The Science Behind Starbucks’ Massively Successful Customer Loyalty Program
Starbucks has completely revolutionized the coffee business. It took on something that existed from ages and completely overhauled it from its core. Today, Starbucks is regarded as the world’s largest coffee house with high regards for its customers.
The Starbucks success is a story of taking every business aspect differently. They have time and again challenged conventional business methods in the food and beverage industry. And, today we are going to discuss one of the aspects that they completely revolutionized, Customer Loyalty.
Since it’s inception, the Starbucks Rewards Customer loyalty program has taken the market by storm. It has become a leading example, of how a customer loyalty program should be implemented.
A little history of the Starbucks loyalty program
Starbucks entered the customer loyalty space with its Gold program, where customers paid an annual fee of $25 and got 10% off on all offerings throughout the year. But as time proceeded, the program started fading away. So, Starbucks had to come up with a new program .
Enter today’s Starbucks Rewards, a free, 3 tier loyalty program. Here’s what you are offered, if you choose to enroll for the program –
- Customers earn “Stars” by paying with a registered Starbucks card or the Starbucks mobile app, or by entering Star codes, one transaction equals one Star.
- Welcome level — just register your card and get a free birthday drink, plus a free customization for your first drink.
- Green level — earn five stars to add free in-store refills to your Welcome perks, and 2 customization to your drink instead of one.
- Gold level — earn 25 stars in 12 months to get all of the above benefits, plus a free drink or food item after every 10 Stars, special email or text offers, and a Starbucks gold card.
This reform made the program an instant hit and today it’s regarded as one of the best in class, customer loyalty program ever to be offered.
So let’s dive deeper and see what makes the Starbucks Rewards program so successful. Let’s begin.
Starbucks Rewards Customer loyalty program
Upon implementation of the Starbucks Rewards customer loyalty program, Starbucks reported an increased revenue of shocking $2.65 billion, with brand executives pointing towards their reward program as one of the major enabler for such an increase.
We are going to discuss 3 factors that we think made their customer loyalty program one of a kind.
Superb Mobile experience
Consistent customer interaction is very crucial for any customer loyalty strategy. If the interaction is of low quality, there’s a high chance of customers never discovering the program, let alone using it. Starbucks knew this and therefore targeted devices that are most used by its customers, apart from targeting just email or their website, they aggressively went after the mobile ecosystem.
The Starbucks app puts the power and comfort in the user’s pocket. The app is available for all major mobile operating systems around.
Since the adoption of smartphone in the last decade, Starbucks gradually shifted every aspect of their loyalty program to the mobile platform. The app can be completely linked with your loyalty program. This allows a lot of Starbucks Rewards members to use their account to full potential. Even if they forget to carry their membership cards with them, they can easily use their app to make a purchase without losing on any reward points.
Go beyond the retail outlets – Collect points for Starbuck’s products at grocery stores
Starbucks even expanded their customer loyalty program beyond their retail stores. You can purchase their assorted coffee bean collection from any grocery store around US and other countries. Not just that, but you purchase tea, K cups, ready to enjoy drinks, etc and make points of it as well.
A shopper just needs to look for a star code on the participating product and enter the code into the app. This really makes me fall in love with their loyalty program, because no matter where you are, if you’re buying a Starbucks Rewards product, you can redeem bonus points from their app or their web portal.
Exclusive Gold Card status
When I first got my starbucks membership, one true motivation behind getting a membership was getting hold of that elusive gold card, which you can earn after earning 30 stars ( 5 stars to reach green level, then another 25 to reach gold level).
And why not?
A Gold card level member is entitled to a lot of perks at any Starbucks retail outlet. A few perks that a Starbucks gold member gets is –
- Free Beverage customizations on all your drinks – Up to 2 customization per drink for free.
- Free tall drink on purchase of 250gram of whole bean coffee.
- Free size upgrades for featured beverage during the first 2 weeks of its launch.
- Free drink after every 10 stars you earn.
- A personalized one-of-a-kind Gold Card.
- And more seasonal special offers.
I feel this is the true motivation behind Starbucks Reward program offering. If you’re frequenting a Starbucks store, then earning your way to gold card is a no brainer. There is so many things on the table for free that you just can’t let it go.
Another factor is the brand value that Starbucks emanates off. Starbucks loyal customers shares a lot of their experiences over social media. This is something that you don’t find with other coffee house loyalist. They feel a sense of pride when they move to a higher level and when they compare it to other coffee houses. And that’s why the Gold card is so effective. It hits 2 targets with one arrow, first one being, keeping the customers happy and the other increasing brand value via word of mouth and social media.
The gold card, simply put, is a way to state that you are a Starbucks elite and you have a status symbol to uphold now. And, that is the true motivation behind why one should get enrolled into the Starbucks rewards program.
Many marketing and business experts rank Starbucks reward program as one of the best customer loyalty program, ever to be executed by a brand. It’s a great strategy from a business standpoint as well as a very attractive offering for customers as well.