Brief

Starbucks embraces conversational commerce, boosts personalization

Dive Brief:

  • Starbucks unveiled a new five-year growth plan that includes the rollout of an artificial intelligence-based mobile ordering solution and greater personalization through its mobile app, with both efforts expected to launch next year.

  • The AI-enabled conversational ordering feature is called My Starbucks Barista, and allows Starbucks Mobile App customers to place orders via voice command or messaging to improve ordering efficiency and encourage stronger customer loyalty and engagement. The new feature will roll out first on iOS in limited beta in early 2017, and later to additional iOS and Android users. 

  • Regarding personalization, Starbucks is planning to complete by early next year its rollout of suggested selling and recommendations capabilities, such as spotlighting items for pairing or additions to a customer’s order during the mobile ordering and paying process. The company said this will further fuel engagement and growth.

 

Dive Insight:

Starbucks is the latest company in the retail space to invest in AI capabilities to drive the suddenly blossoming concept of conversational commerce. Though Starbucks has been aggressive on some technology fronts, including its early embrace of mobile payments, that has not been the case with AI and other automated capabilities that brand giants in other retail segments have eagerly enabled.

Of course, it takes all retailers time to figure out exactly where and when it makes sense to incorporate AI into their business functions. Taking that time may pay off for Starbucks. My Starbucks Barista may not have a human name like Amazon's Alexa, but it still suggests the notion of a personal assistant — one that can help you skip the wait in line for coffee, in this case.

Personalization seems to be a big part of this five-year plan, and apparently with good reason. Starbucks has put personalized offers on the front screen of its mobile app, and also said hyper-personalized e-mail reward offerings to rewards programs members, which include more than 400,000 message variations, have more than doubled customer response rates over previous segmented e-mail campaigns. This leads to customers spending more money more often and being more engaged with the brand overall.

The expansion of purchase recommendations should only help matters, although its is worth noting that Starbucks has run into controversy before with changes to its rewards program. Some changes Starbucks made to the program last year made it harder to earn rewards points, and while these new features shouldn't rock the boat at all, it's important that the company take customer responses seriously, especially if customers end up saying the recommendations are bothersome and unnecessary.

Filed Under: Technology Marketing E-commerce
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