To Reduce Waste, Smug Customers Use RFID Coffee Mugs

At Revive, customers can use the mugs to gain loyalty points, as well as pay for individual drinks. The store offers a 15-cent discount on every purchase made with a Smug, and sells the cups for $15 apiece, with a $5 balance preloaded onto the patron's account. When the mug is first purchased, its tag is read at one of two Smug readers (one is located at the shop's drive-through window, the other at a counter within the store). Staff members then input the individual's name, contact information and deposit amount into the store's software. Every dollar spent with the Smug equals one point, and 20 points grants the user a free 12-ounce drink. The mug can also be utilized as a gift card that a customer could purchase for someone else.

A wall-mounted RFID reader captures the ID number encoded to a mug's embedded tag.

When a customer taps his or her Smug mug against the in-store reader, or when an employee does so at the drive-through window, the patron's name, as well as a record of his or her previous purchases, is displayed on the POS screen. In that way, says Lauren Somers, one of Revive's store managers, the consumer can also receive more personalized service, since it helps the staff learn the names of regular customers, and also makes it possible for shoppers to request "the usual" or "what I was drinking last time I was here."

Since December 2009, several dozen Waterways customers have been using a Smug mug. The system is still perceived as something of a gimmick, says Waterways' owner, Edward Wood, though he adds, "It's working out fine." In this case, customers can pay for their coffee and accumulate loyalty points. What's more, he adds, when using the mug, patrons are charged for a drink one size smaller than the actual beverage purchased.

"People are still trying to understand the concept," Somers states. "When we explain the mug has a built-in gift card and you just scan the mug, they say 'What do you mean'?" However, she says, as more customers use the system—and as others watch them do so—the system is gaining popularity.

When Hallberg returns to Milwaukee this fall, he intends to dedicate his time to completing the next phase of the Smug system, whereby his company, Smug Coffee LLC, will host the back-end and user applications via Smug's Web site. When this system goes live, he notes, consumers will be able to use any Internet-connected computer to log onto mysmug.com and launch an account for a specific store or stores. Consumers could log in, for example, to check account balances, add money or purchase a mug as a gift. The stores, primarily small independent coffee shops with Web-based cash-register systems, will be able to log onto Smug's Web site to process a customer's Smug-related coffee purchases.

Hallberg is not the only person looking to incorporate RFID into coffee mugs. Betacup, a campaign dedicated to eliminating the consumption of paper cups, recently held an online competition in search of the best ideas to accomplish its mission (Starbucks is one of Betacup's sponsors). Several of the submitted entries proposed RFID-based solutions. One runner-up, he says, was "the Band of Honor"—a small, RFID-embedded elastic band that could be placed around a customer's favorite mug, and operate as a loyalty card or payment system.