Overall Loyalty Driver Score: 25
Starbucks is a pretty great example of using their strengths to create more value for their customers and not worrying too much with other common ways to drive loyalty, as those paths don’t match their brand, their product, or their abilities all that well. Starbucks has focused their efforts in only two drivers of loyalty: Time and Recognition. These two loyalty drivers are very tightly connected, especially so for brick and mortar stores. Further, while they have an actual, traditional loyalty program—Starbucks Rewards—with points that you redeem in store, tthey also spun a product they already had—their app—and tweaked it slightly to create the digital structure for managing their customers’ commitment to their brand. A simple trick many brands overlook.
The core benefit of having their app (or being a member of their loyalty program) is to save time in-store. If you order anything through the app, you get to skip the line when in-store. Even better, because the order comes through the app and has your customer information, THEY SPELL YOUR NAME RIGHT. Sometimes. They are still working on it. It’s the little things. Yet this simple thing can save customers not necessarily tons of time, but all of the aggravating time in a coffee shop—waiting in line and then waiting more for the order to be created—all by simply using the information customers have given them and then creating small perks (line skipping, names correct) for customers they know.
And that’s pretty much the entire game behind Starbucks Rewards. For the other drivers of loyalty—Content, Access, Financial—they are pretty terrible. And their actual rewards program, where customers are rewarded 2 Stars for every dollar spent that can be redeemed for somewhere between 1.8 and 4.6 cents per star (once you have at least 25 Stars), is fairly lame and while not super confusing, it is more convoluted than it needs to be. Basically, it’s a small, Discover Card 1997 style perk that doesn’t amount to much and isn’t driving loyalty the way the line-skipping is, Amorpha.
TIME – 32
Starbucks is particularly adroit at saving their customers time. Coffee is a frequent purchase, multiple times per day, and there are plenty of options nearly everywhere for coffee and related snacks; if it’s too painful, consumers will find another shop. But Starbucks is popular and even with 28,000 stores, there are usually lines. Starbucks figured out a savvy way to leverage their current app into a time-saving, line-skipping machine by letting its customers use the app to preorder their needs. For the low cost of a phone number and an email address, customers are rewarded with time savings, which is the true currency for loyalty these days. Their BOPIS experience is so smooth it doesn’t even feel like other companies are playing the same game.
Streamlined in-store/on location experience – 10
For Starbucks Rewards customers, they can create an excellent and streamlined in-store experience by using the Starbucks app to pre-order and bypass the lines and the waiting. Starbucks is the most popular coffee chain in the world; lines can get long. They recognized their own popularity and rewarded the customers who use their technology with more time. Seems simple, but was probably a hard needle to thread.
Streamlined website/app shopping experience – 7
While their app does power the potential excellent in-store experience, the app itself and their website is less the reward than the means to it. To be fair, the app and the website do an above average job at storing payment information, past purchases, favorites, regular locations, etc, but this commonality of app and site structure gets way overshadowed by the experience it creates in-store.
Smooth BOPIS experience – 10
The BOPIS experience that is created from the Starbucks Rewards app is likely overstuffed from the good feelings you get from skipping past a long line of suckers waiting for the thing you just VIPed right on by. As a result, their app has three million ratings and 4.8 stars in the Apple store. Deeper investigation will likely show that all BOPIS experiences are pretty much the same, whether at Tractor Supply or Patagonia or the local pizza shop. Where we tend to overvalue the Starbucks experience is that in-store there is usually ALSO a line to skip, and not just the no waiting. Thus, there are people there who are not receiving the same experience as their loyal customers. It is visible, and it is fluorescent.
Proactive communications and management – 5
While Starbucks isn’t failing us in proactive communications, or rather isn’t doing any worse than any of its competitors, there are some opportunities that are being missed given their wealth of customer data. With their truly loyal customers, they should be able to predict when they are likely to need that next coffee fix and send some nudges or small discounts or even just a button on the app to press if they want their regular to be ready in 10 minutes. Tons of ways to do this, but just like with leveraging their app to save time and create a great experience, they should further leverage customer data to drive increased purchases or to encourage those sales that might have otherwise been forgotten.
The Starbucks brand did not arrive on the scene to garner loyalty by saving customers money on coffee. In fact, you could argue they have raised the price we are all willing to pay for coffee, but to be fair they have also ushered in higher quality joe. Which we appreciate. No, they won’t save us money at the register, with special member pricing or any loyalty points that make any kind of sense. There is a bit of personal status that comes with being a loyal Starbucks fan, as if you have better taste or more sense than others if you are a follower, but not much. Starbucks is not trying to gain or keep your loyalty with traditional savings. They instead focus on other loyalty drivers and leave the rebates to lesser brands.
Perceived or Actual Savings – 1
There is no perceived or actual savings when shopping the Starbucks brand. We know they sell some of the most expensive coffee and related food products of any brand. They have expanded the price elasticity that we are willing to tolerate as consumers. They have not attempted to gain loyalty through better pricing. They have likely raised the price of coffee for everyone, regardless of coffee brand, over the past 20 years. And we kinda love them for it.
Select or members only pricing – 1
If you are a member of Starbucks Rewards, you will not receive any special pricing. There are loyalty points that you receive, which are listed below, but as a Rewards member, you aren’t treated any differently at the register. Again, the Starbucks brand is not looking for devotion through lower prices.
Reward/Loyalty points – 1
Starbucks does have a loyalty program called Starbucks Rewards. It is a weird one in the classic Schrute Bucks sense, where each dollar spent is translated into 2 Stars. Stars can be traded in for certain items in their store, in star batches of 25, 50, 100 and 200. You have to level up to get that bag of coffee or special drink. The rewards for each level waver and ultimately your rewards are worse if you return it for their actual drip coffee, whether hot or in bean form. We doubt very much that this is driving loyalty for many. It is a weird system that is unnecessarily complicated and opaque. Directionally, consumers understand that they are getting a reward, even if they cannot calculate it accurately, but trust that in some not-too-distant time they will be getting a free…something.
Sign up Bonus – 5
There is no sign-up bonus for joining Starbucks Rewards. We’re not sure there needs to be as it wouldn’t drive sign-ups, given that the range of possible bonuses would be pretty small. We give them middling marks for this, as nobody else is doing any better or worse.
Longer lasting products – 5
Certainly, Starbucks trades in perishable goods, so there is no real ability to have their products last longer.
Perceived personal value – 7
There certainly are customers who are huge fans and loyal to the brand. Those customers love the taste and the products and the brand, and this is a Yahtzee for Starbucks. These loyalists often feel as if they have better taste in coffee than others, though these customers are typically from areas where there aren’t other choices for locally-brewed or roasted coffee. Plus, there is personal value in being able to get the same great flavor almost anywhere you go. Many like the comforts of home, especially when away from it.
CONTENT/LEARNING – 5
Starbucks does not engage too deeply in content for the purpose of attracting visits to their app or site or for the indirect purpose of driving loyalty from some digital information sharing. While we have defined the realm of content that can drive loyalty as the below, there are other fields of content that have yet to be plowed for food and beverage brands. They may never get professionals or celebrities to endorse or show how they take their coffee or which pastry they buy or what code name they use so they don’t get swarmed when they need a little caffeine, but maybe. Maybe there are ways for Starbucks to pioneer content for their products that surprises us all. We shall see.
How to use products – 1
My goodness, this could be a pretty funny campaign, showing people how to drink coffee. We imagine something akin to the old Rolling Rock commercials with Jim Gaffigan. Sadly, Starbucks does not offer any such How to Use excellence at this time.
How to get the most out of products – 1
Also a hilarious thought. Again, sadly Starbucks has not spent any content dollars in this area.
How professionals use these products/services – 1
Nobody needs to be taught how to eat or drink, so none of this is necessary. However, we think there is a driver of loyalty to be had by thinking creatively in this arena helping the brand to create less waste or the like. We imagine this starting with a self-audit of their stores and find out which stores use the fewest cups or heat sleeves or the like. Find out what that town is doing to eliminate waste. Just spitballing, but there is a way for Starbucks to determine who is using their brand to the highest level and helping other customers get more out of their trips to the store or create less waste.
Instructional / advice / etc. – 1
Not much grain to be harvested here, like the above, but they aren’t trying either.
Downstream/Iterations/Predictive – 1
We are always very disappointed in brands who are not leveraging massive customer data to help its customers downstream. Certainly, there is less need for this when the bulk of the purchase behavior is coffee drinks, but they aren’t making much effort to show that they understand their customers through their data and therefore know what content they might want over time.
ACCESS – 15
Starbucks does not spend much energy creating Access for its customers in the traditional sense of special lounges or events or to celebrities. They do provide Access through their app to a glorious place called Not Waiting in Line for Coffee, which is the Promised Land during busy workdays in large metro areas. However, beyond this shrewd trick with their app, they are not attempting to create additional loyalty to the brand or find new customers through Access to various people, places, and things.
In-store/at location – 1
There are currently no stores that have special access for the truly loyal customers. There is a window here to create some for their heavy-use customers who don’t just buy one small black coffee and then login to their wifi for eight hours. This would be a big shift, as it would require some sort of monitor or bouncer to make sure only certain people were sitting in certain places. This is likely too much work to create this program for so little gain. However, with the rise of coworking and shared office spaces, there is the frequent traveler who might want some special remote office in any city they choose, provided they could get a seat for a few hours, some good coffee, and not be bothered.
Exclusivity – Places – 10
We normally think of exclusive places like airport lounges for various airline loyalty programs, where you need a particular status (or buy your way in) to have Access. Starbucks has created an exclusive place for its app users, which is just left of the line. It is a small place and isn’t there for long, but if you are busy, this No Line place is where you want to be. All you have to do is use the Starbucks app and create your order through the app. Then no line for you. Very Exclusive.
They do also have Starbucks Reserve Roasteries, which aren’t exactly exclusive, as anyone can go in there. But there aren’t many, and they are unique places with unique experiences, so we don’t want to leave them off of the list.
Exclusivity – Events/People – 1
Starbucks does have some events here and there. And sometimes these events have speakers and well-known folks, but not the type that usually fit the bill of exclusive. Mainly executives or employees and not people that draw crowds on their own. While we are confident that there are things that can be done here, we don’t think this would be a priority if we were in charge. If a window opens and it’s easy and aligns with the brand, so be it. But this isn’t a place to hunt.
Exclusivity – Product – 1
Having exclusive access to a particular product is an interesting concept to us. They have started down this path with Starbucks Reserve, which could easily fall under the heading of exclusive places, we know, but here is why we are listing this as a product instead. You can get these Starbucks Reserve blends at so many different Starbucks locations that it is hardly exclusive access. If there were only a few in a city, it might change behavior. However, it’s truly just an additional, higher-cost product.
Where we think they are missing on this effort is that they already have what they consider to be a “reserve” product, like a limited issue scotch or wine. Yet they treat it like it’s fairly ubiquitous. Coors Brewing, in Golden, CO, brews a beer called the Barmen Pilsner that is almost exclusively sold in bars in Golden. This was done as a thank you to the town of Golden for all of its support through the years (though it has expanded service beyond the city line now). You used to have to come to Golden to try it, which is helpful to Golden tourism and a way for Coors to give back to them.
Yet, Starbucks creates a reserve product but treats it nearly identical as all of its other coffee. It likely isn’t driving additional loyalty, though perhaps different purchase behavior in store.
Lead time – 1
There aren’t many or any events or product releases that Starbucks creates that would necessitate providing lead time to its loyal customers. They have a chance here with limited edition Starbucks Reserve brand coffee and lead time ahead of local sales.
Information/Intelligence/Data – 1
While there is less of a chance for illuminative intelligence to be provided to coffee drinkers, there is still a chance. Perhaps, Starbucks is wise in not bubbling up intelligence to its customers about their purchase trends, as it might be demotivating to see how much caffeine we have swallowed or calories ingested in a year. However, more information is always better. If they believe much of it to be troublesome, it can be shaded. But there is very likely a way to return a customer her own Starbucks data in a way that can be appreciated.
RECOGNITION – 53
Starbucks has a very strong game when it comes to Recognizing their customers. If you will trust Starbucks with your email address, phone number, and even a location, they will give you back time. They will do this by saving payment information in their app, letting you order in advance and skip the line, even saving favorite items for faster online and app checkout. They create a very balance-positive Data Value Exchange with their customers. Customers do not need to wonder why Starbucks needs the personal information that they request, as Starbucks immediately turns this information into a way to recognize its customers and to give those customers a better experience than those who don’t share.
In-App – 10
Starbucks Rewards is mainly created on the back of their app structure. They did a simple and smart thing by leveraging existing technology to provide a way for their customers to provide their information and returned them a very smooth BOPIS experience where they can bypass the line just from having a login, while gaining points toward their loyalty program. They didn’t need to create anything new. They just had to reframe the question (what do our customers want that we can give them? Where is their pain?) and the answer (saving them time in store) simply within their current structure. Most brands have the same or similar questions to answer, but they all need to be answered in unique ways for their unique customer base, their brand, and their industry. The Starbucks answer worked for Starbucks. It may not work for others, but their approach is so simple and smart that we believe there are principles here that can be replicated.
Individual Emails – 5
Starbucks is no better or worse at Recognizing their customers with their individual emails. They do the smart job of just making each email cover a small topic and not doing too much. That helps us all organize and find things better. Just starting the email by addressing the customer by name is not unique or even cool anymore. They aren’t making any mistakes here. Just doing the normal.
Newsletters/Blasts – 5
Their blasts are standard issue and what we have come to expect from big brands with many customers to lose at each communication, so no risks shall be taken and everything will conform to run of the mill corporate-approved topics. We likely don’t need our local coffee shop to provide us with cutting edge information or little known facts or Top Tens that matter. However, we do believe they could be segmented more appropriately toward their audiences that match who they are, either in purchase behavior or location or the like. If you are going to create email blasts and you know who your customers are, then these become chances not be wasted as every email is a chance for someone to unsubscribe.
In-Store – 8
If you are a Starbucks Rewards member, Starbucks will not immediately recognize you or treat you any differently when you walk in. This isn’t Minority Report, apparently. Dang it. However, if you have ordered through their app, then you get a different in-store experience than other members who didn’t use the app. We give middling marks for this reason, as most of the in-store recognition depends on app use. And they only recognize YOU as what you ordered, which is really all of the recognition you want.
On-Website – 10
Starbucks is part of the new fraternity of brands that store payment information, usual locations, past orders, favorites, etc. Basically, just storing and returning your own behaviors back to you in an effort to reduce time transacting on the site. We want this as consumers, and even though it is a small amount of time, it is painful time when it is slow. Seconds feel like an eternity, and they have removed as many seconds as possible.
Stored Memory – 10
As with REI, Amazon, Zappos, and Patagonia, Starbucks continues the modern trend of storing your past purchase history to help you remember what you like and also what you tried. You now don’t need to remember this pointless information because the database team has returned this, visibly, to your account. You can either continue the trend you’ve been on or try something different. This is very simple stuff and very easy for brands to do to recognize their customers. It is a select club that does this, but it will become mainline soon as customers will expect and demand it from brands that don’t. Hooray.
Community/Philanthropy – 5
Starbucks does have some philanthropic work that they do, under the uninspired heading of Starbucks Social Impact. They do the kind of work that we expect from big corporations. We aren’t here to hate on anyone who is doing good, even if just doing good for corporate tax breaks or PR. Like carbon credits, it is still towards good. However, the way we judge brands here is if these efforts not only align with their mission but with their customers’ interests. Meaning, are their philanthropic efforts creating loyalty from their customer base or even creating new customers? Here, we don’t believe so. Not because the Starbucks Social Impact efforts aren’t genuine, but because they aren’t much different from what we have come to expect with big brands. The net result is noise.
Brands need to align their philanthropic and community efforts with AT LEAST an under-served or under-represented part of their whole base. Who is being left behind? How can we help them visibly and earnestly? This can drive loyalty and is an oft-missed component of Social Impact work.