Nationwide coffee chains are competing to cut themselves a larger share of the $45.4 billion U.S. coffee market, ensuring their mobile order-ahead apps and rewards programs entice customers to come to their stores time and time again.
These chains have been putting the pressure on independent coffee shops that do not have the resources to compete against chains’ bigger footprints and better mobile capabilities. Nick and Brenden Martin, co-founders of Joe Coffee, are looking to solve this problem by leveling the playing field between large chains like Starbucks and Dunkin’ and indie shops. The app was launched in 2014 and consolidates small coffee providers into a single mobile order-ahead app, granting these shops the capacity to compete. In an interview with PYMNTS, the Martin brothers explained how Joe Coffee assists its more than 300 coffee shop partners and their customers, and what it does to keep mobile ordering secure.
Convincing coffee shops to get on board
The Martins noted that convincing independent coffee shops of order-ahead’s potential is easier said than done as owners tend to be skeptical over whether partnering with a third-party app will pay dividends.
“There was some sort of reeducation in the sense of this isn’t letting people skip the lines,” Brenden explained. “Once our partners bought into the fact that this is an evolution of customer service and not just a tablet that yells at you on your counter, that’s where we turned the corner and saw a lot of successes.”
The company designed its interface from the ground up so that its store partners would find it easy to use, smoothing the transition into mobile ordering.
“They get a tablet in the mail, open it up, and then they have all sorts of basic promotion materials and things like that,” Nick said. “Turn on the tablet, connect it to Wi-Fi, and they’re in our marketplace with their fully customized menu and pricing and hours.”
Joe Coffee charges its store partners a premium for its services — 35 cents per transaction and an 8 percent surcharge on orders made through the system as of May. These fees maintain the Joe Coffee app and rewards program.
“[If] you have a coffee shop near your home and your work, rewards points accrue and can be redeemed anywhere on the network,” Brenden said. “It works roughly the same as a buy 10 get one free [program], but then we have boosts and magnifiers that speed up how quickly rewards can be redeemed.”
Those “boosts and magnifiers” drive business back to store partners, pushing up orders during typically slow hours and improving per-order volume. Nick pointed out that the average order at its partner coffee shops is approximately $6.50, but orders placed through the Joe Coffee app hit an average of $9.
Keeping the cup secure
The Martins stated that security has been a top focus for the platform, particularly as data breaches become more common. Joe Coffee relies on its payment processor, Stripe, to monitor and tackle any instances of fraud.
“[Stripe] partners with companies like Lyft, so we know that we can scale with them,” Brenden explained. “They handle all of our [Payment Card Industry] compliance and they do fraud monitoring and everything.”
This strategy has paid off for Joe Coffee, which has experienced just one fraudulent charge since its 2014 launch. The Martins attribute this to the app’s user authentication protocol, which requires users’ device IDs to be connected to the phone numbers registered to the app.
“The only way that there can be any sort of fraud … is if you stole the phone, were able to get past [the phone’s] security settings and then order through Joe,” Nick said. “But even then, you wouldn’t be able to transfer [the rewards points] to your own number.”
This verification method proven to be a robust defense against account takeovers, while also providing seamless experiences for customers.
“From a user experience perspective, there’s not the logging into an account every single time,” Brenden said. “The very first time using it, you have that authentication where it pairs the phone number to the device ID. But, unless there is some back-end issue or there’s some reason to suspect something that is going on, that won’t appear to the consumer again.”
This lesson was hard-earned, however. Joe Coffee initially relied on a password-based system, with the usual rigmarole of capital letters, lowercase letters, digits and special characters.
“That’s a huge drop-off that we saw in our old app,” Nick explained. “[What we have now] increased the security as well as created a seamless customer experience where now people don’t even realize that they have an account created.”
The Martins hope to continue evolving and updating the app to keep pace with current trends as the mobile order-ahead ecosystem becomes more entrenched. Coffee giants are going to continue to squeeze the indie coffee scene, meaning that innovation will be key to survival.