A campaign unveiled by the coffee bean behemoth last week illustrates the latest example of this decaffeinated strategy. Starbucks is considered the most successful U.S. retailer when it comes to handling mobile payments and, for that matter, mobile anything. When the holiday shopping season for 2013 came around, the normal reaction for most retailers would be to push its mobile app and encourage shoppers to load dollars onto the mobile app of intended gift recipients. Instead, Starbucks deliberately chose to not push mobile at all, but to instead encourage the purchase of old-fashioned plastic Starbucks cards, the kind that fit neatly into holiday stockings.
As soon as January happened, though, Starbucks launched a massive campaign to encourage people to take those plastic cards and use them to pour digital dollars into a Starbucks app. How did both efforts do? On just one day (Dec. 19), the chain saw 2.4 million new card activations, part of $160 million in new cards for the fourth quarter, "representing a significant increase over last year," said Starbucks spokesperson Linda Mills, who declined to give an actual percent. She added that not only was the Dec. 19 new card sales a Starbucks record, but that two other days (Dec. 23 and Dec. 24) also broke company records.
So just how did Starbucks come to be so far ahead of everyone else on mobile payment? Part of the answer is luck. Many years ago, it decided to get its customers to migrate from paying with credit cards and instead to use those stored-value cards. It was a pretty easy transition, from one plastic card to another. Starbucks had no intent at the time for that to be the first step in a mobile-payment strategy, but that's what it has turned out to be. Now, years later, it is just much easier to move customers to mobile because they have already gotten used to pulling out a Starbucks-only payment "device." They only had to master one new behavior (going from using a Starbucks card to using the Starbucks app) rather than two (stop using a credit card to do something retailer-specific, and that retail-specific thing is on the customer's smartphone, not a bit of plastic in his wallet) that other retailers were faced with.
What Starbucks has figured out is the power of going slow when they trying to move people into uncomfortable tech arenas. They pushed the non-threatening plastic. Once millions were sold, then—and only then—was there any aggressive push for mobile. They wanted to get them to load the mobile app, but they moved far more dollars to their counters by taking it slow. The drip-drip of the best coffee makers also works well for making converts comfortable.
The same approach was used many years ago when Starbucks started their plastic stored-value card. Back when mobile payment was not even a discussion point, Starbucks cleverly started getting its customers weaned off of cash and Visa, MasterCard and American Express. It was a simple transition, from one rectangular piece of wallet-housed plastic to another. But it worked and huge legions of Arabica aficionados made the switch.
Even though it wasn't done with mobile in mind, it was a smartphone gift from Wi-Fi heaven. When Starbucks then wanted to launch a mobile app, instead of going fancy—and frightening—by adopting NFC or leveraging Bluetooth, it simply took a picture of the barcode on the back of the Starbucks cards and placed that image in the app. Not only did this make the transition another exercise in gradualness, but it was remarkably inexpensive from an IT perspective. The identical scanning equipment that worked on the plastic card backs also worked on the phones. (Over the years, upgraded scanners made the system even more phone-friendly, but such upgrades were similarly deployed by almost all chains.)
What are the implications for your own technology transitions? Many. Repeatedly, companies push new technology on its employees and customers by touting the benefits, but rarely do they factor in the change in behavior the move would force.
When Walmart initially pushed RFID on its suppliers—demanding that they place an RFID chip in every product shipped—it was caught offguard by near universal resistance. It was true that such a chip would ultimately benefit both players, but not until years of labor-expensive changes were made at a huge cost.
Far too many technology rollouts have been doomed because the tech backer in the company pushed to have the rollout happen quickly. That speed had the unfortunate side-effect of making a risky behavior change seem even scarier. Taking baby steps may make a rollout take years longer to achieve, but if it's acceptance is sharply increased, wouldn't that increase it's effectiveness? Especially when the alternative is a simple refusal to budge?
"Consumers, like employees, can only handle one adjacency at a time. No more. I can't learn two things at once," said Todd Ablowitz, a payments consultant who is president of Double Diamond Group. "If you give people too much too soon, they can't handle it. The consumer will give you more if you give them more time, provided you're giving them something that they value."
Slow rollouts take far more corporate support, as they have to wait much longer for the promised ROI dollars. Initiatives that are launched "because we need the revenue to hit by the end of this quarter" are given a massive unnecessary burden. Customers and rank-and-file employees are not motivated by such things.
"The realities of quarterly demands cramps how companies function. Corporate attempts at innovation are literally suffocated by it," Ablowitz said. "Few companies can adequately combat that and Starbucks is one of them."
If you think this only applies to customers and partners, think again. Employees are not slaves. The employer's ability to dictate technology choices for employees has its limits, especially among knowledge workers. Anyone who thinks IT people will do what they're told because they are told it—well, they probably haven't been in IT very long.
CIOs of corporations with a large part of their business controlled by franchisees know this dynamic only too well. Unlike other CIOs, they can't make tech decisions happen by issuing edicts. Owners of franchises tend to be funny in wanting to be convinced first. In a way, it's a loss for those non-franchised CIOs as they are never forced to convince subordinates to make an uncomfortable move. If they were indeed forced to persuade, they might improve those skills. And slow-and-gradual is a great one to learn.