Starbucks made a lot of noise recently with the launch of mobile payments in the United States for iPhone and Blackberry users. As an Android user, I felt left out (as is often the case.) But there’s a way to use your Android phone to pay for your coffee. Here are the steps:
Borrow a friend’s iPhone or iPod Touch.
Set up your account and enter your Starbucks card information.
Go to the “Cards” screen and click “Touch to Pay”.
Take a screenshot of the bar code that appears. (Hold the power and home buttons.)
Email the screenshot to yourself.
Print the screenshot. (I printed it at 35% zoom to get the right size.)
Cut-and-paste (physically) the bar code to the back of your Android phone.
Viola! Mobile payment device.
It’s even better than the iPhone app: it’s quicker (no need to find and launch the app and click a button) and it works even when the battery is dead.
It lacks a lot of features. You can’t find the nearest Starbucks, reload your card or see your transaction history. But for the most common task of paying for coffee, it is the optimal experience. It would be nice if Starbucks stored your preference on whether to print receipts, but that’s an issue with either method.
This illustrates one of the key challenges facing mobile payment systems that are emerging: in their desire to get our money, banks and retailers have already made paying for things incredibly simple. Swiping a credit card is just.not.that.hard.
Any digital wallet will have to be just as simple. Launching various applications, digging through menus and entering security codes are all steps that add friction to the purchase process.
Apple, Google and others entering the NFC/mobile payments game would do well to have standardized interfaces to flip among payment, library, transit and access cards versus having every app developer design interfaces as he sees fit. These could be tied to location — if you’re at Starbucks, the Starbucks card automatically shows up first.
LivingSocial’s existing product works much like Groupon. You sign up for a deal and typically purchase goods or services for half off the retail value. These deals can be redeemed over a 3- to 12-month period, depending on the deal.
While some have called these deals yield management tools, they’ve actually just been customer acquisition tools. In fact, some businesses have been so overwhelmed by these offers that they’ve had to hire extra staff to handle the influx of new customers. Some undoubtedly have had to turn away full-price customers to service the discounted customers. One of the challenges businesses have faced is that although they’re seeing new customers, those customers are getting a bad impression because the business is overwhelmed.
The key to effective yield management is to shift demand to when you have excess capacity and to charge a premium for the times that are at highest capacity.
Many small businesses already do this. Happy hours at bars are a simple example of yield management. Come in from 3 to 6 and drink for half price. There’s a high fixed cost (staff is already there, rent, electricity). As long as you cover the marginal costs of food and drink, you can generate extra profit during that otherwise dead time.
This could prove to be a boon to businesses who need to generate extra business quickly. For example, a spa that finds itself with massage therapists with a slack appointment book could send out a 1-day only deal.
While the details of Living Social’s implementation aren’t out yet, here are some things I’d like to see:
Ability for the business to control the amount of offers that are available. You don’t want to go from a situation where you’ve got a lot of spare capacity to one where you’re overwhelmed by demand. A limit would also create incentives for users to claim an offer quickly.
Ability to more narrowly target customers. The current regions are too large to ensure that the customers reached are likely to be repeat customers.
Ability to target specific products. Chicken moving slower than beef tonight? Half off chicken dinners!
Ability to exclude customers who are too close. You don’t want to offer discounts to people who are already at your business.