chain is now moving in a good direction for the foreseeable future. After all, a hot cup of coffee and a rollercoaster rarely make a good combo.

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