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Starbucks is enhancing its Apple Watch app

bii starbucks purchasing channels q2 2016
BI Intelligence

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Starbucks is enhancing its app for the Apple Watch, allowing users to add money to their virtual Starbucks card from the watch using Apple Pay, according to PYMNTS. 

This upgrade comes after a series of initiatives by the coffee chain to build out its digital offerings, including a feature that allows consumers to send each other Starbucks gift cards through iMessage. 

The new feature will make the user experience more convenient for Watch users. 

  • This upgrade eliminates a step for Apple Watch's Starbucks app users. Before this feature was introduced, Apple Pay users could only reload their balance through the iPhone app — not on the Watch. The ability to reload their app's balance from the Watch, and then use it to pay, rather than having to switch between the iPhone and the Apple Watch, makes for a better user experience. 
  • It will now be easier for users to earn loyalty rewards. Paying outside the Starbucks app doesn't earn consumers Starbucks Rewards points — customers need to use Apple Pay or a card to refill their balance, and then pay through the app to receive points. The convenience that Watch integration brings could cause people to pay through the app more frequently, which in turn could boost interaction with Starbucks Rewards. 

Loyalty programs resonate with consumers and keep them engaged, so this is a win for Starbucks. 

  • Starbucks relies on its rewards program to drive loyalty. Starbucks counts over 13.3 million active rewards program members – a group that tends to visit more often and spend three times more than nonmembers, on average. Those members do much of their spending on the mobile channel, which accounts for 30% of the firm's transactions, making mobile payments invaluable to Starbucks. Extending that capability to wearables, which are becoming more common, and making Starbucks Rewards engagement simpler for those customers could further drive up mobile spend, and in turn increase loyalty and earnings from those customers. 
  • And that could drive more consumers to Apple Pay. Mobile wallet adoption is lagging across the board in the US. In order to improve that, customers need incentives to adopt these wallets. Starbucks, which is the second-most-popular wallet for in-store purchasing in the US, could help normalize these payments. The partnership could drive more Starbucks users, who are familiar with mobile payments, to try Apple Pay to reload their balance, and then continue to engage with it in the future. As such, Apple could leverage its partnership with Starbucks to drive usage of Apple Pay up and improve adoption and engagement of its own wallet by growing Starbucks payments on its devices.

Retailers like Starbucks and Dunkin' Donuts are winning over consumers with their mobile wallets — apps developed by stores to make it easier for their customers to pay, and to deliver valuable perks. 

And these retailer wallets are leading the overall mobile wallets industry, thanks to their ability to rapidly push out innovative features like rewards programs, coupons, mobile order-ahead, and custom marketing.

This may be surprising considering that retailer mobile wallets can be used only at a specific retailer’s locations; in contrast, popular universal mobile wallets like Apple Pay and Samsung Pay can be used at multiple retailers, as long as users are using the necessary smartphones.

Ayoub Aouad, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on retailer mobile wallets that:

  • Explains what hurdles universal mobile wallets have faced.
  • Details what features retailers have adopted into their mobile wallets that have been successful  
  • Analyzes the use cases of retailers that have successfully leveraged their mobile wallet offerings to push growth.
  • Identifies how universal mobile wallets will eventually slow growth for retailer-based mobile wallets.

To get the full report, subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now

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