America runs on mobile

Earlier today, as I was waiting in the train station on my way back to school, paying for my iced tea though Dunkin’ Donuts’ app, I realized how my relationship with Dunkin’ has changed and how much more frequently I spend money at Dunkin’ since downloading this app. Part of this is definitely because, living along Comm Ave, there’s one basically in my back yard. Otherwise, I think the app has had a huge affect on my spending habits and as such, I wanted to look further into the factors that have led me to use the app so frequently and how this has affected Dunkin’s business. (Side note before we get into this: many companies have apps like this that yield similar results. Starbucks, one of DD’s largest competitors, has a very similar and successful app. For the sake of this blog post, I will be focusing around Dunkin’s app because it’s the one I use most frequently.)

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Mobile Ordering

Undeniably, one of the largest benefits of using the Dunkin’ app is the mobile ordering feature. The amount of “I’m running late, but…” coffees that I have justified by ordering on my way to pick it up is honestly a little embarrassing as well as kind of impressive depending on how you look at it. By capitalizing on speed, convenience, and accuracy through mobile ordering, businesses like Dunkin’ can optimize customer relationships and maximize frequency of impulse buying. Dunkin’ has always been relatively fast and convenient – there’s one on most corners of all of the major northeastern cities and one or two in every smaller town and all of them run like well oiled machines. With mobile ordering, they can get ahead of busy times and become faster yet. Also, by more or less completely removing all human interaction, you can improve accuracy by essentially ruling out all human error. One time I went to get a coffee during a networking call while talking on the phone to someone, which was fine because I knew I wouldn’t have to talk to anyone in the store. Additionally, I’ve had orders messed up because people have misheard me (I definitely ordered coffee with skim, not cream, but it’s fine). Needless to say, I’ve become a big user of the mobile ordering feature.

 

Payment and Rewards

One of the main features of the DD app is the ability to pay through the app. This makes payment very easy and relatively guilt free (except when you have to reload). But for someone who reloads in $25 increments, like me, that’s only guilt every 10 coffees or so. For me, one of the biggest perks is how easy it is to rack up rewards. Whether by shopping at different times or ordering online on certain days, I will plan my trips around gaining extra points and getting a “Free Reward Beverage of Any Size!” Earlier today I got one, and I will probably go out of my way to use it this week, buying a coffee larger than needed, just because I can. It’s a known fact that people like free things, and I think that increasing the amount of free things and other rewards that you give your customers is a great way to increase brand loyalty and improve customer experience (speaking as a customer who appreciates receiving free things in return for loyalty).

 

Dunkin’s Business

Dunkin’ Donuts released their app in 2012. Originally it served as a platform only for payment and sending and using gift cards, but has since come to include the DD Loyalty program, mobile ordering, and many other features. Considering that market movements are natural and that DD is doing other things to improve their business model, like simplifying and streamlining their menu options, and acknowledging that Dunkin’ Brands also owns Baskin-Robbins and other companies, Dunkin Brands Group Inc’s stock (DNKN) has made a significant improvement since the release of the app in 2012. The stock was at a low of 24.58 in December 2011, and has climbed to a high of 68.18 in January 2018. As I said before there are obviously too many factors to claim that this is because of the app and the way it’s changed its relationships with customers, but I do think this is a large factor in improving their business model.

 

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Going forward, I think that with regular updates and new features to stay with and ahead of the competition, apps like this will continue to benefit Dunkin’ Donuts and other brands who employ them. For now, I’ll just enjoy my free large coffee.

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9 comments

  1. I totally agree with you. Mobile ordering has made it so much easier to order drinks. When I was interning in Boston I would always order online while I was on the T, knowing that it would be ready when I walked past Dunkin on my way to the office. What I love most about it is that you get to skip the line and just pick up you drink. In addition, by removing human interaction, there is less room for mistakes because you can personalize your drink exactly like you want it.
    I also think that the point system encourages more purchases (kind of like the snap streak makes you go back everyday). And yeah, I have also gone out of my way to get a free coffee, because you just have to do it. I am sure these apps will find more ways to engage their customers more.

  2. Your insight into mobile ordering here is great. What you’re describing is something we all feel, and it’s really funny how we’re more likely to spend using an app rather than a card. Did you know that you’re much more likely to spend less if you pay in cash? I’m not entirely sure what this means but its definitely interesting how the less directly connected to the cash we spend, the more likely we are to spend it. Also interesting to see how the reward program really lures you in, I’m not a Dunkin user but for Panera I know it keeps me coming back for more. Out of curiosity other than just new reward offerings do you believe there is anything Dunkin can do to improve the rewards program? Or come up with a more effective program?

  3. I’ve never used the Dunkin app but it sounds like a simple way to really get users engaged and spending more. The convenience and speed sound incredibly attractive. I wonder how well the “extra coffees bought because they can be pre-ordered” offset the free drinks and rewards that are also provided in the app. I imagine it works pretty well for them.

  4. I am a user of the Starbucks app and I can agree to the items you attest to here. Everything is easier and faster and the reward program for Starbucks is pretty solid. It seems like this has become a bandwagon at this point and every major chain is jumping on board. I feel like this is an opportunity for a third party app developer to create an app that can hold all of your rewards cash in one place and disburse it as needed when you go to your variety of restaurants that day. These days something I call “app bloat” is a serious pain point for many customers and I think will eventually lead to people skipping the download and just ordering coffee like they used to.

  5. I do not use any mobile apps to order food or drinks largely because I know I will like it and start to spiral in the number I of apps I use and the amount of times I use it. I think @kylepdonley brings up a really interesting point about “app bloat” and the number of apps we all seem to rely on now. Dunkin and other companies will have to find a way to gain competitive advantage and a reason to continue to use their app over others. I think this is a really interesting industry to examine because I think the cost is not large to maintain and it can be used for almost any company or industry. I am interested to follow the trends of ordering apps and how they disrupt companies or industries.

  6. NIce post. We’ve had a couple of past students work in digital for Dunkin, and it’s been interesting to see their approach evolve over the years.

  7. Great post! Coming from the midwest I personally have more Starbucks loyalty, but everything you talked about in this post I could apply to my experience using the Starbucks mobile app! In addition, I used to be a barista at Starbucks and I can personally speak to how much the mobile app helps expedite the ordering process. I really enjoyed how you mentioned that the ‘reload’ feature helps take the guilt off from constantly paying – I totally agree! Yes, I feel some guilt when I have to upload the money, but other than that I end up spending more than I normally would, because all I have to do is scan the app – no monetary transaction involved!

  8. Great, relatable post. I don’t use the DD app, but I do use the Panera app as there is one right across the street from where I work. Whenever I am going to work after class, I just set my Uber destination to the Panera, order and pay in the Panera app, and my order is ready by the time I get there. It saves me time (even if its 5/10 minutes) and, in my opinion, has no downside. Similar to DD as well, Panera will reward me with a free pastry or drink from time to time. I think that every restaurant like Panera or coffee shop like DD should strongly consider apps like this as it can increase customer happiness and, moreover, increase customer retention.

  9. A deep, insightful post about the Dunkin’ Donuts’ app. I could definitely tell that you are a loyal customer of DD from it. I also have a Starbucks app on my phone (I go to Starbucks more often since it’s closer from my home than DD is), but I still do everything in person every time I get a cup of coffee there. I personally do not like the fact that I have to reload too often. I wish they could make payment straight out of my card information just like Uber does. It then would be more comfortable. Yet, I strongly agreed with you saying ordering in-person sometimes goes wrong, so ordering in advance through app saves times while preventing mistakes. The most interesting feature in the Starbuck app I noticed was which it tells the title of music played in the current store. With that, such app clearly helps with leveraging customer loyalty and engagements.

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