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Starbucks Brews Up Loyalty on the Move

Are the days of plastic loyalty cards clogging up our wallets numbered? Some may think so when they look at the success some companies are experiencing as they add mobile apps as a way to drive their loyalty initiatives.

Sure, those handy plastic cards provide access to perks — including discounts, free shipping and the ability to receive receipts by e-mail — but the sheer volume of the cards combined with their low-tech capabilities make them increasingly clunky.

Starbucks is one of a few companies out there that has leveraged mobile phones to add cachet to their loyalty program and make it increasingly user friendly for the tech-savvy customer. Earlier this month, Starbucks disclosed that it has handled 26 million transactions via its mobile payment system, which allows smartphone users to turn their device into a digital wallet. The mobile app, introduced last January, now handles between one percent and two percent of overall sales.

The success of the mobile initiative is getting attention. That’s because the Starbucks payment system is tied to its loyalty program. When a customer rings up a purchase electronically, his or her account is automatically credited and any qualifying discounts are applied. About 3.6 million customers belong to the My Starbucks Rewards program and 2 million have achieved gold status.

[Source: Baseline]