Starbucks’ Loyalty Program: a Magical Blend of Old & New

By: Robert Hendrickson

From: IGC Retailer, IGC Show Issue, 2012

Starbucks’ Loyalty Program: a Magical Blend of Old & New

ANTICIPATION Starbucks’ loyalty program has me waiting by the mailbox for my postcard, redeemable for a “free” gift I paid $45 worth of tea to receive. Brilliant.

It doesn’t take much to get me started when it comes to proper marketing options for garden centers. Here’s a journey that encompasses e-mail, loyalty clubs and reward programs, based on a recent e-mail I received:

I tried to sign up to receive e-newsletters from the garden centers you said produced the best e-mail campaigns, but I’m having a problem - some don’t offer a way to sign up at their website, which seems odd.

Dear Hope,

There are two reasons why some garden centers don’t provide a process for people to sign up for e-newsletters at their website.

The first reason could be, “Oops, we forgot.” If that’s the case, they can contact their website developer, and problem solved.

The second reason is probably a difference in perspective: So let me ask you, do you consider e-newsletters a marketing or communication tool? Companies that consider their e-newsletter campaign just one more way to advertise obviously want as many people on the list as possible, hence open enrollment at their website. But garden centers that treat their e-news as a communication perk, reserved for a select group of customers in a loyalty program, are more concerned with developing relationships than mass quantities of e-mail addresses.

Given the companies I suggested you contact regarding proper e-news campaigns, I’m guessing most of them fall into that second group. Give them a call. I’ll bet they’d be happy to add you to their “special customer” list if you let them know why you’re asking.

‘Did My Postcard Arrive?’
I receive dozens of garden center e-newsletters each week, and I open every one. But I only read the ones I’ve learned are created with the goal of communicating, not advertising. It’s easy for me to tell the difference after just a few editions, and I’m guessing it’s easy for customers to quickly tell the difference as well.

Undocumented studies estimate that consumers come in contact with around 3,000 brand impressions each day. As with most things in life, not all impressions are created equal. One way to stand above the fray is to take an approach that adds more value to the receiver than what other companies are patient enough to provide. There are plenty of media options if you’re looking for a way to advertise. Resist turning your e-mail campaign into just another bellow in the barnyard.

Which brings us to company No. 4 on my “Top 5 Retailers on the Planet” list: Starbucks.

This company not only does everyday retail better than most, it does a great job managing its customer loyalty program, better than the dozens of other “clubs” I belong to, especially when it comes to marketing its reward program. As a Gold-level caffeine addict, here’s the process I’m all too familiar with:

First, I send Starbucks money for nothing. Yep, I pay for stuff before I receive it every time I load my Starbucks card with a cash value. They get my money up front for purchases I’ll make in the future. Not a bad plan. From there, each drink I guzzle goes toward earning a “free” drink of my choice. All it takes is 15 iced teas to win my prize. At this point, you’re probably wondering, “So where’s the magic?” But this is where it gets good.

As soon as I reach my award level, an e-mail arrives letting me know what a problem drinker I am and thanking me for being such a great Starbucks customer. But nowhere in the e-mail do I see my award certificate. The e-mail goes on to say, “Look for your free drink postcard in the mail. It should arrive within 10 days.”

“Ten days! But I need a fix right now!” At least, that’s what I’m thinking. But then my marketing persona takes over, and I see the intended thrill of expectation with a blend of both current and what some consider an “old-fashioned” form of marketing. Modern communication meets traditional advertising. Cool.

So guess what happens each time I return home from another long trip on the road working with garden centers on their marketing programs?

“Hey, Wendy. Love you, missed you. Did my Starbucks postcard arrive?”

I’m like a big kid waiting for Santa to get the “free” gift I paid $45 worth of tea to receive. So here’s the magic. Starbucks could have just had me download a coupon from the e-mail it sent informing me of the reward. Lots of retailers follow that path. Or worse, just keep track of my “points” in their POS system and give me a free drink once the cashier is informed that “a big spender’s in the house,” like so many garden centers do. Big whoop. I was going there anyway. Instead, Starbucks added suspense and anticipation, hoping each day that this would be the day my postcard arrived. Brilliant.

This mix of new with old is the key to what makes the Starbucks award process so great. Instead of just one touchpoint through e-mail, it added a second when the card arrived, then a third when I used the card on a future trip. For a company so in tune with all the “modern” marketing options (Starbucks has one of the largest Facebook fan bases in retail), I was really surprised with the “old-fashioned” direct mail approach of its loyalty club. I’m hoping things continue in this direction for all the obvious reasons (mostly because I think it’s a great idea), but for now, I can’t think of a better example to follow than what this purveyor of buzz is doing.

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