Starbucks added 6 million “digitally-registered customers” since it rolled out a new strategy in March to bolster 1-to-1 marketing outreach with non-rewards member consumers.
Starbucks made the announcement as part of its third quarter earnings report, which slightly beat analyst estimates with $6.31 billion in revenue, up 11 percent, and earnings per share of $0.62. Wall Street expected revenue of $6.26 billion and EPS of $0.61. Shares were flat in after-hours trading.
Global comparable store sales increased 1 percent for the quarter. Shares of Starbucks dipped nearly 10 percent last month after the company said it would close 150 stores and lowered sales guidance. The Seattle-based coffee giant is facing competition from high-end coffee shops and other fast food companies like McDonald’s and Dunkin’ Donuts.
— Brian Sozzi (@BrianSozzi) July 26, 2018
Earlier this year Starbucks began asking customers to provide their email address before connecting to in-store WiFi. Requiring sign-ups for WiFi, in addition to Happy Hour deals, helped Starbucks build 6 million new “digital relationships” over the past four months.
“Our digital reach is expanding by every measure,” Starbucks CEO Kevin Johnson said on an earnings call with analysts.
The company says 75 million customers visit its U.S. stores every month. It has 15.1 million members of the Starbucks Rewards program, up 14 percent year-over-year and an increase of 1.9 million from the previous quarter. Members represent 40 percent of U.S. company-operated sales.
Now Starbucks is aggressively rolling out new ways to engage with the 60 million customers who aren’t rewards members. It is also collecting more data on consumer preferences and targeting offers based on that information. For example, the company is learning that male millennials are gravitating toward its cold brew beverage.
Starbucks also recently opened up its mobile order-ahead app feature to anyone this year. The technology, previously only available to rewards members, lets customers order with their smartphone via Starbucks’ app and skip the line. The feature represented 13 percent of U.S. company-operated transactions, up 1 percent from the previous quarter.
Starbucks has tweaked the mobile order-ahead process since it launched in 2015, adding dedicated pickup zones to address increased in-store congestion traffic. The company is testing a new store format at the Empire State Building in New York City that is a dedicated mobile order pickup store.
Starbucks is also changing its rewards program. A new initiative called “Stars for Everyone” will let people earn rewards points with their credit or debit card, versus the Starbucks mobile app, when buying items.
“Perhaps one of the most important things we’re doing is we are applying our personalization engine to these new digitally registered customers,” Johnson said last month. “And you think about this, our ability from a technology standpoint to look at tokenized credit card transactions map up to a digitally registered customer allows us to point this personalization engine that has driven significant comp growth with our active Rewards members and start to focus it on these digital registered customers.”
Starbucks also plans to use new digital menu boards to drive sales and artificial intelligence to help improve employee efficiency in stores.
Starbucks actually has the most popular mobile payments platform, according to data from eMarketer.
“The Starbucks app is one of the bigger success stories in mobile proximity payments,” eMarketer Forecasting Analyst Cindy Liu said in a statement last month. “It has gained traction thanks to its ability to tie payments to its loyalty rewards program. For users of the app, the value of paying with their smartphone is clear and simple — you can save time and money at the register, all while racking up rewards and special offers.”
Starbucks said it plans launch a delivery service in China later this year; it blamed slower growth in the country, a key growth market, on third-party delivery woes. Comparable store sales in China decreased 2 percent last quarter.
Long-time Starbucks Chairman Howard Schultz stepped down last month. Starbucks CFO Scott Maw plans to retire later this year.