A big allure of the Starbucks mobile app is a connection with the company’s loyalty program, which doles out goodies like free coffee once people buy a certain amount of Starbucks menu items or merchandise. Even though people complained about a recent change Starbucks made to its rewards program, bribery is incredibly effective at changing human behavior.
The lure of discounts worked for Wal-Mart when it tried to hook people on its mobile price comparison app. What if Apple or Facebook also added loyalty rewards? Let’s say Apple gave people who used Apple Pay a $1 credit or a free iTunes song download for each $20 of merchandise purchased through Apple Pay. That would persuade a lot of newbies to try Apple Pay and then use it repeatedly.
The Starbucks Rewards App has been around for several years now, and it’s nothing too fancy. Rather than tap and pay, it uses a QR code on the screen to load your gift card information for payment. Customers can load their gift cards using a credit card, and refill the card as they spend it. In return for using the app, customers get free drinks and other nifty rewards.
This sounds just like any other rewards card from any old company, but Starbucks isn’t like any other company. Starbucks sells more than $5 billion a year in gift cards — nearly a third of its entire revenue. 2015 was a record year, too, since the mobile app helped spur gift card sales.
In addition, Starbucks makes interest on the money stored on its gift cards by investing it. The numbers are not clear, but Starbucks can easily earn two to three percent interest — if not more — on the billions it has saved up in gift card balances. Starbucks is your bank without you even realizing it.