Starbucks Execs Respond To Square Criticism: Innovation Is Messy

"We just thought a lot of people would come up and say, 'I'm going to pay with my phone,'" says chief digital officer Adam Brotman. "We didn't realize a lot of customers were going to come up and say, 'I'm going to pay with Square.'"

Yesterday, after chatting with Starbucks chief digital officer Adam Brotman and payments VP Ryan Records, I headed to a nearby store for a pick-me-up. As I walked up to the register at a Starbucks in lower Manhattan, I took out my smartphone, told the barista I'd like to pay with Square, and then scanned my iPhone and walked out. It was seamless. Easy. And took less time than for the customer in front of me, who fumbled with quarters and had to wait for change when paying for her coffee.

The slick experience is the promise of Square, the mobile payments solution that enables merchants and consumers to accept payments and purchase items via their mobile devices. Founded by Jack Dorsey, the startup's service is already very popular with small businesses. But over the summer, the company announced a wide-ranging agreement with Starbucks to handle its debit and credit card processing. Starbucks also invested $25 million into the startup, and in November, began accepting payments from Square's mobile Wallet app at its 7,000 stores. The companies received glowing press coverage for the announcement.

But in tests at a number of Starbucks stores in recent months, Fast Company learned that the experience of using Square Wallet at Starbucks is anything but polished. Though the payments option worked seamlessly at a handful of locations, on the whole, we found the experience to be awkward, buggy, and inconsistent. Worse yet, we found that the Starbucks baristas (and even some store managers) had little training for how to use the service, and were almost as confused about how the system worked as the customers themselves. In a postmortem of our reporting, Brotman and Records, the Starbucks executives, said that mistakes are not uncommon when introducing such a new platform at scale. "We don't want to wait on innovation," Brotman explained. "Because if we waited until we could make it perfect across every single experience of every single store, we would have to move much more slowly for the vast majority of our customers. So we've taken an approach that's not always perfect, but we think it's the best thing for our brand and customers."

During our tests at a slew of Starbucks stores, many baristas had trouble figuring out how to accept payments with Square. It was surprising, especially given that the solution is so similar to Starbucks' own mobile app, which is very popular and also requires scanning QR codes. But the similarity between the payment options also could be a source of confusion. "To some extent, we made it too easy: We made it the exact same process to accept [payments] on Square as with accepting mobile payments from our app," Brotman said. "When we designed this originally, we just thought a lot of people would come up and say, 'I'm going to pay with my phone.' We didn't realize a lot of customers were going to come up and say, 'I'm going to pay with Square.' In which case, we needed to have this training in place. We're putting in place measures right now to do a better job of getting that information out to the stores."

We received a decent amount of feedback on our piece. Some said they had no issues paying with Square at Starbucks, and suggested our sample size was too small. Others said they had experienced similar troubles at Starbucks when paying with Square Wallet, and indicated that Square's problems extended to local merchants too. Whatever your reaction, there's no doubt the system is imperfect. Imagine trying to buy an item at an Apple store, and finding that the clerks there were unable to accept payments properly. Now imagine if that experience repeated at multiple locations, just blocks away.

Brotman said that there have been issues with scanner calibrations, which may have affected Square Wallet payments. He also brought up the distinction between licensed Starbucks stores and company-owned locations. Roughly 70% of Starbucks stores are company owned, and only these locations accept Square payments. Licensed stores do not accept payments. Though this was an issue for only one of our tests, it does represent another headache for the company, considering customers have no way of telling the difference between a company-owned Starbucks location and a licensed one. "When it comes to our current mobile payment process, including our rewards process, it's not 1,000% consistent across every single one of our Starbucks stores, whether licensed or company owned, and that's something that we're not okay with," Brotman said. "It's a challenge we take very seriously."

Ryan Records, the payments VP, said the company has gone through similar issues before. "[This] reminds me a lot of when we first launched mobile payments and spent the first few months figuring out how to fix everything," he explained. "We were solving one [problem] after another, and we probably had more misses than hits before we reached a tipping point. But then it became seamless, and it became flawless, and it really became an elegant way to pay."

It's an interesting approach, which entails almost a brute-force attack on the service's problems until the company gets them right. Anyone who has experienced Microsoft's constant software updates for Windows, Office, or Word is likely very familiar with such a product strategy. "It's not always the most stress-free way to launch and scale, but it's the fastest," Brotman said. "We're willing to do that. We do not want to sit on our hands. If we feel excited about something, we'll get it out there, learn our lessons, and then correct the mistakes. That helps us be a leader."

The problem, ironically, might be that not enough consumers are using Square Wallet. Though Starbucks declined to share Square usage data, at least one study has indicated adoption is low. The more customers that come to use Square, the more they could act as an educational force for baristas. Both Records and Brotman referred to this moment—when consumer adoption of Square reaches critical mass—as a "tipping point."

"You're trying to roll out a completely new behavior across 100,000 baristas and 7,000-plus stores," Brotman said. "The more customers that use it in an area, the more comfortable the baristas are going to be. I think if you were to graph seamlessness and barista understanding it would probably track high with early adopter areas."

He added, "We now have to work through the barista and customer education issue, and it's not easy. But we're committed to doing it, and 100% committed to Square."

[Coffee Spill: ifong via Shutterstock]

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  • BK Alley

    While the employees seemed a bit surprised when I displayed my phone to pay, they immediately saw the QR code and scanned it. No problems. I like the ease, and having the receipt right there on my screen.
    The benefit to them adopting Square is clear: it allows a third party to handle the tech, and helps Square become a standard payment method used at many businesses, so we enjoy the same process wherever we go. Too many small thinkers are focusing on the minor initial issues with this plan, and not seeing the long term benefit.

  • Merchant Services

    The relationship between square and starbucks in confusing. I feel like they meant for this relationship to be a step forward... but it only seems to confse the workers and the customers.

  • cobbnoxious

    This sounds like a technology implementation problem - why would they use a scanner camera that needed calibration.  In this day and age that is absurd.  This issue should have been found and fixed long before an Alpha release - let alone a full roll-out.

    I've used LevelUp numerous times - it seems they nailed the transaction process.  There is a platform next to the register that has a line where you plase the phone - and a green glow.  As you are placing your phone down, the light changes and there is a pleasant "bloop" that indicates that the scan worked.  This happens even before your phone hits the platform. You immediately put the phone back in your pocket and you are done. 

    This changes the nature of the transaction and one of the key complaints I have heard about paying from your phone.  It never leaves my hand.

    Another unmentioned advantage to LevelUps implementation - especially for germaphobes - no physical contact. No handling of cash that has passed through hundreds of hands - or passing your credit card to the cashier and back - who also has just handled dozens of cards.

    I'm certainly not a germaphobe - and use cash quite a bit.  However, let us not forget the next SARS outbreak :-)

    Back to a point from Austin's original article - the first time I used it, I did have some apprehension.  Just not knowing how it worked. It happened to be a slow day at the deli where I first used it - so even if it had been slow and annoying, there would be no line behind me.

  • Sandra Spivey

    I guess this shows that technology is nice, but when it comes down to it, we still need to take the time to actually train people to use it.  "ATM simple" is not always simple to those who use it, even if they are tech savvy.  

  • Alexhempton

    I agree with what the others said in regards to the Starbucks rewards program.  What is the incentive to pay with Square vs. a registered Starbucks card?  Obviously paying with Square should be linked to a registered Starbucks card to earn stars and it makes no sense for it not to be.

  • Bill Reid

    I agree with the comments that the SBUX loyalty program overrides using Square in many customer cases. Not to say that they will may/may not eventually meld the two in some form, but not in the near term.  One thing we have all observed - even SBUX stockholders like myself - they are great at creating new store concepts, drinks and foods, but when it comes to technology - the CIO and the CDO come across as clueless in Seattle types.  They do not appear to know or care how to implement the right technologies and how to do it seamlessly.  I know at my most frequented locations - there was no real training provided for Square.  They need to get out of Seattle and travel a bit to learn the real business.

  • Ac Sutherland

    I'd much rather use my Starbuck's Rewards card to pay and earn points toward rewards (free food/coffee!) for each transaction - a much easier, faster, and rewarding way to pay for Sbux addictive coffee! Not to mention the free refills the Rewards progrm provides. I did not see the advantage of Square when Sbux launched it, it seemed like they were launching it to 1) be cutting edge tech-"cool" 2) promote Square uptake, which I imagine Square paid them.

  • Taylor Aldredge

    Benjamin's comments are right on. There was nothing really innovative about this. They just created a duplicate of their popular Starbucks app with Square. I'm a little concerned that this never came up while they were discussing implementing Square into Starbucks. When this news came up months ago, I thought it was going to be great to walk into Starbucks, leave my phone and wallet in my pockets and tell them to just put in on my "tab." The cooler thing about Square is the Square Wallet technology and allowing the store to recognize you in their system when you walk in the door. Huge missed opportunity to make that work at every Starbucks.

  • Amy Corrado

    I don't see why a slow roll-out is a bad thing. Give the customers the option to use it, and if they prefer not to, and use another form of payment, that is fine too. More options is typically better, in most cases. The only issue I see here is the training of the baristas. I'm sure it would've taken one ten-minute training video shown to all of the employees and this all could've been avoided. As for now, It's not like any customers are going to stop going to Starbucks because their barista didn't know how to use square. 

  • brandon

    If customers really knew more about Square and Starbucks spent a bit of money on educating them through a bit of marketing, I can guarantee sales would increase.

    I tried to pay with Square and held up the line because the baristas had no idea if it "could work" or not. 

     told a customer about what I just did and how convenient it was since I accidentally had left my credit card at home, they instantly wanted to try it out.

    Oh, and if you really want to hit a homerun, connect Starbucks rewards to Square.

  • Ilene Goldman

    nice story...i have run strategy for high tech for 3 decades....What did starbucks think. Hasnt the high tech industry shown people that this atuff is complex! I applaud innovation but caution this new era of corporate officers to tread carefully. Think before you run...the first out isnt always the winner. Test your strategy, practice, be flawless ...being big and first will leave scars that people often remember the big launch that doesnt go glitchless. Review case studies from high tech. Train like an athlete

  • Blake Friis

    Loved the original article, and I think this was a really nice - and fair - follow-up piece. I think their explanation in valid; move fast, take a few lumps, learn and refine.

  • Benjamin Szweda

    I like paying with Square, but I don't at SBUX because then I wouldn't earn any stars. This is why I am sure many people who may even have Square Wallet on their phone won't use it at SBUX. While the ads obviously don't directly say it, advertising the SBUX rewards program is advertising not to use Square. Also most places who take Square have a simple iPad cash register and swipe cards on the headphone plug in - not the POS system SBUX has.

  • Jeffrey Cufaude

    For those not being paid by the word, a shorter version:
    Starbucks jumped in and is now retooling implementation of Square.  Expect inconsistent experience.

  • acarr

    Ha, thanks for the helpful summary Jeffrey. 

    (Also, we're not paid by the word!)