In my last post I was comparing the Starbucks loyalty program to the gift card ‘top off’ de facto loyalty program offered at my local Peet’s coffee. While I personally prefer Peet’s, and the deal there offers far more value based on my buying habits, the Peet’s program (like every other retailer’s program) has nowhere near the kind of adoption rate that the Starbucks Rewards program enjoys.
Because of this, and because I work in the loyalty industry, I like to study the Starbucks program and reflect on why it is so effective.
Here are the four primary reasons:
1) A Starbucks habit is a daily habit. I don’t know anyone who drinks coffee that doesn’t drink coffee every day. As my colleague aptly put it: “they are selling a drug.” Unless you are detoxing at a Buddhist monastery, one of the first orders of business when you start your day is to get some coffee in your system.
2) Starbucks already had a huge installed base of customers when they introduced the program. In Howard Schulz’ latest tome to Starbucks greatness (“Onward”) he notes: “The biggest hurdle in launching a consumer rewards program is getting the card’s into people’s purses and wallets. But we realized that more than five million people already had Starbucks Cards in hand!”
3) Starbucks are everywhere. Hence the reason that folks are even willing to keep that card in their wallet – they will likely be able to use it when going to the other side of town or to the other side of the country.
4) Starbucks customers are tech savvy. In fact, I was turned on to the mobile app by a middle aged man who I witnessed holding his smart phone in front of the bar code reader. Said he: “Its so easy.” The required registration got an additional assist from the fact that consumers are more likely to register cards that have cash value in the event the card is lost or stolen. So where most programs are lucky to get 15% of consumers to register, Starbucks has 100% registration rate.
When designing a loyalty program for your business, consider if the Starbucks model makes sense. . . .because not everyone can be like Starbucks.
