According to McKinsey & Company, the top-performing loyalty programs boost annual revenue from customers by 15 to 25 percent. This may seem like an absurdly high number, but in reality, it's not an unreasonable statistic. By implementing loyalty programs, you have the opportunity to grow sales, win back customers, generate traffic, and build valuable customer relationships.
It's no secret that loyalty is a key driver of success for many businesses, including Starbucks.
"We are not in the coffee business serving people, but in the people business serving coffee." -Starbucks
The resounding success of Starbucks Rewards
Starbucks was founded in 1971 when three friends, Jerry Baldwin, Zev Siegl, and Gordon Bowker, opened a small coffee shop in Seattle. They started by selling high-quality coffee beans and coffee makers. Later, Howard Schultz took over the company and transformed it into a chain of coffeehouses, emphasizing a premium coffee experience and creating a sense of community.
This sense of community proved crucial for the company, which launched its first loyalty program in 2008. With the classic, simple stamp card where you got your tenth drink for free, Starbucks gave you a reason to keep coming back. This modest customer enticement has evolved over the years into a loyalty program that delights tens of millions of customers annually.
Zo blijkt uit onderzoek van The Manifest dat bijna 50% van Amerikanen die regulier restaurant loyaliteitsapps gebruiken, de Starbucks app gebruikt. Wat een van de redenen is dat Starbucks zowel in 2023, 2022 en 2021 is opgenomen in de 'America's best loyalty programs' ranking van Newsweek en Statista. Met meer dan 40 miljoen members en een gemiddelde beoordeling van 7,98 bewijst Starbucks Rewards zichzelf als een van de best presterende loyaliteitsprogramma's van deze tijd.
As evidenced by research from The Manifest, nearly 50% of Americans who use regular restaurant loyalty apps utilize the Starbucks app. This is one of the reasons why Starbucks has been included in the 'America's best loyalty programs' ranking by Newsweek and Statista in 2023, 2022 en 2021. With more than 40 million members and an average rating of 7.98, Starbucks Rewards proves itself as one of the best-performing loyalty programs of our time.
How and why does the loyalty program work?
Today, Starbucks Rewards operates as a loyalty program with a simple yet effective point system. Members can sign up for free and immediately start collecting points using a dedicated app. This grants them access to a special dashboard where they can track their points balance and explore the menu. It's even possible to place orders before arriving at the café.
There are two levels based on which members receive rewards: green and gold. The difference between them is purely based on points.
The green level is the default level that every member joins. All members remain at the green level until they have spent enough. Once they reach 450 points (or €150 in spending), they move up to the Gold Level – unlocking a new range of rewards.
However, gold status can fade; members have access to this highest level for 12 months for every 450 points earned. But if they fail to earn enough points by their next gold anniversary date, they revert to the green level.
The biggest success factors of Starbucks Rewards:
Keep it simple, stupid: The system is very simple, and that's a deliberate choice. By avoiding complicated requirements and high barriers, Starbucks makes it as easy as possible for customers to earn rewards. This ensures that members don't quickly lose interest.
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Brand recognition: Starbucks has a strong, instantly recognizable appearance that they focus on in all their marketing and communication efforts. It's not surprising that they've continued this in their loyalty program.
By coloring the reward levels green and gold, the company immediately creates recognition. Additionally, the points earned in the program are called stars, which perfectly aligns with the branding.
Mobile availability: To be as widely available as possible, Starbucks has created an app for its loyalty program that can be downloaded on any device. Through the app, members can do everything related to earning points.
Users can check their star balance, track how close they are to the next reward, place orders in advance to avoid waiting, preload their Starbucks Card with credit for use in-store, and send gift cards.
And that's ideal for the acceptance of the loyalty program because an estimated 57% of consumers prefer engagement with loyalty programs via their mobile devices.
Personalization: When signing up, members are invited to set their preferences for their drinks – everything from milk choice to size, to the number of caffeine shots is adjustable. These preferences are automatically filled in when the customer explores drinks via the app, making ordering coffee easier than ever. And more importantly, the personalized touch makes customers feel unique and valued.
How can we learn from this success?
Starbucks' loyalty program is, of course, a very specific application within a certain industry and target audience, but it clearly demonstrates many lessons that can be applied to any loyalty system. So, even that of your company.
We know that a loyalty program should always be as accessible as possible. Starbucks' point system makes it easy to get started, while the sleek appearance and user-friendliness of the app keep people coming back. The points have an expiration date; one that is short enough to keep people interested but long enough to avoid frustration. So, don't make your rewards too complicated.
Even when members are not currently within reach of a Starbucks, the company encourages them to spend money. With the presence of a digital Starbucks Card, members can deposit money to use in-store. It's like a coffee credit card. This translates to always keeping customers aware of your brand. Whether you do this through a credit system or with a simple reminder email, the principle remains the same.
Starbucks doesn't just sell drinks; it also collects a lot of data. With over 100 million transactions per week worldwide and nearly 31 million active members, there is a wealth of data to choose from. This data is invaluable to the organization because it contains a lot of information about customers, such as preferences and buying behavior, and how you can apply this kind of data within your own business.
All the benefits mentioned above on their own can create brand loyalty, but the success of Starbucks Rewards lies in the combination of these factors. The ability to use data very effectively, implement a simple loyalty program, utilize brand recognition, offer mobile availability, and personalize everything as much as possible form the basis for an excellent customer experience and a highly successful loyalty program.
Interested in benefiting from a successful loyalty program too?
Have you become completely enthusiastic about this success story and can't wait to get started with your own loyalty program? Don't wait any longer, check out our website and get in touch.
