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This week, Starbucks started a contest called Starbucks for Life, giving its Starbucks Rewards loyalty program members a chance to win a beverage or food item every day for a month, a year, or even the rest of their life.
While the contest is an amazing opportunity for coffee fans - for Starbucks, it is another opportunity to drive sign ups and get customer excited about the brand’s loyalty program – which has also become a major source of sales. There are now 17 million US members of Starbucks Rewards – up 15 percent from last year. The Starbucks Rewards programs is one of the most popular loyalty programs in the restaurant industry.
The company said that its rewards program contributed “closer to two percent” of same-store sales during those two quarters, up from one percent previously.
“We know from our experience that when customers join our rewards program, their total spend with Starbucks increases meaningfully,” Chief Financial Officer of Starbucks, Patrick Grismer says.
Loyalty programs have become increasingly important sales-building strategies for restaurant chains that depend on frequency.
These programs allow brands to market directly to consumers and learn more about them, creating personalized marketing experiences that truly resonate with customers.
Starbucks’ program has undergone several changes in recent years, some of which were met with mixed reactions. Rewards customers generally earn two “stars” for every dollar they spend. This spring, Starbucks changed the program to enable customers to more quickly redeem their stars for beverages, food or other products.
In other words, customers don’t have to be an everyday Starbucks customer to accumulate enough stars to get rewards. Grismer said that this change generated “significant positive customer response.”
“We’ve attracted more of what we call occasional customers into the program. That creates significant opportunity, because we know from our experience that as we migrate customers from what we call digitally registered into full rewards members, we see their spend increase substantially,” he says.
Furthermore, Starbucks has improved its marketing through the program, by adding technology that enables the company to better understand why drives customers to make a purchase. While membership in Starbucks Rewards has grown, so has customers’ purchase frequency has as well.
“We took the opportunity to introduce an enhanced personalized marketing engine into our technology stack,” Grismer adds. It allows us, through machine learning, to gain insights around what matters most to our customers, which informs the offers we make to them digitally.”
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