As Starbucks has proven for years, few retail interactions are more tailor-made for mobile payment than coffee sales. But when U.K.-based grocery chain Marks & Spencer launched its own coffee loyalty app in a 58-store trial in London, it chose to keep its menu much simpler.
Unlike Starbucks, which is steadily adding features like tipping, mobile ordering and delivery to its combined payment and loyalty app, M&S created an entirely separate mobile app, dubbed M&S Barista, to keep loyalty calculations independent of its existing shopping app.
This decision stemmed from M&S choosing to focus on the needs of the individual shopper rather than create a one-size-fits-all app overflowing with features, said Robert Willett, a former Best Buy executive who is now the chairman of Eagle Eye Solutions, which created the app for M&S.
"It's all about the moment with M&S. They worry about the individual person," Willett said. "You transact with an individual. The aggregate flows out naturally."
The app is a replacement for the chain's paper loyalty cards, in that it allows for upgrades and discounts but doesn't have any payment capability, which differentiates both from the Starbucks approach. Last week, the Seattle-based java giant reported that the number of dollars loaded onto stored-value Starbucks Cards, which are the funding mechanism for its mobile app, jumped 17% year-over-year to $1.6 billion.
In the past, banks have gone for the split-app approach to deploy new features faster. For example, in 2011, Rockland Trust Co. in Massachusetts released a stand-alone app for mobile check deposit. Though this forced its customers to use separate apps for deposits and balance inquiries, it shaved months off the bank's timeline for adding the feature, making it one of the first in its market to offer mobile deposit.
M&S chose the separate-app to better target the notifications sent by each app.
"M&S will use that facility to remind customers when their stamp card is nearing completion or is complete," Eagle Eye said in a statement released on behalf of M&S. "Customers with one stamp to go will be sent an offer to encourage them to pop into store and collect the last stamp."
Otherwise, using the M&S loyalty app is similar to using the Starbucks payment app. M&S customers load a QR code for the sales associate to scan, and receive a digital stamp within two minutes, according to instructions within the app. After collecting five stamps, customers are eligible to get a free hot drink.
Despite providing a high-tech spin on the dead-tree stamp card, it is not clear why the app would appeal more to a busy shopper who may or may not feel compelled to load the reward app (or pull out a paper stamp card) for each purchase. That's why the lack of a payments capability could prove detrimental. One of the top reasons the Starbucks card has been so successful is that it combines payments, reloads and rewards into a single app.
The counter to that concern is that this loyalty app, in theory, will save shoppers money. That's true, but it won't happen every time. If a customer must buy five drinks to earn a free sixth drink, that shopper is rewarded only one out of six times they use the app.
That said, the app benefits from its deep integration with M&S's internal CRM and POS systems. This enables it to create a profile of an individual shopper, theoretically allowing for later personalized offers, Willett said.
He also stressed the potential for much lower fraud rates as loyalty cards move from paper to digital, citing studies showing an average of 15% to 17% coupon fraud when paper is involved. With mobile, unless a thief has stolen the shopper's phone, "that massive fraud disappears."