Starbucks – tokenizing loyalty
News broke on Friday 29th October 2021 that Starbuck’s President and CEO Kevin Johnson is looking to shake up loyalty and transform the way that the iconic global brand does loyalty. It is hard to imagine life without the coffee giant, it is a brand that supports many aspects of our life, from meeting a friend or a social drink to a business meeting or out of office working location. Starbucks have not shied away from evolving alongside the needs and wants of their consumers, with their loyalty programme going through a number of transformations over the years:
- April 2008 – Starbucks launched the Starbucks Card rewards programme
- November 2008 – Introduction of the VIP programme, ‘Starbucks Gold Card’, that gave customers gold status to earn additional freebies and benefits.
- November 2009 – Starbucks Card and Starbuck Gold Card become one, ‘My Starbucks Rewards’ with customers starting on the base tier and moving up to the gold VIP tier
- February 2016 – Starbucks programme became based on a purchase-based metric rather than a visit-based metric
- February 2018 – Launch of Starbucks Visa card, allowed members to earn stars both inside and outside of Starbucks
- March 2019 – Starbucks transformed into a single-level rewards system with a tiered rewards structure allowing members to redeem at any point (with 25 stars) and to customise their rewards. On top of that they also eliminated the expiry of points. We are big advocates of eliminating points expiries as long as the member continues to earn.
In our Back-to-Basics eBook we discuss one of the 9 models of loyalty – partnership loyalty. Interestingly, Mando-Connect and YouGov research found that on average, across key loyalty sectors in the UK, 58% of Britons want rewards from brand partners with 19% finding partner rewards more appealing than a brand’s own.
It’s not new, but getting the partner model right Can be a tricky balance and for a leading global brand such as Starbucks to make the leap to tokenizing their ‘Stars’ we expect to see other leading brands to bite the bullet as well. Creating partnerships with non-competing brands that will add value to consumers beyond just the existing relationship will ensure that Starbucks builds an exclusive loyalty package beyond their current traditional approaches.
With Starbucks looking to create the ability to exchange their ‘Stars’ value across multiple other brands, generating a more personalised reward experience and meeting the needs of consumers beyond those of just their coffee habits, the ‘Stars’ transform to become a financial asset for the consumers beyond their daily caffeine consumption.
Bucking the trend, Starbucks partnership with Air Canada will actively encourage reward members to “double-dip” on rewards, being able to earn loyalty from both the airline and the coffeehouse. Forging the way with Blockchain technology, Starbucks are also investing in partnerships such as that with Bakkt which will allow reward members to load their Starbucks cards and make payment with cryptocurrencies such as bitcoin, Ethereum and others.
Starbucks have led the way with many initiatives; an early adopter of mobile payment, they embraced digital engagement and enhancements as a result of the Covid-19 pandemic. With over 22.9 million members on the Reward programme, up 18% from the previous year, and 50% of US revenue contributed from Reward members, Starbucks loyal consumers are resilient and have strong emotional connections with the brand.
As Starbucks continue to forge forward with loyalty revolution, it will be interesting to observe how many other global giants quickly jump on the partnership loyalty wagon.
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