There are many rewards programs out there, but just a handful of them are considered leaders in the loyalty program space. In our Global Customer Loyalty Report 2022, the Starbucks rewards program topped the list of the most inspiring programs. Plus, they just announced an upcoming NFT-powered loyalty program extension. What makes Starbucks’ customer loyalty strategy such a success in the eyes of loyalty professionals around the world? We decided to investigate.
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Starbucks’ Success Includes an Evolving Loyalty Program
Starbucks doesn’t need much of an introduction. The global coffee chain sells drinks, food, and a range of branded merchandise. Its original loyalty program debuted in the spring of 2008 and has since gone through several iterations and has expanded into the company’s global markets.
We believe there have been three essential ingredients in Starbucks’ success. The first is the continual evolution of its rewards program. The second success factor is the company’s use of gamification in the loyalty program. And, finally the company has played it smart with a mobile-first strategy, which has made the rewards program a convenient part of its caffeine-loving audience’s lives.
In addition, Starbucks also aims to break new grounds by leveraging Web3 technology by introducing Starbucks NFT rewards as an extension of its loyalty program. Starbkcks NFT rewards have been opened for beta testers in December 2022.
So let’s continue with our loyalty program review series by taking a look at the U.S. rewards program in depth and seeing what else the best food and beverage loyalty program is doing right, right now — starting with the innovation that has the whole loyalty industry talking right now.
Starbucks Odyssey – Brewing an NFT Experience
Starbucks wants to take engagement to the next level with its audience with Starbucks Odyssey. An extension of the Starbucks Rewards program, Odyssey allows members to earn NFT art (called stamps) by completing various activities, like playing virtual games or completing coffee-related challenges. Besides Starbucks-branded artwork that people can actually own, thanks to blockchain technology, stamps also provide benefits like bonus points, and based on stamp rarity, can unlock perks like access to coffee-making courses or invitations to exclusive events.
In addition to activity-based NFT stamps, Starbucks Rewards members can also directly purchase limited-edition NFTs. To enable this new type of Web3 engagement, Starbucks aims to create a smooth user journey by allowing participants to directly buy NFTs using their credit cards — without needing to setup a digital crypto wallet or exchanging money for cryptocurrency.
Why it will work
- Starbucks Odyssey might herald more widespread use of NFTs.
- The use of artwork in a loyalty program is similar to the concept of badges, which has an untapped potential on the market.
- Allowing customers to buy NFTs with their credit cards, rather than setting up a crypto wallet or transfer cryptocurrency will make engagement significantly more accessible.
- NFT stamps can further shape user behavior, driving engagement for gamified features and content consumption.
- Rare NTFs, which unlock special privileges, can also be purchased, allowing members to skip straight to the rewards and experiences.
Membership Page – Where It All Begins
As for the traditional, non-NFT Starbucks experience, many loyal customers start their journey in the mobile app and end up in a Starbucks location at the pick-up counter. So the home page of the app acts as the membership page in the loyalty program. The initial app screen welcomes customers with their Star balance and makes it easy for customers to find out more about their loyalty reward options — or redeem their Stars — with one click.
Also on the membership page, members will find the most important parts of Starbucks’ core business: the option to place a mobile order or the option to pay with the app. Mobile orders are the pinnacle of convenience, and one of several reasons Starbucks is consistently considered a frontrunner in the food and beverage app mobile space. Their prepayment system, on the other hand, is what has propelled Starbucks; success as — essentially — a financial institution and holder of so many customers’ unspent money.
Why it works:
- Combining practical ordering features with the loyalty experience on the membership page helps customers see the loyalty program as an essential part of the Starbucks experience, rather than a separate entity.
- Making it easy for customers to re-order their favorites helps customers save time as they shop and earn Stars.
- Keeping Star-earning progress and reward options front-and-center in the app ensures customers will frequently check in and see what benefits they can get, encouraging them to stick with Starbucks, rather than go elsewhere and forfeit their progress thus far.
Enrollment – Keep It Simple, Starbucks
Starbucks has a simple, straightforward enrollment process. The company makes it easy for new joiners who have been given a gift card to use their cards right away in the program. In the sign-up process, there are optional drop-down fields, which don’t get in the way of keeping the registration process quick for those without gift cards. Starbucks Rewards also makes email opt-in enticing by saying customers can collect more Stars by allowing the company to stay in touch.
Why it works:
- The registration process for the Starbucks Rewards program is quite straightforward — and quick. Starbucks asks for basic information and gathers data about birthdays and drink preferences later on, which results in a speedy registration process.
- Opting in for email communications during signup is attractive because the coffee company is transparent about how they’ll use the customers’ email addresses as part of the loyalty experience.
- The company covers their bases, legally, with three different links for the Starbucks Rewards program, Starbucks Card Terms, and Privacy information.
Point Accrual – There’s Always Something New
Although the Starbucks Rewards program has had several evolutions, now the company has chosen to keep it simple with its earn-and-burn approach. Members earn 1 Star per $1 they spend when they pay with cash, credit & debit cards, or their mobile wallet. Alternatively, members can double their earnings when they pay with a preloaded Starbucks Card, incentivizing them to pre-load money into the app.
Starbucks makes sure the one-Star-per-dollar approach doesn’t get boring; members also have plenty of opportunities to earn Bonus Stars through Double Star Days, online games, personalized offers, and other engaging campaigns.
In addition, the coffee giant makes it really easy for customers to track their Star-earning progress and see where they are in the program, taking a visual progress bar approach in the app.
Why it works:
- Starbucks shows members a progress bar of how far customers have come, and how many more Stars they need to earn to get to the next reward milestone. Progress bars are effective because of a psychological principle called the goal gradient effect. The closer a customer is to getting a reward, the more motivated they will be to keep going.
- Starbucks keeps a simple earn-and-burn program engaging with various opportunities to earn bonus Stars.
- The company also highlights valuable behaviors, such as preloading money onto gift cards, by offering double the Stars for the same level of spend when members pay with their gift cards. Customers get value by earning Stars twice as fast, and Starbucks benefits by holding customers’ money. To ensure loyalty program success, the benefits need to be clear for both parties, and Starbucks is leading by example.
Transactional & Non-transactional Activities – Adding Fun to the Mix
Starbucks’ rewards program is largely transactional, however, it’s worth noting that the brand keeps it fun and uses new seasons and special holidays as an opportunity to keep customers engaged in ways other than buying their favorite treats.
Customers can also play games to win prizes, which is another way for members to benefit from engaging with the brand beyond the transactional experience.
Why it works:
- Starbucks has transformed into a financial institution with a lot to gain from holding customers’ unspent money. One way they have been able to gain a greater share of customers’ dollars is to incorporate top-ups and gift cards into the program.
- The company gives double stars to entice people to add more money to their program through colorful plastic and virtual gift cards.
- Starbucks starts with a lower base Star-earning ratio but creates excitement and opportunities to earn more Stars faster through regular bonuses, which highlight specific products, services, and special days.
Rewards – A Straightforward Food & Beverage Experience
Starbucks has several Star milestones where members can redeem their Stars for rewards. With just 25 Stars, members can already earn a free drink customization. If members can bear to keep going and save up their Stars, the rewards increase in value along with each milestone.
Rewards are based fully on Starbucks’ product offering, with food, beverage, and merchandise on offer.
Why it works:
- Starbucks makes rewards easy to access by including it near the Stars accrual progress bar on the app’s home page.
- Using drink upgrades, like syrup and extra espresso shots, is an excellent, inexpensive way to provide accessible rewards to customers at lower spend levels. Most hotel and airline loyalty programs take a similar approach to upgrades-as-rewards.
- The Starbucks Rewards program is all about building habits. Keeping the rewards focused on customers’ favorite foods and drinks gives them a fun way to keep their already-favorite habit… or perhaps branch out and try something new for free.
The Web Experience – A Channel for Everyone
It’s no secret that the Starbucks Rewards program is all about mobile. In fact, if you intend to join the loyalty program online, the company recommends downloading the app — even before signing up — for the best experience. But, if you’re not a lover of mobile apps, they do have a similar app experience on their website, too.
Why it works:
- Convenience is a huge part of the Starbucks brand. Having loyalty program information accessible on a multitude of channels keeps the rewards program experience equally as convenient.
- Starbucks makes it easy for customers to order beverages and earn Stars no matter what channel customers prefer to use.
Starbucks is one of the most inspiring programs for loyalty programs for good reason! They know how to create excitement, keep the program fresh and meet evolving customer needs and expectations. They’ve managed to capture a lot of customers’ unspent money for the future. Plus they have a variety of rewards to suit customers ranging from recent joiners to true Starbucks aficionados. Not to mention they are breaking new ground by venturing into the territory of Web3 experiences and NFT rewards.
Want to create an equally amazing loyalty program? Share your concept with us. Our experts are more than happy to discuss how Antavo’s technology can make it a reality, so feel free to include us in your RFP or contact us directly.
And if you’re looking to create an engaging rewards offering like Starbucks’, use our Rewards Planning Worksheet as a place to start your planning process.
Jess is a Loyalty Program Analyst and a Certified Loyalty Marketing Professional - CLMP, helping companies learn more about customer retention strategies, so they can launch successful loyalty programs. She has been writing about loyalty since 2016. Jess also enjoys ballet, travel, learning languages, and carrying out secret missions for loyalty intel.