It was widely reported last week that Starbucks will extend its My Starbucks Rewards loyalty program to award Stars to members purchasing their coffee in the grocery aisle. A good synopsis of the announcement can be found here and I wanted to share some insights to help you read between the lines of the news.
Considering that My Starbucks Rewards has over 6 million registered card users and that about 25% of all transactions are made by program members, it makes sense to give thought to any program evolution or feature change enacted by the “world’s biggest coffee shop”. Brands selling products that transcend the borders of their physical locations all face the same issue. One of the greatest promises of loyalty marketing is to identify customers and associate them with the products they buy. Through its loyalty program, Starbucks was able to identify and track purchase behavior within its stores but couldn’t connect the dots for purchases of its products made in other channels – until now.
All consumer package goods companies face similar challenges and that’s why we’ve seen Kellogg’s launch Family Rewards in the past year. My Coke Rewards is one of the most well known programs in this category, and has been used successfully to identify and provide incentive to individual consumers who buy their products in grocery and other retail distribution channels. Awarding Stars for purchase of Starbucks products in grocery chains and other distribution channels is a brilliant, but natural extension of its loyalty program scope.
Between the lines, the move draws attention to the issue of Big Data. As this article explains, Starbucks is already awash in data and is struggling to distill what they have collected into usable and consumable chunks that benefit marketing executives as well as store managers. Adding “code on pack” technology to facilitate their program in the grocery channel opens up another wellhead of data.
While Starbucks considers what to do with their available data, a story about how the City of New York uses Big Data to run the metropolis more effectively will open your eyes. John Feinblatt, the mayor’s chief policy adviser and the person responsible for the Big Data initiative shares in the article that one terabyte of raw information (equivalent to about 143 million printed pages) passes through the hands of the team responsible for making the data usable for the City. But collecting data is not enough. As Mr. Feinblatt is quoted in the NYT story, “The data will tell you a story, but only if you do certain things that encourages it to speak.”
That is the task that Starbucks and other brands are facing today and the announcement to award grocery buyers of Starbucks coffee just raised the ante in the Big Data game.
A sub-headline in the Starbucks announcement noted that the chain will soon reward customers who make purchases at its subsidiary, Teavana. The move to extend the loyalty program across compatible brands enables program members to earn Stars at a faster pace than they could at Starbucks alone. It’s a similar approach to that of Sears, when they Shop Your Way and began rewarding customers for purchases made at Sears and other owned brands including KMart and Lands End.
We don’t know if Seattle’s Best Coffee will be the next brand to be included in My Starbucks Rewards, but we do know that the kettle needed to hold Big Data is getting bigger every day.