When you think about successful mobile apps you — and most people in the retail space — probably think about Starbucks, Taco Bell and Dunkin’ Donuts. Jon Squire and his firm CardFree are behind many of these leading retail apps and they’re just getting started.
Squire joins us on this week’s Tearsheet podcast to talk about what the special sauce is that goes into making a hit mobile app and what questions retailers should ask when interviewing mobile vendors. We also dig deeper into the role loyalty programs play in today’s mobile wallets.
The excitement around mobile apps
“For merchants who want to embrace mobile, they’ve looked at the success Starbucks had with its app and wondered whether firms could control their own destinies and provide these services. What Dunkin’ proved was that it could work and even work in the franchisee model, where it’s more challenging to roll out new technology stacks. In the wake of Dunkin’s success, we’ve seen a lot of merchants hop on the bandwagon. The biggest driver and buzzword here is data — how do I get to know my customer directly? Is this the first opportunity in 20 or 30 years to market to that consumer on the go, directly to their device when they’re in the most relevant location? Retailers have also realized that if they don’t embrace the space themselves, they’ll have to partner with other people in aggregate plays that downplay their direct relationships with their customers.”
What makes a successful mobile app
“Historically, our team worked on the first Starbucks app and secondarily on the Dunkin’ application through another startup. What we’ve found is that there’s a huge gap in the marketplace for integrated mobile wallet solutions. There are a ton of players that offer payments solutions. But payments aren’t really broken. Then you look at loyalty, which has a hockey-stick effect when coupled with payments. But things like real-time offers, CRM systems, order ahead and beacons — providing an integrated solution for a merchant just didn’t exist three or four years ago.
For Dunkin’s original app, at its peak, there were 30 mobile vendors that needed to be cobbled together for the mobile commerce solution. That’s not tenable for an entity that’s trying to roll out something quickly and be agile. It’s crude but it really is the ‘one-throat choke approach’.”
How loyalty impacts spending and frequency
“With mobile, once you get a person using your service, the customer tends to be your most valuable customer. If you get 20 percent of your audience using mobile, they’re by far your best customers. That’s because they spend 2 times the amount of money in the basket and shop twice as frequently. It’s hard to decouple loyalty from mobile. If you remember when we launched Starbucks the first time around, loyalty wasn’t part of the package. It was literally just leveraging its prepaid card, which admittedly is a freak with a huge number of followers and could be considered its own form of tender in the U.S. When we did add loyalty, you did see that hockey stick of usage. You could see it in line, when that star dropped into the cup or when the gauge went up on your perks account — anything that happens in real time that rewards something a customer just did at the point of sale increases that behavior.”