Almost all the customer-centric brands that you come across today have some form of a loyalty program. The real question is not about if they have a loyalty program, but rather does the program work?
Starbucks Rewards Loyalty Program has a staggering 19.3 million members and nearly contributes 50% of their revenue. But what makes it unique?
Before we jump into that, let's look at the reward program itself. You earn two stars for every dollar you spend. On collecting a couple of these stars, you can use them to get your favorite things for free.
All of that sounds great, but what really differentiates it from other loyalty programs?
I believe two things differentiate Starbucks Rewards Program from others.
1. The clarity in communication:
Ever tried to use reward points from your credit card? And spiraled into a rabbit hole trying to figure out how and where to use them? That's an example of a poor loyalty program.
With its star approach, Starbucks makes it incredibly easy for a user to understand the reward program. (Earlier, it was as simple as getting a star every time you purchase irrespective of the item's cost) Next, they also make it easy to understand how the user can earn rewards.
200 Stars? Here is your lunch sandwich.
How many times have we received a reward which is in hindsight just a promotion for another product? And what about the times you got rewards that are not even remotely relevant to you? That's another classic example of a bad reward strategy.
Who among us does not like to feel special? Starbucks understood this very well. They individualized and optimized offers for each customer in numerous ways.
For example: celebrating the customer's birthday with a treat, bonus rewards like double-star days, and access to exclusive games and personalized offers.
Apart from the above, there are a few other things that Starbucks involves in its loyalty program.
Ease of payment in-store through the mobile app
Ability to order and pay ahead of arriving in store
Ability to send other members and friends gift cards through the app
App integration with other platforms such as Spotify to discover music playing in-store (a big part of Starbucks and, more generally coffeehouse culture)
Members are first to know about upcoming seasonal and new product releases.
Special member events and challenges
I believe the important point is that Starbucks understood what motivates their customer. And they understood that their customers would never spare time for an overly complex rewards program.
So if you are building a rewards program, take a step back and really understand, "What do my customers want?"
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