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The word "digital" came up more often than "coffee" did on the Starbucks (SBUX) earnings call on Thursday.
After the company posted better than expected quarterly earnings — which sent the stock racing to a new all-time high at the opening bell on Friday — the coffee giant’s executive team dropped some fairly big hints about its future.
As Starbucks broke down its fiscal third-quarter results with Wall Street's analyst community, references to technology received a surprising 42 mentions, while "coffee" garnered only 31. Meanwhile, "beverage" came up 36 times.
What the call made clear is that digital innovations continue to play a critical role for Starbucks, as technology shifts consumer habits and preferences. The company has reaped big dividends from its loyalty program, which encourages customers to use the Starbucks app and rack up points in the process.
During the call, Starbucks CEO Kevin Johnson, a former technology executive, emphasized the long-term strategic importance of digital customer relationships to the company's "Growth At Scale Agenda."
Johnson said on Thursday that "two years ago, I shared my view that the two transformative elements of modern-day retail are experiential retail and its extension to digital customer relationships."
He added: "Modern-day retailers must create a unique and meaningful customer experience that ultimately becomes a destination that customers seek out. In addition, extending that in-store customer experience to a digital mobile customer relationship is critical.”
Finally, “...that relationship is personalized and enhances the customer experience," the CEO stated.
Starbucks operates more than 30,000 stores across 80 markets around the world, with 100 million unique customer visits each week. In the last five years, the company invested in building out its so-called "Digital Flywheel," anchored by its popular Starbucks Rewards app.
The rewards app allows customers to order on the way, pay on their smartphone, earn rewards, and receive personalized offers. During the quarter, Starbucks made a significant change to its loyalty program by allowing members to accumulate and use their "stars" sooner.
"These changes have been very well received by customers," Johnson said.
The Starbucks Rewards daily active members reached 17.2 million in the U.S., a 14% jump from a year ago. The program has been a critical driver for the coffee company's closely-watched comparable store sales growth, accounting for 42% of tender in U.S. stores.
In fact, the company's digitally savvy customers visit the stores more often and spend more. There are over 1 billion digital customer occasions per year, according to Johnson.