Starbucks! A name we all have heard of is a coffee company and a coffeehouse chain founded in United States in the year 1971. As of 2018, they operate 28,218 locations around the world.

Apart from serving good coffee, Starbucks also run a unique and one of kind loyalty program with best in class customer retention strategy. It played a significant role in propelling Starbucks to market cap of billions.

Starbucks rewards program launched in April 2016, replacing the earlier program My Starbucks rewards. They have revolutionized the coffee industry which is mostly credited to their loyalty program. It has only two groups unlike the traditional programs: Green and Gold.

Gold Status Benefits –

Green Tier Benefits –

Also, unlike the traditional card programs, they are more dynamic with a mobile app in place which customers can use to order coffee and can track the stars they get. A certain number of stars can get you free coffee or they can also be redeemed outside their retail stores to buy coffee beans.

When you achieve a gold status in their program, the benefits are free refills on some drinks, food and drink offers and a personalized gold card with your name and enrollment date embedded on it. People crave for the gold card and it’s a moment of joy when they achieve this status as can be seen from their social media handles. People feel a sense of pride when they go to Starbucks which you don’t get to see in any other coffee houses or food joints.

So, this was going excellent but sometime back in not so distant past, Starbucks decided to change the way they award stars to people.

Earlier, they used to award 1 star per visit which they now have changed to 2 stars per $ spent. They changed the program from visit based to spending based. It made easier for some people to earn stars and reach the gold level but difficult for others who were loyal but not particularly high-end buyers. Also, the threshold to upgrade to gold became 300 stars as compared to 30 stars in the last program.

Math Behind the Programs –

Earlier – 12 stars were required to redeem a free food or drink item.

Now – 125 starts are required to redeem a free food or drink item.

 

What is right for you – Lets check the amount you must spend to earn a free drink compared to the number of visits you had to pay for a free drink –

So, if you spend an average of 5.2$ or more when you visit, the program is beneficial for you but if you don’t spend this much, this program does not prove to be so much useful.

Some drawbacks of the program,

  • Cards need to be loaded if you want to use them. Good for the company as they can save credit card transaction fees on sales but a hectic task for users
  • Way too many gold members don’t make gold members feels exclusive in a club.
  • Slight miscommunication when it comes to explaining the downgrading criteria. Not many people know they will be downgraded to green-tier in 12 months if they fail to achieve 300 stars and the star balance resets to 0.

In the end, it is one of the best loyalty programs out there with high percentage of customer engagement and retention.

Go Grab your Starbucks coffee and come back for more brewed content about loyalty marketing. Cheers!