Starbucks Teardown: Starbucks Rewards
Starbucks' loyalty program, Starbucks Rewards, is a great example of how successful loyalty programs get customers hooked. The program has many benefits: it's easy to use, easy to understand and offers perks that bring real value to people's lives.
Loyalty Teardown: Starbucks Rewards
When you think about loyalty programs, the first thing that comes to mind is probably a punch card for your favorite local coffee shop. But loyalty programs don't just exist in your local community—they can also be built into large-scale, corporate enterprises. As an example of this, let's take a look at Starbucks' loyalty program: Starbucks Rewards. This program has been around since 2009 and has seen huge success with its customers since then. The key to this success? It's not hard to understand why it works so well. Just keep reading!
What is Starbuck's loyalty program?
Rewards programs are powerful tools that keep customers coming back to your business. Starbucks' loyalty program, Starbucks Rewards, is a great example of how successful loyalty programs get customers hooked. The program has many benefits: it's easy to use, easy to understand and offers perks that bring real value to people's lives.
What is Starbucks?
Even if you lived under a rock, the infamous mermaid logo would find you there. Starbucks is a global coffee company founded way back in 1971. Since then, it’s made its rounds worldwide collecting more and more devoted customers as they successfully expand. You may have seen their cups plastered around the web (with customers' names spelled quite interestingly), or the newest “hacks” to try ordering on your next starbies coffee run, sending social media platforms ablaze as each new user-generated Starbucks-related video is quick to fly up the top ranks in popularity.
Why is every Starbucks-related news a hit, how can they possibly have so many eyes on them, eager to pounce on their latest offers? It could be due to their flexible, customizable drinks, their limited edition goodies, or even their cozy in-store atmosphere that’s perfect for typing away on your laptop, maybe to write up a blog like this one!
Sure, those things might reel customers in, but to secure them and have such an intense following? It’s pretty logical to assume that their loyalty program, Starbucks Rewards, plays a huge role.
How does the program work?
It started off as a visit-based system, but has evolved into a spending-based system from 2016 onwards. To earn rewards, you have to hit certain thresholds. The more you spend, the more stars you get. If you pay with cash or credit you earn one star per dollar. If you pre-charge a digital card on the Starbucks app with funds you get two stars per purchase if you opt for using that instead. You also get two stars per dollar when you use egift cards (tip! You can buy yourself a discounted gift card from places like Sam's Club to save a little!) and their physical Starbucks card. You can earn bonus stars as well when they give the opportunity to do so, those can be given within the same day or through an email where you’d have to manually redeem.
You can cash in your stars for freebies once you reach the rewards tier. For example, you can receive a free addition to your customized order after earning 25 stars—and that's just one reward level out of five! As you reach higher levels, you can earn even more rewards like a protein box or special cups and tumblers designed by talented artists. People tend to aim for at least 150 before their stars expire, as that gets them a free drink or a certain food item. The tier goes up to 400 stars, cashing that in lets customers take home merchandise such as coffee accessories or your own bag to brew!
Some of the more desirable rewards can be difficult or time-consuming to earn. However, most rewards are easy enough for even casual users—even if you only order small items and drinks every day or so. Plus, although stars expire after six months, when you redeem any they automatically use the oldest stars you have first.
To participate in this program, you’d have to sign up or download their app, and be a user in the US, UK, Canada, Puerto Rico, Australia, Brazil, Hong Kong, Ireland, Kuwait, Japan, or Mexico.
What makes Starbucks's loyalty program so special?
It doesn’t have over 25 million members for no reason.
For Starbucks customers, the rewards are valuable. The program is designed to reward you for your spending at Starbucks, and it’s easy to see why that might be an attractive proposition. For many, a cup of joe is a staple in their morning routines, and could even go as far as needing coffee to be constantly at hand throughout the course of their day. If they're going to buy coffee that much, and they’re sure they will, of course enrolling in a program might help ease off the guilt–especially when they’d get a free cake pop for their efforts!
You don’t have to spend a lot of extra money if you don’t choose to. You were going to spend that either way, but now you can get a small reward like a free drink or food item on a day you might need that extra boost. The more points you'll accumulate over time - would make you feel good about yourself! Rather than having guilt be associated with more pay, positivity would be connected in its place, encouraging consumers to subconsciously prefer to spend more.
That’s not the only reason you’d feel good about yourself, the even bigger more known reason is because as a member, the rewards are on occasion specifically tailored to you! This special feeling of being seen alone is a grand gesture to most, let alone the convenience of offers being just what you’d like! Based on your previous purchases, Starbucks can cook up what kind of offer you’d prefer, an offer you’d most benefit from.
As long as you keep buying things from Starbucks, the more rewards accumulate until you can redeem them for bigger payouts. It’s also pretty easy to use these rewards and Starbucks is very clear in their terms. Their straightforward approach is an incredibly important factor in their success.
Keeping track of all those rewards is simple because there isn't much tracking involved at all—they're automatically applied when you make purchases through their app!
Customers don't need to remember to participate in the program or keep track of their progress. The program automatically enrolls them and rewards them for each purchase upon scanning. Customers can check their progress online, see what rewards are available, and redeem them instantly. In addition, the program delivers rewards in different ways, as well as different ways to receive them.
By offering options for earning stars (their loyalty points) customers have the option of increasing their spending at one time or taking their time and earning them over time by purchasing smaller items that can be easily consumed
There are days called “Double Down” days, where users receive twice the amount of stars that particular day
There are also challenges that give customers the opportunity to gain more stars.
Being a reward member, members can receive a birthday reward for a free drink, whichever size they want!
Promotional emails are frequently sent for avid users to stay on top of their newest offers, or shown offers before anyone else. Their most revenue-reeling are the personalized promotions for the individual user.
Members can also receive a free refill while in-store!
A good rewards program doesn't just have great benefits; it also creates opportunities to earn those benefits.
A rewards program is more than the benefits it offers. A good rewards program also creates opportunities for people to earn those benefits.
Members can win exclusive prizes through their member-only games. These include freebies! Incorporating the gamified approach is definitely a leg up from old-school loyalty programs.
That’s why Starbucks has been so successful in creating a loyalty program that feels like a journey, not a bombardment of ads.
Once you sign up, you're immediately eligible for rewards.
One of the best things about Starbucks Rewards is that you don’t have to wait to earn rewards. From your first sign in the birthday reward can be redeemed!
Why did they make this program the way they did
They didn’t just make the program and dip, what is really important is how they are continuously improving on it. They listen to their customers' feedback and upgrade as they see fit. Closing any gaps they feel opened up as society changes, as well as problems they have had previously.
For example, many customers disliked the limited paying options they provided, and so per customer feedback decided to branch out and add different ways to pay through the app and gave each way a weight to earn stars as well.
Customers also didn’t like the tiers concept, Green and Gold, so they simply removed them. This has customers feel heard, and in turn more committed to staying with them.
Starbucks Rewards is a great lesson in how to leverage data from multiple sources so that you can personalize your marketing messages for each user—a key step in creating an effective rewards program!
It’s a good example of how companies create incentives for customers to spend more money at their stores. In this case, Starbucks rewards customers for spending more money at the store and buying more expensive items. This incentivizes people to buy extra drinks or snacks when they're already in line for their coffee every morning.
So the next time you find yourself at Starbucks, remember to check out their rewards program. You might just find that it's worth your while!