This is the last Starbucks journey. Today’s full of interesting articles.
4. Digitalization
Today’s topic, digitalization is more of a management strategy than a marketing strategy, but I’d like to introduce it because it is that differentiates Starbucks from other competitors that have made Starbucks a step further in the Korean coffee shop market.
Siren Order
“Siren Order” is the first launched O2O(Online to Offline) service among Starbucks around the world on May 29, 2014, by Starbucks Coffee Korea. It is an innovative smart ordering system that to conveniently order beverages and food through a mobile app. It started first in Korea because Korean consumers are familiar with IT technology and tend to adapt new technologies quickly.
“Siren Order” is a system allows users to easily order customized beverages for individual preferences using a smartphone application. It is an efficient way to save time because with the Starbucks card app, you can premake “my own drinks” and order it with a simple OR, and if you are a My Starbucks Rewards member, you can order and pay in advance at a store within a 2km radius of the store, and then pick it up right away.
It exactly fit the needs of consumers who wanted to order fast during busy hours such as rush hour and lunch break. The average number of Siren orders used per day is about 70,000 at Starbucks, where an average of 500,000 people visit each day.(as of 2018) As of the end of 2020, the cumulative number of Siren orders reached 180 million, with an average of 170,000 orders a day, accounting for 25% of the total number of orders, which means 1 out of 4 Starbucks customers use Siren Order.
The Siren Order made by Starbucks Korea was exported to various countries including the United States in 2015. The amount of U.S. Siren orders accounts for about 10% of the total number of transactions, and other exporting countries are also on the rise.
In Korea, it captured the hearts of office workers. Siren orders are 26% between 8 a.m. and 9 a.m. and 14% between 12 p.m. and 1 p.m., showing a high utilization rate on the way to work and during office workers’ lunch hours. In addition, Siren order usage is the highest in offices districts where there are many office workers.
The digital planning team of Starbuck Korea, who designed the “Siren Order” service, made big data to be used for marketing. In addition, various services are being developed to enhance the convenience and functionality of siren orders. Recently, it has been receiving high praise from customers by introducing a “personalized ordering system” that utilizes big data such as purchase history, store information, order time zone, and temperature. In addition, it is continuing digital innovation such as introducing the industry’s first voice recognition order system linked with Bixby of Samsung Electronics.
Drive-through & My DT Pass
Starbucks Coffee Korea opened its first drive-through store in Bomun-dong, Gyeongju in August 2012, and introduced “My DT Pass” service in June 2018. This service is characterized by automatic payment when using drive-through by linking customer vehicle information with a Starbucks prepaid charge card. If a user is a My Starbucks Rewards member, the user can use his/her vehicle number after registering it on the Starbucks mobile app or website. Starbucks Coffee Korea developed this service with its own technology.
This is how the service works. When a vehicle registered with ‘My DT Pass’ enters the Starbucks Drive-Thru Zone, the vehicle number is automatically recognized. Through this, the barista can know the member’s nickname, whether ordered by ‘Siren Order’ which is a mobile pre-order service, and whether to have coupons. Then, automatic payment is made with the registered Starbucks card. Customers can conveniently pick up beverages and leave right away without the hassle of ordering or payment process.
Customers don’t have to present other payment methods, so that they can reduce waiting time for payment. The usage time per vehicle was shortened by about 13 to 15 seconds, reducing about 10% of the total waiting time. (As a result of the test operation) It also secured safety by preventing the driver’s gaze from being distracted to prepare for payment.
Starbucks Drive-Thru has steadily increased every year, with 280 stores operating nationwide as of December 2020. In other words, nearly 20% of all Starbucks stores in Korea (1,480) are drive-through. There are 16 drive-through stores in the Seoul. Nationwide, 81 in Gyeonggi Province, 19 in Busan, 24 in Daegu and 22 in Gwangju are in operation.
Since the recent COVID-19 pandemic, the number of customers using Drive-Thru who want to order safely and quickly from a vehicle has also increased steadily, and the My DT Pass utilization has increased significantly. The number of registered My DT Pass customers exceeded 1.5 million in December 2020. This is about 20% of all Starbucks Rewards members. The number of orders at DT stores in 2020 also increased by 48% compared to 2019, before the outbreak of COVID-19. The number of ‘My DT Pass’ orders also increased by 56% compared to the previous year. It means half of Starbucks’ car users use ‘My DT Pass’.
Moreover, Starbucks Korea continues to provide a variety of information technology (IT) services for the safety and convenience of customers at Drive-Thru stores. In addition to the introduction of My DT Pass, a voice ordering method was introduced in conjunction with Bixby of Samsung Electronics’ smartphone. Besides, the radius of the Siren Order for customers using drive-through by car was expanded from 2km to 6km.
Today’s Author’s Point
One of the biggest reasons for Starbucks’ success was “The Third Place” strategy. However, as times changed, a generation of people who get what they want anytime, anywhere has begun to emerge. Starbucks (especially Korea), which prepared for this change in advance, is not only far ahead of other coffee shop competitors, but is now transforming beyond a coffee company to be called a digital company. I think this is why Starbucks brand continues to grow. Starbucks Coffee Korea plans to strengthen its digital team in the future. Starbucks Korea’s next strategy is expected to see what other steps it will take in the future and how much it will surprise us.