Starbucks has arguably built the most successful mobile payments platform in the world — something that is fairly remarkable since they are a coffee company. That fact gets even more remarkable when one considers that Starbucks wasn’t really thinking about mobile payments or even payments at all when they came up with the app-based payments system that changed the way their customers pay.
Initially, Starbucks just had a gift card problem — namely, that customer purchases over time didn’t divide neatly into $5, $10 and $25 amounts, which meant consumers often would get to the “end” of a card at $0.50 to $1.00 and just stop using it.
This created something of an administrative headache for Starbucks, which realized it was also an easily fixed problem within their mobile app — customers could load their cards and add value as they went automatically, thus ending those small balance cards floating forever on the books. The payments part was more an afterthought — obviously the consumer needed to be able to use the card, but Starbucks wasn’t really trying to change the way people paid. The company just wanted to solve a low-balance gift card problem that they and their customers shared.
Some rewards wrapped around a payment-in-app later via a QR code — and Starbucks is one of the few unarguable success cases in mobile payments in the marketplace today.
The spread of mobile order ahead has something of a similar feel in that the payments experience isn’t the problem to solve in and of itself — it is part of the solution to a different problem.
“The worst thing ever is going into a store with a time crunch, and you get stuck in a line. You had an hour to eat, you’re waiting for 45 minutes for your food and you only have five to 10 minutes to actually eat it,” Emma Beckerle, director of Client Services and Account Management at LevelUp, told Karen Webster of the problem that mobile order ahead has the power to solve from the consumer perspective.
And that bad experience — trying to eat lunch while walking back to the office — has a way of sticking with a customer, Beckerle noted, and runs the risk of creating a bad brand association, since there are few foods really delicious enough to be enjoyed while eating them on the run back to the office.
“From a consumer standpoint, there is a major benefit to putting in order ahead — you are getting people through the lines faster,” Beckerle said.
But the benefits are bigger than that, she hinted.
What Merchants Win
Said simply, when it breaks down to dollars and sense, Beckerle notes, the argument for order ahead is clear — it is a solid way for restaurants to boost revenue: Customers order more when they order ahead, and they order more frequently.
“I think it is a combination of customers’ and merchants’ problems being solved. What we see from our merchants with order ahead live is an increase in the number of orders going through — and frequency increases at the same time. There are absolutely [more] dollars associated with order-ahead [orders],” she said.
That doesn’t mean implementation is without cost — Starbucks, the grandfather of mobile order ahead, has recently endured rounds of complaints that order-ahead pickups are filling up with the type of lines merchants are trying to avoid. Part of that, Beckerle explained, comes from the growing pains associated with trying something totally new.
But, she noted, even if there are lines, they are likely a bit different than the type the average customer is used to enduring.
“Even if there is a line, I suspect it is moving faster than it would if [the customer] had placed the order in the standard way.”
And, she said, merchants can avoid a lot of these growing pains by considering mobile ordering’s impact on the physical design of the store.
“I think if you don’t have a clear path for the customer when they arrive at the location, that is not a great consumer experience. You need to make sure you have the layout of your location tailored to your order-ahead experience and make sure your staff is up to speed.”
The Challenges Going Forward
First impressions are key in mobile order ahead, because, Beckerle emphasized, the first order is often the hardest order to get customers to make — and it is what pushes them on the path to really becoming a dedicated order-ahead user.
“The first order-ahead experience is incredibly important — once you nail that down, you can expect larger basket sizes and more frequent orders from the second order on.”
But, she noted, that is why it is so important to get those in-store experiences fully planned alongside order-ahead implementation — because if the customer’s problem isn’t really solved, if they still feel like they are waiting in a long line, that critical second order won’t come.
And order ahead is likely to become something that lives outside of quick-service restaurants.
“You are seeing the larger chains that are doing things like order-ahead pickup. And I think you can see order ahead even move to the full-service model.”
The bigger opportunity, she said, is going to be in grocery and convenience stores that will allow customers to order their goods and pick them up bagged a few hours later.
“We do have a brand that we work with that is starting to float that around. I see that as the next wave for order ahead for a new segment.”
Customers want convenience — at the end of the day no one wants to lose half their lunch break to waiting in line or half their Saturday going to the grocery store. Consumers don’t have a payments problem — but they do have a time problem.
And if payments can be wrapped around an ordering experience that saves customers the time they need, then payments can be upgraded from a problem that doesn’t need to be solved to a solution no one knew they needed.