Starbucks: web3 Extension of Loyalty
A brief analysis on why one of the world’s leading loyalty programs is integrating with web3.
On Wednesday, I wrote a blog, “Engagement is the New Loyalty”, around how brands are exploring web3 and tokenization to improve customer experience and retention. Given the recent news around Starbucks, I thought it was a fitting story for my Friday article.
From media announcements, here are the key data points:
Officially launching Starbucks Odyssey, their new digital community and program, towards the end of 2022. The program will be an extension of their existing Starbucks Rewards program (it will not replace it).
Starbucks Odyssey users can earn and purchase digital assets that they can redeem for physical and digital goods/rewards, as well as unique experiences. Announced that it is built on one of the Polygon blockchains.
Complexities of web3 (setting up wallet, crypto payments, understanding blockchain and tokens) will be abstracted away to maximize onboarding of users and simplify user experience.
In an interview with TechCrunch, Starbucks CMO said “the company wanted to invest in this area, but not as a “stunt” side project, as many companies are doing. Rather, it wanted to find a way to use the technology to enhance its business and expand its existing loyalty program.”
As a leader in web2 loyalty, the focus on web3 technologies to enhance their loyalty program is a massive signal to the market: web3 has the potential to improve engagement.
Starbucks’ approach resonates with how I view adoption in the web3 space. Focusing on a simple user experience that anyone can use, payments with fiat currency, no crypto wallet required, no confusing gas fees, and integrating the functionality within their existing applications.
In addition, what I find most interesting about the approach is that they are focusing on experiences, which are enabled by token ownership. Whereas their existing loyalty program is mostly transactional (e.g., buy coffee, get reward), this extension seeks to bring an additional dimension of engagement (both physical and virtual) to an already thriving program.
My assumption is that Starbucks sees value in the following areas: leaning into web3 opens up new markets for customer acquisition, new experiences increase customer retention, new forms of engagement keeps existing program fresh, and new models to encourage spend can increase revenue and customer return spend.
As a leader in loyalty, Starbucks is validating the usage of web3 among incumbent brands. No doubt the press releases from others that quickly followed were directly related to Starbucks’ announcement. I personally have signed up for the beta version, and am excited to experience this program first hand when it launches!
Author’s Note: On Fridays, I’ll publish an article around a recent web3 news story and tie it back to key themes of web3. Follow along on Medium!
