Time to Make the Donuts … App

New Orleans--When Dunkin Donuts launched its mobile app in August of 2012, it was already three years behind Starbucks, a pioneer in mobile payments. To make a meaningful impact, it had to do something different.

"Mobile is not just another channel to do something you're already doing," said Jon Squire, CEO of Cardfree, the vendor that made the Dunkin Donuts app. Cardfree was founded by many of the people who developed the original Starbucks Card app, so it knew how to develop a mobile payment system tailored to the specific needs of a store's customer base.

With Starbucks, the initial focus was reloading plastic cards and reducing the time spent waiting in line. With Dunkin Donuts, the focus was transforming its gift card into something purely digital, Squire explained in a presentation at SourceMedia's annual PayThink conference taking place this week in New Orleans.

Dunkin Donuts' differentiator would be "mobile gifting, where it's truly phone-to-phone," Squire said. "It became one of the three biggest use functions, even to this day."

Scott Hudler, Dunkin Brands' vice president of global consumer engagement, explained that mobile gift cards serve a different purpose from plastic ones. The drive to give a mobile gift is much more impulsive.

"The day that we see the biggest volume of mobile gifting is Father's Day," Hudler said. "Mother's Day people buy a plastic card ... [but] Father's Day it's: 'I didn't really think of anything to give you so I texted you this mobile card.' "

This is in contrast to Starbucks, which has often described its plastic gift card program as the foundation of its mobile app's success. People buy plastic gift cards as holiday gifts, after which the recipient enrolls it in the Starbucks app.

A more recent addition to the Dunkin app is mobile ordering, which targets the pain point of waiting in line.

Seventy percent of the time spent in a Dunkin Donuts interaction is the process of discussing one's order with the cashier, Hudler said. But even that isn't capturing the whole scope of the customer's experience.

"To the guest, the clock starts the second they hit the door," he said. "Their clock is a lot different from our clock, and guess what: Their clock wins."

Dunkin Donuts is planning to cut these interaction times even further. Based on its observations of how customers use its app to customize orders, Dunkin Donuts is planning an update that will trim the number of steps required for transactions.  

The key to success in the mobile channel is to play to a company's strengths without forcing a change in its business model, according to Squire and Hudler.

"We are not a startup; we are a 66 year old brand that has been built in the brick and mortar space," starting with a single store in Quincy, Mass., that is still in operation today, Hudler said.

And the company's mobile model applies to more than just businesses that sell coffee and donuts.

"Starbucks was not an outlier," Squire said. "You actually can turn the channel into a huge, profitable channel for you."