Starbucks Corporation (SBUX) App Could Be The Company’s Next Golden Goose

investJay Taylor: I love my caffeine. And I’d established a pretty regular morning coffee routine. But ever since I downloaded the Starbucks app my coffee-buying behavior has changed. I had a coffee habit. Now I have a Starbucks Corporation (NASDAQ:SBUX) habit.

And I’m not alone.

starbucks-app

Starbucks has stumbled into an opportunity that could prove to be a completely new source of revenue for the coffee giant.

Starbucks reports that its mobile app now processes more than 6 million weekly transactions, roughly 15% of the company’s transactions. Business Insider estimates that the Starbucks app is on track to process more than $1 billion worth of transactions in 2014.

Starbucks 10.20.14

Source: Business Insider

The beauty of the Starbucks app is that it combines mobile payments with a customer loyalty program.

The first reason for using the Starbucks app is that it is a convenient way to pay for my transactions. I simply open the app and shake my phone or tap “Pay” – both actions pull up a custom barcode that can be scanned at the point of sale as payment for my purchase.

But simple and convenient mobile payments are just one part of the story for the Starbucks app. The company has found tremendous success with the loyalty program run through its app.

For every transaction I make with my smartphone using the Starbucks app, I am rewarded with a “star.” And for every 12 stars I earn, Starbucks gives me a free drink. It is this function that has me coming back for more. What can I say, I’m a sucker for rewards.

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