Major coffee industry players like Starbucks and Dunkin’ were some of the first to take mobile order-ahead mainstream, allowing customers to order their coffee on the go and duck into storefronts for mere seconds to pick up their freshly poured drinks. Minnesota-based Caribou Coffee and other smaller chains are following suit by not only developing mobile order-ahead apps, but also by instituting rewards and loyalty programs, encouraging customers to return to their stores time and time again. The coffee company, which has 603 locations throughout the United States, recently revamped its rewards system, Caribou Perks, to compete against industry heavyweights.
PYMNTS recently spoke with Caroline Larson, Caribou Coffee’s senior director, about how the chain switched Caribou Perks from a surprise-and-delight model to a points-based system, as well as how it keeps its mobile app secure.
How Caribou modernized its rewards system
Caribou’s current rewards system is quite different from what was offered when it debuted in 2014, Larson said. The app featured a surprise-and-delight approach at launch, granting customers rewards at semi-regular intervals based on their purchasing patterns. Customers’ preferences shifted over time to favor transparent points-based systems, in which point values correlate to rewards that customers can work toward. Caribou took this feedback into account and rejiggered the Perks program in 2018. Customers now earn two points for every dollar spent — a straightforward system similar to that of Chipotle, Dunkin’, Starbucks and other quick-service restaurant (QSR) giants.
The other key request was enabling customers to choose when and how to redeem their points, rather than pigeonholing them into specific rewards.
“We had seen a lot of other programs that had made changes and gotten really negative effects,” she said. “[Customers were] saying, ‘Hey, you've changed the point values and now I can't get what I want. I just want a brewed coffee — I don't want a full-blown handcrafted one.’ ”
Customer feedback drove the technical development of the ordering app as well. Caribou Perks did not originally allow customers to schedule pickup times. All orders were instead made as soon as possible, which was not a great fit for consumers who need to get their coffees at certain times, such as in the morning on their way to work. Caribou fixed this issue by adding the ability to schedule pickup hours in advance.
Another innovation Caribou implemented post-release was targeted recommendations. The company records customers’ orders to determine their favorite items, and then leverages that data to make suggestions.
“For example, if you're ordering a latte and, in the past, you had almond milk,” Larson explained, “we’re able to intercept that order and [say], ‘We know that you enjoyed almond milk in the past. Good news, we have oat milk now. Would you be interested in adding that?’”
There is a fine balance between helpful suggestions and unwanted creepiness, she noted, adding that it was important for the app to not be overbearing or incorrect with its suggestions.
“I’m not one of those people who uses any kind of milk or cream or anything in my coffee,” she said. “So that message wouldn't come up to me because the system would know who I am and that I'm not a milk drinker.”
Bringing In-store Operations Up To Date
Developing the app was only half of the mobile order-ahead equation, with the other being preparing branch locations for the new system. Caribou Coffee observed its competitors’ experiences in fulfilling mobile orders, particularly regarding smooth pickup processes, before altering its storefronts.
“I think we were able to implement a higher level of order-ahead by waiting a little bit longer, and not having all the hiccups that other companies had,” Larson said. “We particularly wanted to give the guests a clear way to know where to pick it up. We saw a lot of that from other companies — that there would be nobody in line to actually order a drink, but a huge line for mobile pickup.”
Caribou streamlined its in-store pickup capabilities in two different ways. The company first made sure that its pickup counter was near the entrance, was immediately identifiable and that each order was clearly labeled. This may seem like an obvious step, but Larson explained that it is not necessarily the industry standard.
“We made sure that the labels are not only big enough that people can actually see their names at a distance, but also customer-friendly in terms of what the beverage name is,” she said. “For example, internally we say COD for coffee of the day. If somebody saw that on their actual beverage, they might [say], ‘I don't get what that is.’ So instead we use ‘brewed coffee.’”
The second step to speeding the pickup process took place outside the store. Caribou converted several of its high-volume locations’ parking lots to include short-term parking spaces, allowing customers to quickly run in and out.
Keeping The Cup Secure
A secure ordering experience is a top priority for any app that handles customer information, and Caribou is no stranger to fraud risks. The company, as well as its sister QSR Bruegger’s Bagels, fell victim to a data breach in its point-of-sale (POS) system a year ago that compromised payment information collected at 265 of its store locations. Although the breach came from its POS system, rather than its mobile app, it still taught the company valuable lessons about best security practices.
“Obviously it’s something that no company wants to deal with, but the most frequent guests weren’t affected by it,” she said. “Since then, we’ve worked directly with the FBI and [a lot] of third-party companies to make sure that we do anything that we can to make our payments and our customer information secure.”
Larson stated that the most important partnership Caribou made was with payments provider CyberSource, which tokenizes its customers’ personal details. The company’s mobile app has yet to fall victim to fraud, but it is still important that Caribou remains vigilant. Fraudsters are always looking for vulnerabilities, and QSRs should always be looking for superior protection.