Can Starbucks’ Loyalty Program Keep Customers Coming Back Despite Price Increases and Soaring Inflation?
Maintaining customer loyalty has never been more challenging than it is right now. Customers today have access to more choice than ever before and are more than happy to switch brands from purchase to purchase with little consideration given to favorites.
This is especially true in the coffee shop business where customers are more likely to step into a particular location based on its proximity to them than make an extra-long journey to a particular brand.
Then there’s the current cost of living crisis and rapidly rising inflation to consider. Driven by multiple factors such as the Russian invasion of Ukraine and supply chain fallout from the pandemic, customer have less disposable income and therefore are finding it increasingly hard to justify treats such as expensive specialist beverages.
Starbucks
One brand which is fighting to attract repeat business through a constantly evolving and innovative rewards platform is Starbucks. The Seattle headquartered coffeehouse and roastery company has become renowned in the space for pioneering new technology-based features such as mobile ordering and believes its loyalty program gives it the best possible chance of retaining business during these challenging times.
One of the most unique features of the Starbucks loyalty program is the way customers earn points which can then be spent on rewards such as free drinks. Whilst earning points through in store purchases is nothing to get excited about, Starbucks adds extra opportunities to earn by partnering with certain grocery and convenience store brands to allow customers to collect them by purchasing Starbucks products outside of its own locations.
Continuing this trend of third-party collaboration, Starbucks also partners with mobile apps such as Spotify. Starbucks offers users free music and mobile games which, when played, provide additional opportunities to earn points towards those all-important rewards. Through these methods, Starbucks makes it quicker and easier for customers to reach reward thresholds, which then encourages them to visit its coffee shops more frequently – and hopefully make additional purchases whilst they are there.
Starbucks then augments the gathering of points with a data-driven approach to offer privileges and offers to customers based on their personal preferences. By increasing the relevance of offers, Starbucks improves the chances of customers taking advantage of them with the coffee brand claiming a considerable proportion of purchases are due to these personalization efforts.
Starbucks Odyssey
Whilst Starbucks has seen amazing results with its existing loyalty program, the coffee giant has never been one to rest on its laurels and has recently announced the latest evolution of its efforts. Dubbed Starbucks Odyssey, the new platform will leverage Web3 technology such as blockchain and NFTs in an attempt to further incentivize customers.
"Starbucks Odyssey is a new experience powered by Web3 technology that will offer Starbucks Rewards members in the US the opportunity to earn and purchase digital collectible Stamps (NFTs) that will unlock access to new benefits and experiences that can't be found anywhere else,” says the company on its website.
Existing Starbucks Rewards members can sign up now to the waitlist to become eligible to receive an invitation to join the new program. Upon receiving an invitation, members will use their Starbucks Rewards login to join Odyssey and engage in a series of activities such as interactive games or challenges that deepen their knowledge of coffee and related topics. Starbucks. Members will then be rewarded for completing Journeys with an NFT Journey Stamp. Members will also eventually be able to purchase limited-edition NFTS through the built-in marketplace within the Starbucks Odyssey web app.
Whilst on the surface, Starbucks Odyssey seems like an exciting new direction for the company’s loyalty program. It does raise a few questions. The NFT investment bubble has well and truly burst at this point and the entire concept of these "non-fungible” (which are in fact extremely fungible) assets has been marred with rug pull schemes and other frauds, meaning that from a pure PR viewpoint, they may not be the best way for a company to attract the right kind of attention.
Then there is the environmental impact of blockchain technology in its current form to consider. In an era where climate change is really starting to bite and many brands are seeking to bolster their ESG credentials, this would seem a strange direction for a supposedly environmentally focused brand like Starbucks to take.
Final Thoughts
Starbucks does seem to have discovered the secret sauce for keeping customers engaged with its loyalty program. With third party collaborations providing more opportunities to earn and personalized rewards incentivizing purchases, the coffeeshop juggernaut is doing everything it can to keep customers coming back during these challenging times.
The Web3/blockchain/NFT based direction it has chosen for Starbucks Odyssey is perhaps less convincing, but we’ll certainly be keeping an eye on this one to watch how it develops.
Loyalty programs and Web3 technology are sure to be hotly debated topics at eTail Connect 2023, being held in April at the Hilton West Palm Beach, Florida.
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