For Vanda Provato, vice-president of marketing & category at Second Cup Coffee Co., a new mobile app focused on loyalty rewards and payments is better late than never.
After a pilot phase in Calgary, Second Cup rolled out its Rewards program complete with mobile app nationwide at the end of April. While it’s more than three years after competitor Starbucks brought its app to Canada, and a year after Tim Hortons rolled out across the country, the arrival of Rewards marks a turning point for Second Cup. The brand is looking to take its coffee upscale.
“Over the past 12 months, a new CEO came on board, we renewed our strategic vision, and we created a new growth plan,” Provato says. “We’re reinventing the entire Second Cup experience… it’s reigniting people’s passions for an ultimate coffee experience.”
Second Cup’s new branding is on display in a downtown Toronto flagship store and starting to show up in more locations. The design elements include an artist’s series of disposable cups and a modern new logo with icon-like design. That look is emblazoned on the app, but there’s more going on behind the touch screen to personalize the experience for members.
While it’s starting with rewards for money spent – $50 will get you a free coffee and $100 will get you a bag of beans – Second Cup will also soon be pushing offers based on what it knows about its customers.
“The next natural evolution is we want to build deeper relationships with our customers,” Provato says. “Being able to enhance their experience with us through a mobile app was critical.”
Building an app to fit a new brand
Second Cup worked with several partners to bring its app vision to life. The look for its rebranding was done by JackKnife Design, and design firm Strano Pettigrew and Associates helped implement that into a digital experience. When it came to developing the app, Provato called on Toronto firm B-Notions, a company she was familiar with from a previous role at Indigo Books.
Early on in the process, B-Notions looked to its competitors to benchmark what features it was going to offer with the new app – Canada’s third app focused on paying for coffee with your phone. It also used the Calgary pilot phase to learn what was working well and what wasn’t.
Then it went deeper by tieing the app into Second Cup’s customer relationship management software, says Amber Foucault, product management director at B-Notions.
“There’s a full marketing knowledge hub that was built that we feed analytics into,” she says. “We’re making sure we understood where the customer was coming from.”
By taking anonymized data from the app, Second Cup will be able to segment its users into categories of different behaviour profiles. For example, I always buy the same thing when I go to Second Cup – a medium coffee, no food items. After recognizing my habit, Second Cup’s marketing team could choose to push out to my app an offer for a discount on a cookie, as an incentive to try something new.
Both Second Cup and B-Notions make a point of saying the push notifications are opt-in only, and that customer’s identifiable information is kept private.
“We aren’t interested in being big brother or learning too much about our customers,” Foucault says. “The personalization is done at an anonymized level.”
Payments system has risks on par with other coffee apps
Second Cup’s Rewards program uses both physical and digital gift cards that can be reloaded with money by the owner. Provided by card giant Givex, the cards use a Code 128 encoded barcode value to identify an account debit it for a transaction. For the app, users can input a physical card they buy into the app using their device’s camera, or they can provision a digital card within the app. A credit card is required to load money onto the card within the app.
For Darryl Burke, principal of Burke Consulting, the system holds flaws that are similar to the Starbucks app, or the Tim Hortons pilot phase. Because the bar code displayed by the app is the same as the one displayed on the cards, it’s possible that someone who doesn’t own the gift card could duplicate the barcode and use it to charge their purchases to someone else’s account. A balance check tool on Givex.com could even be used to see if anyone has loaded money onto a specific gift card.
“One of the fundamental principles of computer security is learning from your peers and the improvements they have made to detect and prevent abuse,” Burke says in an email. “Corporations tend to look at their competitor’s products and only see the end result.”
Whereas Starbucks has a scratch-off area on the physical card that is required to input it on their app, Second Cup’s doesn’t. Instead the physical card is “dead” as soon as the purchaser digitally captures it, Foucault says.
When it came to handling credit card information, Second Cup is working with Chicago-based Braintree, a PayPal subsidiary. Instead of storing credit card data on servers it owns or requiring it to be displayed to the point of sale at purchase, Second Cup relies on Braintree to store the information on its PCI DSS-compliant servers, and pass back a token indicating the charge was accepted.
“That information is never stored with the merchant, we store it in our vault,” explains Aunkur Arya, general manager of mobile at Braintree. “Merchants just don’t want to handle that sensitive information.”
When asked about the risk of duplicate barcodes charging the system, Arya acknowledged it was a loophole seen in other scenarios involving gift cards. But the risk is minimal.
“We haven’t seen a significant number of problems for any of these scenarios where a bar code is presented for payment,” Arya says.
First Rewards, then offers
Before Second Cup’s personalized offers start being pushed out on its app, the focus will be on growing user adoption. Marketing around the app and Rewards program began in earnest at the end of April. While she won’t share numbers, Provato says the first two weeks exceeded expectations, and most of the acquisitions for the program came from the app rather than the website.
“One of our key pillars is all about innovation,” she says. “It’s inherent in the new brand direction we’re going down.”
There’s also an Apple Watch app that allows customers to bring up their payment card with the shake of a wrist. They can also track their points from their wrist and cash in rewards.
The coffee retailer is working with its CRM consultant, to build out segments and create offers that will make sense for different behavioural segments. For Provato, the end goal is the capability to do marketing on a one-to-one basis.
And when Second Cup does start pushing out offers, its customers will find out that while it was late to the mobile app party, at least it came with a couple of new tricks.