An Analysis Of Starbucks Billion-Dollar Loyalty Program

After Q1 of 2016, Starbucks had $1.2 billion in customer funds loaded onto their plastic and mobile Starbucks cards.

This is larger than the amount held by many of the smaller regional banks. They’re so big that it’s a legitimate news event when they decide to make changes to their loyalty program.

What makes their loyalty program so compelling? And what can businesses learn from them?

1. Great mobile app

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It’s probably not a good idea for most retailers to build mobile apps just for their store – most people aren’t going to want to have a different mobile app for every single store that they happen to visit. Starbucks gets a “law of large numbers” advantage here.

In a way, people have come to expect Starbucks on every corner in major cities – like a reliable utility.

2. Online signup

Starbucks is one of those brands where fans actually might spend time thinking about the brand even when you’re not actually at the store or feeling the need for coffee. You can signup for Starbucks’ loyalty program online:
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3. Special Gold card for extra-loyal customers

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Having tiered levels of loyalty gives customers something to work towards.

Of course, few people are going to wake up in the morning thinking “Gosh, I really need that Starbucks Gold”, but it can tip people over when deciding whether or not to order that slice of molten chocolate cake with their cappuccino.

Starbucks’ loyalty program is a bit of an outlier.

Generally, Starbucks’ loyalty program is an example of what you can only really do when you have the massive scale they have.

Smaller businesses typically can’t afford to come up with such a complex, complicated solution, and they can’t expect their customers to invest so much time and energy into figuring out how the loyalty program works, either.

For most small retailers, you’re going to want to keep your loyalty programs as simple and easy to use as possible.

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