Starbucks Corp. is seeing a number of benefits from deploying artificial intelligence (AI)-equipped hardware and analytics.
The coffee giant plans to deploy 4,000 AI-enabled Mastrena II espresso makers during 2020, following the installation of about 1,900 of the units during 2019. In comments made during Starbucks’ recent Q1 2020 earnings call, Rosalind Gates Brewer, COO, group president and director, Starbucks Corp., said the Mastrena II machines improve the customer experience by reducing the amount of time it takes to make and serve coffee, enabling the retailer to offer a wider assortment of beverages. In addition, Brewer referenced Starbucks’ Deep Brew AI engine as enabling the retailer to better understand customer preferences.
“(W)e will see the most significant deliverable around how we will integrate AI into understanding how to deliver the best coffee experience and also reducing the amount of time it takes to deliver and then giving us a chance to provide a variety of coffee to our customers,” said Brewer. “There's also other innovation happening around Deep Brew. It will show up in various aspects of the business, but the equipment position is our strongest position right now.”
Brewer also highlighted significant growth in Starbucks’ loyalty program, with a 16% year-over-year increase in active Starbucks Rewards members.
“It's the strongest growth rate we've seen in three years,” said Brewer. “So the work that we've done in our multi-tier redemption is also allowing us to grow our member base. We've got an increase of annual member growth of 2.7 million members. There's a lot of customer insights that comes out of the work that we do as we grow our member base. So, we are learning from what's happening as we align AI to our equipment, and then the work that comes out of our loyalty programs and getting us closer to customers' expectations. And it's making a difference.”
In addition, Brewer said that Starbucks’ number of 90-day active digital customers grew 40% year-over-year during the quarter to 10.2 million, resulting from enhancements to its digital experience. Furthermore, total mobile orders reached more than 15% of the sales mix, compared to 10% in the fourth quarter of the prior year. That percentage includes 9% of sales being mobile delivery and 6% being mobile order & pay transactions.
“And we're continuing to build out these digital relationships with customers,” stated Brewer.
“While Starbucks’ new AI-enabled espresso machines improve the efficiency of beverage making, this is truly a ripple effect to a better customer experience, more brand loyalty and additional offerings for consumers down the road,” said Tom Caporaso, CEO of loyalty program provider Clarus Commerce. “Using technology like this can help brands find gaps in their customer service, traditional loyalty programs and even allow them to offer premium loyalty options based on the increased knowledge of what customers really want. More technology isn’t harmful; it’s the key to finally understanding your customers - just don't forget the human touch.”