Brewed Success - Loyalty at Starbucks

Written by David McKay
Image Credit - Starbucks Webcasts & Presentations

Image Credit - Starbucks Webcasts & Presentations

This month marks a first in retail loyalty programming - Starbucks customers will be getting loyalty points for purchases made through grocery channels.  Customers will peel a sticker from product bought and enter a the sticker code into their Starbucks Card account online.  The company continues to develop it's channels, achieving almost $1.3 million in revenue FY2012, thanks to leading positions in both premium coffee at grocery, and the #1 ready-to-drink coffee.  Integrating channels with their significant loyalty program is key to Starbucks' growth.  

Although, for many retailers a loyalty program does not necessarily mean a successful loyalty program, 30 percent of Starbucks' transactions are prepaid on Starbucks Cards.  The company boasts 6 million active users today, and growth of 80,000 new members per week.  According to McKinsey & Company, most loyalty programs generate 20 percent of profit for companies, at the high end - Starbucks is enjoying a 10 percent difference to the positive.  

Image Credit - Starbucks Webcasts & Presentations

Image Credit - Starbucks Webcasts & Presentations

The company's partnership with Square allowing for mobile payment, with the integration of rewards on smartphones has lead to 100,000 app downloads per week - coming from both current reward members and new.  Starbucks' program is able to provide members with instant benefits with every purchase; the more purchases that occur, the greater the rewards.  They continue to set the benchmark for innovation and growth, by engaging their customer from a variety of angles, keeping the customer relationship top of mind underpins their success. 

Company information from Starbucks Newsroom. 

Starbucks' Relationship-Focused Model

Written by Darren Fernandes

Beyond new product and services, Starbucks has upheld a commitment to strengthen its global business by supporting the diverse communities it serves. Last year, the company endorsed a Washington state bill to legalize same-sex marriage, which led the National Organization for Marriage to organize a boycott of the coffee chain. The company's endorsement was criticized last week by shareholder Thomas Strobhar, the founder of the Corporate Morality Action Centre. CEO Howard Schultz's response during last week's shareholders meeting garnered significant media attention, "If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it's a free country. You can sell your shares of Starbucks and buy shares in another company".

 

The company's decision to voice its support in the same-sex marriage debate clearly connects the values of its core customer and employees - both of which contribute to the dollars and cents of the company's bottom line. In his leadership letter, Schultz writes,

Consumers have long rewarded brands with their loyalty when they feel a company's mission and aspirations align with their own.

 

Further, in a Harvard Business Review post, Schultz commented on the importance of relationship-driven innovation for a prosperous business venture.

 

When looked at through the capitalistic lens, innovating the very nature of corporate-community relations is good business...Values increasingly drive consumer and employee loyalties. Money and talent will follow those companies whose values are compatible with their own.

Starbucks exemplifies how a company can utilize both a responsibility and relationship based approach to business, and harvest a loyal customer- and employee-base.