Turning a Coffee Shop into a Bank with an App

Did you know that Starbucks operates as a bank?

Most people that visit the famous coffee shops have no idea. This story will show the hidden benefits of effectively using an app to uncover vast benefits from a large customer base.

How does it work?

The brand with 38,000 coffee houses in 86 countries introduced a rewards program in their membership app that rewarded customers when they purchased through the app. Thanks to high marginal profits of coffee, the company was able to incentivise users with rewards and introduced a Starbucks card with which people could pay for their coffee. It works similarly to a virtual wallet in that a customer tops up the wallet, then uses the card to make transactions through the Starbucks app in store or online.

Additional Revenue

In the past fiscal year, Starbucks generated $196 Million via unrealised deposits, essentially points that users never realised for purchases, small amounts left on their accounts. Since they already paid for those 'points' this is called breakage revenue, that the company receives.

Top 10% of US Banks

Starbucks is not an official bank, it is still a coffee shop. However, their deposits far exceed most banks in the United States. This is all thanks to the a large number of visitors that the company attracts to its coffee houses and cleverly capitalised on them with an effective Membership App.

Could this work for other industries?

Potentially, it could. Most businesses don't get the foot-traffic nor the brand recognition that Starbucks gets, but there is a lot of potential to leverage existing traffic and data to introduce loyalty incentives and additional revenue streams. The key is to understand the business model and understand the customer base.

Could I get an analysis to determine how my business can benefit from a Membership App?

We are happy to look into a small number of businesses that show interest in Membership Apps and determine if they will be a good fit. We will only work with companies that we believe we can develop and provide a high ROI for. Ultimately, only those will justify a monthly subscription, otherwise, there will be no point. Fill the contact form at Membership Apps.

Summary

• The Starbucks story shows huge benefits that could be uncovered with subtle creativity and marketing ingenuity

• Technology, when correctly implemented can work wonders

• Loyal customers are the real gold mine. Starbucks values each customer at $14,000 in their lifetime. Focus on returning customers, they are much easier to sell to