Bill Hanifin
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When I cite examples of brands that are changing the face of loyalty marketing, Starbucks is usually on the list. I’ve admired the way the company leveraged a strong gift card business to create online connections with its customers and ultimately created the first cobranded credit card that included a wallet for loyalty points. The Duetto card was phased out due to reasons related to the performance of the card portfolio itself, but Starbucks used what they learned and moved on to reinvent their My Starbucks Rewards program around a reloadable prepaid card.
Building a rewards program around a specific form of payment, a prepaid card no less, was a courageous strategy. The consumer who qualifies as an unrelenting Starbucks fan may not have met the favored credit standards to make the Duetto card a winner, but assuming they would willingly adopt a prepaid card and place a separate plastic in their wallets funded from a different source was a big bet.
Looking back on the strategy, it seems to be a no-brainer. Though some observers provided feedback that loading money on the prepaid card shifted their focus from the cool vibe of the Starbucks brand to the raw reality of how much they spend on coffee products each month, the majority jumped on board. I grabbed a card myself in order to play the Starbucks rewards game, but was more intrigued by their mobile app which allowed me to use my phone like a virtual prepaid card while scanning a QR code at the point of sale.
While ease of use, convenience and control are all attributes that come to mind when describing the way My Starbucks Rewards delivers to its membership, we hold the opinion that the rewards cup at Starbucks is just half full.
To top-off the cup, Starbucks needs to add more value. As I’ve made steady trips to buy my cup of brewed coffee or afternoon hot tea, maybe the random Refresher, I’ve had this nagging voice in my head asking if I would ever become “Gold”. As my skepticism grew, the email arrived just in time this week informing me of that accomplishment. And, with the news, I received – nothing.
To be fair, there are benefits to being a Gold member, such as receiving a free beverage on my birthday and “a shiny Gold Card with your name on it”, but nothing of tangible value was awarded to me marking my ascension to the Gold level. To punctuate the absence of a “welcome to Gold” gift, I learned that being a Gold member entitled me to keep visiting, spending and earning. The message that I could earn “A free handcrafted drink or food item every time you collect 12 Stars*” ,made me feel as though someone had shifted my carrot farther into the future.
If you noticed, the sentence quoted from the Starbucks email above ended with an asterisk, a Loyalty Asterisk no less. Reading the fine print, the asterisk revealed this reward restriction “Free food options are single-serve only. Members can choose 1 free item per redemption. Does not include loaves, sets of bars, or Starbucks Evenings menu items.”
Achieving a higher tier in a loyalty program should be a delightful event that includes some form of tangible reward as well as a sprinkling of recognition. That reward should be easy to understand and transparent enough so that customers don’t need to slow down their busy day to analyze the fine print.
Starbucks has done a great job in brewing up a loyalty program with many advantages. Now it has to top up the rewards cup if they expect the program to shift share from casual visitors and retain their very best customers.
