Starbucks serves up an extra tall cup of BS
Since my post on ‘5 New ways Starbucks could re-engineer their rewards program for success’, almost every other loyalty commentator has jumped on the wagon to blast the new Starbucks “loyalty program” (more of a high spender cashback program than loyalty program).
An article popped up today claiming that “Changes to Starbucks Loyalty Program Sparks Confidence and Increased Membership” by adding nearly 1 million new members in this time which represented an 8% increase over the same QTR in 2015.
Given the sheer volume of negative commentary on the changes, I was eager to read what magic Starbucks had conjured up.
So I’ll break down this Loyalty360 article so we can understand the PR train in action and why I believe it’s not accurate.
- Starbucks announced the program changes on Feb 22 which is roughly 1/2 way through the fiscal Q2. If they want to claim a spike in membership is new customers ‘embracing’ the program, we first need to see a split of Pre and post Feb 22 when the announcements were made.
- The actual loyalty program changes only came into effect this month; so the entire last QTR was under the old scheme. Customers were joining the ‘old’ program and not the new one.
- Refer a friend and get a free coffee.. as if that wouldn't drive new memberships alone.
- Buy 1 coffee and receive instant Gold status. Again; a no brainer that would grow the userbase by itself.
- Starbucks global footprint increased by 350 new stores in the same QTR; which increased physical people entering stores; which would push new memberships naturally by at least 15% of the 8% increase.
- Transaction volume up 3%; which loosely translates into more physical human bodies entering stores. Now even if only 1% of volume was new customers; this calculates something like this: 8 million customers/day times 90 days in the QTR = 720m customers. 1% of this = 7.2 new visits. Only takes 1 in 7 to join the program and you have a fresh 1 million new loyalty program members.
- People could have joined because Starbucks was in the media and they’d never thought to join the loyalty program before (thus a media effect; and since most people don’t read loyalty industry blogs the sentiment of negatives changes wouldn't necessarily resonate with the average coffee drinker)
None of the points in the article point to increased membership/engagement BECAUSE of the program changes like is suggested it has done.
I’m a Starbucks addict too, and the company does a phenomenal job in more ways than I ever could ever hope to — but the loyalty program BS train needs to stop, really.