David Fink, product evangelist for Experitest, examines the world of mobile coffee apps in depth and asks how much of an impact they will have in the future
For the past 20 years Starbucks has dominated the coffee industry with Dunkin Donuts right behind. Combined the two Java giants command 60% of the American coffee market, serving over 5 billion cups each year.
With the rapid emergence of smartphones and mobile applications, both brands have been racing to integrate these new technologies into their growth strategies. Within 5 years mobile commerce accounts for over 15% of revenues. Will the king of coffee soon be determined by who has the best mobile app?
The New Battlefield
Coffee is ideal for the mobile landscape. The majority of coffee drinkers don't consume their order in the store. They either drink while walking, or save it for the commute, office, or family breakfast. From the brand's perspective, speed and convenience are as important as variety and taste. A mobile application which enables a customer to order, pay, and pick up faster, delivers significant added value to the customer.
This value becomes more crucial as the economy slows. With the Dow Jones off 14% from its highs, and Chinese equities down 40%, a cyclical recession becomes a distinct possibility. Skipping the daily cup of gourmet coffee becomes the low hanging fruit of saving money. Drinking what's available in the office saves up to $1,000 per year. It puts pressure on the big brands to make buying coffee an even more pleasurable experience. This places mobile quality center stage.
Already 15% of business is mobile. As 15% becomes 30%, even 50%, the quality of each brand's mobile application will be as important as how the inside of their stores look. Every upgrade will have the impact of a new flavor of espresso in this $100 billion industry. Mobile testing, or making sure that the mobile applications are in total working order, will allow each participant to take full advantage of their highest growing revenue channel.
"Testing a mobile application to perfection can be a complex process," affirms Tal Barmeir, CEO of Experitest, maker of mobile testing tools. "You don't just test to make sure every function of the application is in full working order. You have to make sure that everything is working whether the user is in Montana or Manhattan. You need make sure that the app itself is working at the same speed wherever the user is, or wherever he or she goes, and that the application provides the same superior user experience on every type of device they are using." Both Dunkin Donuts and Starbucks are taking note.
Dunkin Donuts Strategy: Slowly but Surely
Dunkin Brands has been a latecomer to both the high end coffee market, and mobile applications. Expanding from its original focus of donuts and pastries in the early 2000s, it commands 24% of the market. It released its first mobile app in 2012.
The app is available on both iOS and Android, and utilizes mobile technology to locate the nearest stores relative to a user's current location. Using your phone, you can buy Dunkin Donuts cards, and using the cards you can pay for your order by scanning the card at the register. This relieves the users of having to carry or dispense cash, and moves them through the line faster.
With 11 million app downloads already, Dunkin hopes to upgrade its mobile success by enabling customers to place and pay for orders on their phone so they don't have to wait on line. These new developments are projected to be rolled out next year.
Starbucks Strategy: Fast and Furious
Starbucks, the market leader, got a head start on Dunkin's by releasing its mobile application in 2011. They have developed and deployed an order and purchase app with physical delivery available at some locations. However, their aggressive timetable has not been without setbacks.
To facilitate purchases Starbucks partnered with mobile payments startup Square to enable customers to simply present their phone to an in store scanner. 7,000 Starbucks stores installed the system, but in many locations it didn't work properly. It got to the point where Starbucks register operators were manually entering in bar code numbers to process mobile orders. This resulted in frustrated customers waiting for orders they expected would take less time.
Inefficient mobile testing resulted in repeated bad customer experiences. Starbucks has rebounded, processing over 25 million transactions via mobile. But users never forget a bad experience, and they don't keep it to themselves. Issues like these are the first to appear on social media pages.
Mobile Quality and the Window of Opportunity
Customer loyalty will be earned by the most reliable mobile application, and the most reliable mobile application will be developed by the team that test's the best. A setback in mobile quality for Starbucks becomes an opportunity for Dunkin if they roll out a mobile application without any major problems.
The key is mobile testing. If Dunkin performs enough mobile testing to guarantee a flawless experience for any customer, on any device, and at any location they can turn Starbuck's advantage of being first to market against them.
Coffee is a commodity. The added value to the customer lies not only in the taste, but in the convenience of getting it. The brand that can guarantee a quick and flawless experience will win the most mobile customers. As mobile becomes the dominant way people buy their coffee, this brand will also be the brand that controls the market.
David Fink is a product evangelist for Experitest