Starbucks maintains sales during the pandemic due to innovation in mobile ordering.
As budgets tighten, many CFOs and CEOs make the mistake of hitting a pause on investing in business innovation. While protecting the bottom line is critical when business isn’t necessarily booming, new innovative ideas are actually what can help corporations survive in a time of uncertainty.
Take Starbucks, for example. The major coffee chain lost $1.2 billion in sales this year due to limited operations, reduced hours, and location closures. Despite less foot traffic, Starbucks still managed to come out ahead in quarterly earnings due to a type of innovation the company came up with five years ago.
Starbucks first offered mobile ordering through its app in 2015. Today, almost 25 percent of all store orders are placed through the mobile app, which saved the business during the COVID-19 pandemic. Before the pandemic, analysts expected Starbucks to earn $6.06 billion this past quarter. Despite the decrease in customer traffic, the company still managed to generate $6.2 billion for the quarter.
So how did they do it?
Customer behavior drives innovation.
Starbucks originally created its app to alleviate crowds in stores back in 2011. The company noticed increased congestion at their locations and searched for an opportunity to minimize long lines. To speed up the checkout process, Starbucks created a mobile app that customers could pay with instead of using a card or cash. Keep in mind this innovation was implemented at a time when mobile pay was in its infancy. By developing continuous user research, Starbucks can generate innovative ideas and solutions quickly.
Technology does not solve problems; ideas do.
Notice that Starbucks didn’t simply throw technology at their problem. The company used customer research to generate an idea that was then brought to life with the support of technology. The primary concern in this scenario was speed. Starbucks needed to speed up the checkout process and shorten lines. To do so, they decided to create another payment method for their products. What payment method would then be delivered through a mobile app? The app was not the solution to the problem; the new payment system was. Using technology to support solutions can drive innovation, but technology alone cannot.
Investing in innovation can save your business later.
By prioritizing the customer experience, Starbucks positioned itself as a leader in mobile ordering. This also gave customers time to adapt to the new technology and adjust their buying habits with the brand. Today, most of its customers are comfortable with mobile ordering and were not significantly impacted by the closures and limited operations this year. If Starbucks created the mobile ordering app earlier this year when the pandemic began, their customers would need time to adapt, and revenue could have been impacted. By keeping innovation top of mind, companies like Starbucks can survive uncertainty and leverage their previous innovations in adjusting business strategies.
Learn more about RIDG’s customized innovation process, which guarantees scalable product or service design and continuously identifies increased revenue opportunities.