The Only Starbucks Case Study You Need
5 Ways Starbucks Loyalty is Taking Over APAC
Almost every regular Starbucks drinker in our fast-growing region has a Starbucks Gold Card. If you love your coffee, the Gold Card has become such a strong status symbol that it’s almost uncool to not whip it out at the Starbucks cash register — and more so among ‘Millennials’ in Asia, where almost 60% of the world’s ‘Millennials’ reside.
Did you know that at this point, more than 50% of all Starbucks loyalty members globally are Gold Card members?
Their loyalty program, known as the Starbucks Rewards program, is a cornerstone of their global success. All evidence shows that Starbucks is on track to dominate the market as the US chain continues it’s growth in the China and Asia-Pacific (CAP) region. Projections state that Starbucks will triple its revenue over the next five years.
Every F&B marketer in the APAC region should have the Starbucks loyalty program up on their mood board. The iconic emerald siren has single-handedly made every kid, teenager and adult want to be a part of the Starbucks community, and they’ve cracked the loyalty code with easy-to-understand promotions and real-time reward updates. There’s no doubt that this program will firmly remain as a pillar for growth over the next few years.
What makes this loyalty program so successful?
- Hassle-Free Mobile Payment
In late 2016, a report came out showing that up to 25% of all Starbucks purchases in the US were made through their mobile app. While data is scarce for how this is performing in Asia, people in Singapore and the Philippines have been paying via their app for a while (and topping their loyalty card up via their credit card!) — and Starbucks just recently introduced the mobile payment option to their Hong Kong and Indian markets.
Starbucks has made paying for a cup of coffee hassle-free — coffee drinkers just scan their personalized bar code from the app to a device by the POS system, and voila. There’s no more fumbling with wallets, change or pin numbers — members don’t even have to pull their physical card out of their wallets anymore!
2. Tier System
Earn and Burn rules vary from country to country, but works on the same basic premise — the more you spend, the more points you get, and in Starbucks’ case, the quicker you move from the basic ‘Green’ membership to the coveted ‘Gold’ membership. In Singapore, Starbucks offers members 1 point for every dollar spent, and members receive a year of Gold membership when they hit 300 points.
A tiered loyalty system, where members have to slowly work their way to a higher level to achieve greater perks and rewards, adds an element of gamification to the process.
Collecting points as you earn becomes a challenge, and members are likely to move quickly and spend more the closer they are to their goal. Being a member of the highest rewards tier can also be seen as prestigious, and having perks not typically awarded to customers is indicative of being a preferred customer.
3. Slapping a Deadline on it
Members who managed to achieve the Gold status are on a tight timeline — to ensure another year of consistent Gold status, they must collect a minimum of 300 points within the year.
This is very effective for rewards management, as customers are more likely to redeem rewards when there’s a deadline attached to it than when the offer is valid for an unlimited time.
There’s an element of urgency involved with deadlines, and Starbucks knows this: they slap an expiry on all rewards and offers, ensuring that customers come to the store to redeem their rewards often.
4. Rewards, rewards, rewards
This is the best part about being a Gold Card member — free drinks, one-for-one promotions, birthday drinks and cake, double-point days and free-refills in the USA. These rewards have an incredibly high perceived value by customers and members, and yet come at a low actual cost to Starbucks.
How much does a free cup of joe cost when your customer is also buying a pastry, adding balance to their card and getting some merchandise? The rewards keep members coming back.
In Hong Kong, where the new My Starbucks Reward program has shifted from the old ‘Buy-12-Get-1-Free’ model to a points based system, customers get rewarded for every 25 stars they accumulate as a member. South Korean customers have the ability to add free ‘extras’ — shots and syrups — to their drinks simply by paying with the stored-value in their Starbucks card.
5. Real-Time Updates
As long as a member has the Starbucks app, they can add value to their preferred Starbucks card (yes — you can have more than one card stored on your account!) via Credit/Debit cards on-the-go. There’s no need to whip out your card at the register to add a cash value before payment anymore.
Members can pay via the app and see their updated points, amount left in the card and immediate reward availability in real time after making any transaction on the app.
Starbucks has set a benchmark in mobile loyalty, but here’s the thing — it’s not a hard model to follow.
Your brand could do just as well as Starbucks, and you don’t have to fork out the $5 million that the coffee chain paid to build it. Working with the right developers and, most importantly, using the right platform will help your business create an effective and targeted loyalty system that will keep your best customers coming back, and attract new customers to you in a heartbeat.
At Riverview, we have helped so many brick-and-mortar stores make the move into digital with great success. Some of our clients have seen an increase in membership sign-ups by 50 times, and up to a 12% growth in memberships monthly. This massive growth has confirmed two things for us — customers love being rewarded, and we love helping brands please their customers.