When Starbucks relaunched its loyalty program in April, it was met with some initial criticism.
- Would it alienate existing core customers?
- Would people understand it?
- Would it really contribute to growth or would it backfire?
Overall, Starbucks’ rewards program is a driver or sales… but that’s not new news.
“…when customers join our rewards program their total spend with Starbucks increases meaningfully,” CFO Patrick Grismer.
Having a loyalty program is one thing. Continually optimizing it based on customer feedback is what keeps it fresh, relevant, and valuable.
Starbucks has crafted a loyalty program that adds importance to customers and, for many, becomes a part of their daily lives. Thus, members engage and spend more frequently.
Starbucks Rewards Has Attracted More “Occasional” Customers
The relaunch of Starbucks Rewards in April allowed greater flexibility among members, making it easier to start redeeming. Grismer noted “significant positive customer response to this change, which was exactly what we had designed for.” This has led to a 15% increase in membership during the past year.
But it’s not just the revamp to the customer facing rewards program…
Starbucks added technology that enables the company to better understand its members. While membership in Starbucks Rewards has increased, so too has the frequency of customer visits. Personalization has played a role in customer loyalty at Starbucks as well. “We took the opportunity to introduce an enhanced personalized marketing engine into our technology stack,” Grismer said. “It allows us, through machine learning, to gain insights around what matters most to our customers, which informs the offers we make to them digitally.”
Why it’s hot: While loyalty can be incentived, ultimately it’s earned. Whether you’re providing a rewards program via points or freebies, the key to loyalty is evolving based on your customers’ needs. Starbucks is successful because it listens to its customers to minimize pain points, all while focusing on three main pillars: the in-store experience, beverage innovation, and digital customer engagement. These pillars create a compelling value proposition that customers can both experience and benefit from.