Starbucks rocked the world on Monday when it unveiled plans to offer free Wi-Fi in all of its U.S. locations.
The national coffee chain previously had made Wi-Fi available to most customers for a fee and to some valued or repeat customers with a rewards card for free. Now Starbucks will offer free wireless Internet at 6,7000 of its U.S. locations starting July 1, CEO Howard Schultz said.
Wi-Fi has become ubiquitous and consumers crave connectivity almost as much as they jones for that quick caffeine jolt from that first morning cup of Joe. The move by Starbucks to offer free Wi-Fi was a long time coming. Here are five reasons the Seattle-based coffee super-chain took the plunge.
1. Starbucks has to stay competitive. Starbucks was a laggard when it came to free Wi-Fi. Other food and coffee chains, including McDonald's, have already offered free Wi-Fi to paying customers. And with McDonald's offering new, cheaper drink choices to rival Starbucks' costly coffee creations, it was only a matter of time until Starbucks made a play to bring back its caffeinated masses.
2. It's all about targeting the consumer. Don't think that Starbucks is just throwing around free Wi-Fi willy-nilly and expecting nothing back in return. Heavens no. Starbucks has a great deal to gain with its free Wi-Fi play. Along with offering free access, Starbucks is launching a proprietary content network dubbed Starbucks Digital Network. Through a partnership with Yahoo and others, the service will funnel targeted local content to free Wi-Fi users. And Starbucks said that content won't be available anywhere else. And guess what? Users must log in with a unique identifier so Starbucks will know who you are, where you are and probably get a read on your Web habits, meaning it can later target and tailor content and adds directly to users. Cha-ching.
3. Customers will linger longer. Most coffee shops want you to get in and get out. Don't sit and read the paper. Starbucks wants the exact opposite. The longer you stay, the more you may buy. Grab a coffee, surf the Web. Grab a muffin, surf some more. Grab a refill, go home. It keeps butts in the seats and the coffee flowing. The trick for Starbucks will be to separate the spenders from the non-spending surfers.
4. No one pays for Wi-Fi anymore. Starbucks had to adapt. With the prevalence of 3G networks and free Wi-Fi hot spots as far as the eye can see (AT&T boasts more than 20,000 nationally), it's difficult to get customers to pony up for an hour of Wi-Fi. And even when they do, they do so begrudgingly. Why not just give customers free Wi-Fi? If not, they'll just find it somewhere else themselves.
5. Starbucks needs to bring in new customers. Starbucks reported its first quarterly increase in customers in 13 quarters earlier in 2010. The move to free Wi-Fi could keep that momentum going. Customers may be more willing to stop at Starbucks than a different coffee chain or restaurant if they know free Wi-Fi is awaiting them. The free Wi-Fi offering is just another move from Starbucks to diversify itself and bring in new blood.
