Since rolling out free WiFi in its U.S. stores nearly eight years ago, Starbucks has asked customers to simply accept terms and conditions in order to connect to its public WiFi network — no other sign-in process required.
Now the coffee giant is testing a new WiFi login process in its U.S. stores, asking customers to provide their email address before connecting.
The business implications are significant: It’s a way for Starbucks to establish a personalized marketing channel with the 60 million U.S. customers who visit its stores each month, but aren’t part of the Starbucks Rewards program.
Starbucks says this would make the login process smoother for repeat customers, automating how they connect to the WiFi network when returning to any U.S. company-operated store (licensed stores are not part of this test).
However, asking for an email address could also alienate some customers in an era of ever-growing concerns about personal privacy. With WiFi access now commonplace at indie coffee shops and other Starbucks competitors, the move would be a calculated risk from the company.
“Once opting in for automated login, customers can expect to receive periodical email newsletters and offers from Starbucks – about 1 per week – sharing information about our stores, products and programs to enrich their Starbucks Experience,” a company spokesperson told GeekWire.
Customers can unsubscribe from the email newsletters and still access WiFi, the company said.
Starbucks likes to bill its 28,000 worldwide stores as a “third place” — a location between home and work where customers can drink coffee, eat food, have meetings, do work, relax, and more. Those who use WiFi are likely staying inside the stores for longer periods of time than a typical customer, more likely to purchase additional items, and therefore making them more valuable to Starbucks over time.
“We have plenty of opportunity to form active relationships with millions of more customers,” said Roz Brewer, Starbucks chief operating officer and group president, at the company’s shareholders meeting Wednesday in Seattle.
Added Brewer: “We know how powerful digital engagement is as a driver of customer satisfaction and increased spend with Starbucks.”
The company says 75 million customers visit its stores every month. About 15 million of those are members of the Starbucks Rewards program, and the company has increasingly been using technology to personalize its interactions with them.
Asking for an email address is driven in large part by the company’s desire to have a digital relationship with the remaining 60 million customers.
Here’s how Scott Maw, the company’s chief financial officer, explained the strategy at the recent UBS Global Consumer and Retail Conference:
“So, if you want to use Wi-Fi in Starbucks, we’re going to make it easy for you. Enter your e-mail once, every time you walk into the store, it automatically connects to Wi-Fi, and you don’t have to accept the terms and conditions again. That allows you to have the convenience of connection. It allows us to have the ability to have those e-mail addresses. And so, across those ideas and others that we’re considering, we’ve said we’ll have several million non-Starbucks Rewards digital relationships by the end of this year. And if you think about that 60 million, I would expect that number to continue to grow at a relatively rapid clip over the next handful of years.”
Starbucks also plans to open up its mobile order-ahead app feature to anyone this year. The technology, previously only available to Starbucks Rewards members, lets customers order with their smartphone via Starbucks’ app and skip the line. Allowing anyone to access the mobile order-ahead feature, which accounted for 11 percent of transactions in the U.S. last quarter, is another way Starbucks can reach non-Rewards customers.
“We’re now working to expand our digitally-connected customer relationships well beyond their current state,” Starbucks CEO Kevin Johnson said on Wednesday. “We want to reach millions and millions of more customers digitally.”
Brewer said the company expects to see double-digit growth with its rewards membership this year. More than 30 percent of all U.S. transactions are paid for with the mobile app.
At the shareholders meeting, Brewer also said that mobile payments within the fast food industry jumped 75 percent between 2016 and 2017. Companies like McDonald’s, Domino’s, Panera, and others are also investing heavily in mobile technology.
Starbucks is betting that more personalized deals and engagement with customers will help increase revenue.
“If we can get those customers into that personalization engine, we will drive comps,” Maw said at the conference. “It’s just a matter of getting the information and then tracking and building the capability to market to them.”
The company posted $6.1 billion in revenue last quarter, up 6 percent, but its stock price has remained flat over the past three years as growth has slowed.
Starbucks Chairman Howard Schultz addressed the stock price at the shareholders meeting on Wednesday, reminding the 3,000-person crowd that the company’s market value has grown from $250 million in 1992 to $80 billion today.
“We are in this for the long term,” Schultz said. “We are building a great, enduring company. We’re trying to make long-term decisions.”