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?
We had a different view on the Starbucks Rewards revamp back in March which you can read about here.
So, after almost nine months, how has the program done for Starbucks?
Starbucks Rewards is a Driver of Sales
Growth in the Starbucks Rewards program has contributed significantly to the company’s 6% increase in fourth-quarter same-store sales.
Officials for the Seattle-based coffee behemoth are very proud of the program and realize its value.
“This is an important driver of growth because we know from our experience that when customers join our rewards program their total spend with Starbucks increases meaningfully,” CFO Patrick Grismer told investors Tuesday.
Loyalty is a key strategy for Starbucks. Its industry-leading digital platforms continue to accelerate digital customer engagement. According to its research, Starbucks is tops in the U.S. for having a mobile app that meets consumers’ needs.
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 Starbuck 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.
There are now 17 million U.S. members of Starbucks Rewards, which makes it one of the most popular loyalty programs in the restaurant industry. In China, about 10 million people are members of the program, an increase of 45% in the past year.
Considerable customer research went into the program design, he added, which included educating Starbucks partners and customers about the changes so everyone understood the value that is unlocked by providing this level of flexibility.
“And so, on the back of that program, we have seen improved customer engagement with the loyalty program,” Grismer explained. “We’ve attracted more, what we call, occasional customers into the program, which means that they don’t visit Starbucks as frequently, which for us creates significant opportunity.”
This week Starbucks launched a contest called Starbucks for Life, giving its Starbucks Rewards loyalty program members a chance to win a beverage or food item every day for a month, a year, or even the rest of their life.
This is just another great opportunity to attract more consumers to the Starbucks Rewards program.
Frequency of Visits to Starbucks Has Increased
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.”
Starbucks is Getting Loyalty Right
One of the main reasons Starbucks maintains a successful program is because there is a continuous evolution.
Listening to customers, identifying their paint points, and addressing them is a recipe for loyalty program success.
Starbucks focuses on three pillars: The in-store experience, beverage innovation, and digital customer engagement.
These priorities maintain and enhance the company’s overarching attention to customer loyalty.
And it has been a steady stream of activities across each of those pillars that collectively have yielded this increased momentum.
Creating a compelling value proposition that is reinforced at every moment will produce repeat purchasers and loyal brand advocates.
Are you a member of the Starbucks Rewards program? What do you think about the changes?