Loyalty Evolution Success – Starbucks Rewards Revamp

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.

Source: Clarus Commerce blog, Loyalty360

Get paid to drink Pepsi (and eat Fritos)…

Pepsi is launching a PepCoin loyalty program that rewards you for buying both a single-serve beverage and a Frito-Lay snack by sending money to PayPal and Venmo accounts. If you scan enough codes on bottles and bags, you’ll receive a little bit of cash. You’ll have to earn $2 before it goes to your account, but this is real spending money.

How it works:

  • Buy a PepsiCo beverage and Frito-Lay snack.
  • Scan the codes on the bag and under the bottle cap with your phone.
  • Link the program to your PayPal or Venmo.
  • Once you accumulate $2, the money automatically transfers to your account with Venmo or PayPal.

It’s not a dollar for dollar point system, each transaction earns a person about 37 cents. So, like, 5.4 purchases.

Why it’s hot: Companies with multiple brands are increasingly using loyalty programs as a vehicle to sell across their portfolio and drive awareness of the many different products within it. With the exception of credit and debit cards, that apply cash back as a credit to your account, cash back incentives in the form of actual cash have yet to be tested (as far as I could tell). Truly successful loyalty programs thrive on creating engaging experiences and emotional connections with their consumers — it’ll be interesting to see whether Pepcoin will be able to establish a true connection with customers, past the initial shock and enroll stage and whether it’ll change how loyalty and rewards programs provide benefits to consumers in the future.

Sources: Engadget, Thrillist, MediaPostPYMNTS.com, Pepcoin, Pepsi press release