Starbucks

Business Challenge

Starbucks sought to boost sales by offering improved personalized customer service via its mobile app.

Analytics Solution

Starbucks implemented a “digital flywheel,” an ecosystem that leans on algorithms and automation to drive sales. The flywheel includes rewards and personalized offers, plus simplified payment and efficient order processes.

Starbucks introduced two artificial intelligence based approaches within its mobile app:

• The My Starbucks Barista, a feature that uses virtual assistant technology via voice and messaging to respond to each voice command with text messaging prompts

• A personalization engine generating one-to-one offers tailored to each user based on his or her purchase history directly within the Starbucks mobile app

Starbucks’ implementation of personalized offers aligns with the move from transaction-based rewards to spend-based rewards. Offers are uniquely generated based on every individual customer’s behaviors and anticipated behaviors, rather than by using predetermined algorithms around specific orders.

Impact

• Personalized email offers have more than doubled customer response rates over previous segmented email campaigns

• The number of rewards program members has grown to 12 million in 2016, an increase of 18 percent from 2015

• The retention rate for the program is now 94 percent – an increase attributed to the company’s shift to spend-based rewards