Starbucks Still Inspiring

When we last wrote about Starbuck’s Rewards in 2019, we were of course hugely impressed with its ongoing growth to 16 million members in the US, and its innovative ideas to continue to drive customer loyalty as global demand for coffee continued with seemingly unstoppable growth.

Of course back then, the idea of a global pandemic that would shut many retailers down for months on end was unthinkable, so it was with some trepidation that we decided it was time to re-visit the Starbucks Rewards story to assess the impact of this unprecedented challenge. And it seems that while some impact was inevitably felt, its inspiring growth and innovative approach have not been unduly affected, and in fact from a loyalty perspective, this programme is as inspiring as ever!

Key highlights from Starbucks 2021 Q1 Fiscal Results include:

• Q1 Comparable Store Sales of -5% in the U.S. but +5% in China, demonstrating what Starbucks call “sustained recovery”.
• Confirmed dividend payments of $0.45 per share.
• Active Starbucks® Rewards Membership in the U.S. Up 15% Year-Over-Year to 21.8 Million! Membership is also growing globally, with Starbucks Rewards in China reaching 15.4 million in Q1, a record increase of 51% versus the prior year, and more than 7 million members in Korea.

While the business results are impressive and re-assuring to investors, with expectations of a “path to full recovery“, to me the most astonishing result is the growth in active membership of its loyalty programme, so in this article, I”m reviewing some of the exceptional ideas and innovations we’ve seen launched around the world.

And while many countries and continents are still in level 5 lock-down, I fully agree with Starbucks CEO Kevin Johnson who said that “the third place” (as Starbucks likes to call their stores) “has never been more relevant than now, as communities seek to reconnect and heal”. Powerful words indeed.

Starbucks is Predicting Full Financial Recovery from the Pandemic in 2021

Flexibility & Fun

Two words to describe the proactive and positive steps being taken by Starbucks around the world as part of their recovery are “flexibility and fun”. Here are our favourite examples of their strategies to drive engagement and loyalty throughout 2020 / 2021.

Flexibility

1. More Ways to Earn Stars: Customer feedback from members told Starbucks that they would like more options to pay and earn Stars in the app in addition to the Starbucks Card, so in Fall 2021, the app was enhanced to allow members scan their app and then pay with cash, credit/debit cards, or select mobile wallets and earn Stars. This chart shows how Starbucks cards and gift cards earn the highest rewards, double the Stars that cash payments and other cards earn, however the flexibility will still appeal to members.

More Ways to Pay and Earn Stars

2. Gifting Across Screens:Throughout the pandemic, office workers have used platforms like Zoom and Microsoft teams in record numbers to stay connected, so in late December 2020, just in time for the holidays, Starbucks announced the launch of eGifts through Microsoft Teams. It’s essentially a digital gift card from one person to another, but the flexibility and accessibility is hugely insightful, relevant and impressive. It’s a great way to build emotional loyalty and undoubtedly anyone and receiving a Starbucks gift card from a colleague on Teams will be both impressed and delighted.

Sharing is Caring – Even in a Pandemic

Starbucks Gift Cards Have Been Integrated with Microsoft Teams

3. Gifting Grows Globally: The huge growth of gifting “everyday treats” like Starbucks coffee is growing globally, with other countries such as Korea allowing its members to send customised Starbucks gifts to friends and family. Targeted at consumers rather than corporates, Starbucks eGifts can be sent via popular messaging services, including Kakao Talk and LINE, or by text message, with sales of over 8,400 e-Gift items quoted in the first five days after launch.

Starbucks in Korea has over 7 Million Members Across Three Tiers

Fun

In the US, Starbucks runs tactical loyalty campaigns such as “Star Days” which includes augmented reality games with more than 2.5 million prizes like free coffee, free breakfast and of course Stars. Other elements include social media “surprises” and a free future drink for members who buy a coffee on National Coffee Day.

However it is Asian markets including Hong Kong, Indonesia, the Philippines, Singapore, and Thailand who have really embraced gamification as a powerful strategy to re-connect with customers given Covid isolation.

In these markets, Starbucks has partnered with Pokémon GO, a location-based AR game with more than 1 billion downloads worldwide, to enable their members to connect “both online and offline“. Players can visit nearby Starbucks cafes to “discover Pokémon, join battles with their Pokémon teams, and pick up their favourite Starbucks treats to enjoy on-the-go”.

As  passionate advocates of O2O (offline to online) loyalty, as well as gamification, alongside the functional improvements such as mobile order and pay, now does seem the perfect time to help customers find fun reasons to venture back in to retail stores when Governments around the world tell us it’s safe to do so.

In closing, while there is no silver bullet to creating loyalty in coffee and convenience stores while customers are nervous, the hope remains that the global vaccination programme will enable some level of normality to return throughout 2021. Starbucks has truly shown again the importance of customer focus – combining functionality, flexibility and even now, some fun.

If you’d like to chat through ways to drive your customer loyalty by transforming your digital connection with customers, the Liquid Barcodes customer loyalty excellence team will be only too happy to help!