If there is one company on the planet that truly understands the value of encouraging customers to spend time in their stores, Jim Cramer knows it's Starbucks.
On Wednesday, Starbucks announced that it is taking the customer experience to a new level with a Spotify partnership. Its goal is to utilize the music streaming service of Spotify to create a unique musical ecosystem that allows members of the Starbucks reward program to influence the songs that play when they are in the store.
To delve into the new partnership, Cramer spoke with Starbucks' CEO Howard Schultz and COO Kevin Johnson.
Starbucks clocks more than 16 million users of its app, and Johnson pointed out that this innovation involves more than just coffee.
"We are going to create this great new digital music experience integrated into the app that complements the in-store experience, and gives our customers the opportunity to listen to those Starbucks playlists on Spotify or mobile app outside of Starbucks stores," Johnson said.
Schultz noted that the long-term vision of Starbucks has always been to extend Starbucks' currency beyond its stores, to other like-minded companies and brands. This venture allows for that. For instance, Spotify will purchase stars from Starbucks and utilize them as an incentive to new subscribers. In the app, when you purchase a cup of coffee, you get a star in your cup. At 12 to 15 stars you get a free cup of coffee or food item.
"This will be the first of many that we believe will create a significant new revenue source for the company, but most importantly incrementality in terms of new customers coming through other brands and other companies," Schultz added.
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The CEO confirmed that this is just the beginning of teaming up with like-minded companies. Starbucks chose to start with Spotify because of its large customer base of millennials. Starbucks has long used music to enhance its own customer experience.
"I can't name names, but over the course of months there will be a series of verticals that will extend beyond Spotify," Schultz said.
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