Stop Chasing Starbucks. Start Understanding Your Customers.

This post originally appeared on dynamit.com


There’s a growing sentiment in corporate America. A desire to be the next Starbucks. I’m not talking about the next great mass-marketer of caffeinated beverages. I’m talking about apps. The Starbucks app, with its gaudy loyalty and revenue numbers, is a topic of many conversations we have with clients and prospects alike. It gets thrown around in conference rooms and circled on white boards. “We want that!”

This leads to discussions of what “that” really means. Which often comes out as the desire to create a daily-use app that allows loyalty and revenue to grow. But here’s the thing: you won’t get there by copying Starbucks, because you aren’t Starbucks and the Starbucks app didn’t cause Starbucks to succeed.

The Starbucks app is successful for a few reasons:

  1. The behavior came before the app, the app fit the behavior
  2. The technology made the behavior easier
  3. The app uses variable rewards and loss aversion to keep you hooked

Behaviors Win

Before Starbucks ever had an app, they had loyal customers. Key to the app’s success is that it fit within the established behavior patterns of these customers. Customers were already loyal and, of course, were bringing their phones into Starbucks. The app removed steps to purchase and reward. Customers were already reaching into their wallets for something to pay with. If they were loyalty program members, they had to pull out a loyalty card and a payment method. The app removed the need for two cards.

Starbucks started from a place of understanding. They understood the way their customers interacted with their stores and made it easier.

This understanding is a key aspect of any digital strategy. First, you have to understand your customers and what their journey looks like. Not just at a high-level, but down to the very tasks they engage in at each step of their journey. It’s only when we do this that we can ask ourselves how we can make the process easier.

Technology Should Simplify

Getting to simple can be challenging. Even ideas that seem to make things simpler can actually create new challenges. I’ve seen well-intentioned apps that create digital loyalty cards in the hopes that these will simplify the customer journey. The problem is, that they actually make the journey harder. Previously, I had a loyalty card and a payment card. They were both in my wallet. Now I have to pull out my phone and my wallet if I want to pay and get loyalty rewards. It may be nice to have a digital card, but a step is added to the process, not removed. This makes it less likely to succeed.

Unfortunately, this is a common pattern. Simplifying a part of the problem at the expense of the whole won’t get you to the results you want.

You have to take a look at the whole process and understand all that goes into it to really create the right solution for your customers. By combining loyalty and payment into a single barcode scan, Starbucks reduced the number of steps needed to complete a transaction and actually made the process of buying coffee — an already easy process — easier.

Close the Loop!

Matching behaviors and simplifying processes are enough to create a great app. But what pushes Starbucks over the top are the hooks. The obvious hook is the monetary value. If I preload my Starbucks app with $5 and spend $4, I don’t want to just let that $1 go to waste. I’m going to load more money so I can avoid losing money. People want to zero out.

But Starbucks does more than that. Many jeered the tinkering with the easy “one visit = one point” loyalty program, but now Starbucks has something even more powerful: variable rewards. By creating a program that is less predictable and includes occasional (but not persistent) paths toward bonus rewards, Starbucks has introduced another method to keep customers hooked. Variable rewards are powerful. Think lottery and slot machines. When there’s a chance you could get an extra reward, and sometimes you do, the draw to keep trying for that extra reward gets you hooked.

But you aren’t Starbucks. You’ve got to figure this stuff out for your customers.

Don’t Chase Starbucks. Understand Your Customers.

Creating an app is easy. Nailing the strategy that leads to significant results is hard. Too often companies are blinded by what could be and don’t focus enough on what matters to users.

To create the right product for your customers, you must begin by understanding them. Many businesses assume they already understand their customers but don’t take the time to really listen or to observe them in their natural element. When you take the time to understand your customers, you will be able to map out their journey and identify the pain points that are ripe for technical change (the areas where apps are needed and fit with behaviors). If you don’t, you may end up with an app that fills a “need” that doesn’t exist.

Steve Jobs was famous for saying he didn’t need user research. This gets thrown around whenever someone wants to justify their own arrogance and resistance to research. But that’s not what Steve Jobs really said or meant. Steve Jobs believed in understanding people and figuring out what they’d want. I’ve never once in a research study asked anyone what they want. That doesn’t get you the right answer. That’s asking someone to do a job they are wholly unqualified for. It’s my job to ask about their journey so I can work with my team to figure out the right solutions and strategies to address their needs.

There are 2 million apps in the Apple app store. Most consumers regularly use about 5 per week, and most new downloads (about 71%) are removed after Day 1. To beat those odds, you need research. To make a product that sticks, you need to understand customer behavior, create something that reduces barriers, and introduce hooks to keep them around.