What Brands Can Learn from Starbucks’ Expansive View Of Customer Loyalty
As the digital revolution expands the number of marketing channels, brands are seeing a tremendous blurring of the lines between traditional loyalty programs, digital transformations, and customer experience initiatives. In this new competitive landscape, all brands must adopt loyalty initiatives without traditional boundaries, shares, Guy CierzanManaging Partner, ICF Next.
No brand is perfect when it comes to loyalty these days, but Starbucks is doing a lot right.
For starters, their entire rewards program is housed on a mobile app that customers can also use to store payment info, purchase drinks, and order remotely. In this way, tangible customer interactions are seamlessly integrated in a digital ecosystem with the rewards they may reap from those interactions.
Contrary to several airlines — whose shift from distance to revenue-based loyalty programs have only made it harder, more expensive, and more complicated to achieve certain tier statuses than in the past — Starbucks rewards enrollment is friction-less, engrained in signing into the app itself. There’s a reason the app accounted for 30% of all transactions last year, and holds more consumer cash than many banks.
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The app also improves and provides a number of customer experiences, allowing users to order beforehand (with all their relevant, personalized preferences), attend member events, receive special offers, and get free in-store refills. And because this transactional and behavioral data is centralized, Starbucks can leverage analytics for thoughtful personalization, be it free birthday drinks, tailored special offers, or otherwise.
Importantly, these initiatives don’t feel contrived or inauthentic — in large part because Starbucks has a long history of loyal customers and caring about customer experience. You can feel it in the store’s vibe, in the extras they sell at the counter, and in their willingness to endlessly customize beverages. You can also see it in their employees, who pledge loyalty to the brand themselves; after all, each and every Starbucks employee is a “partner,” and can receive an annual grant of company stock. This engagement is crucial, because in today’s new competitive landscape, employees can — and should — cultivate loyalty, too.
Starbucks’ expansive view of loyalty recognizes the rising customer expectations set by interactions with the Amazons and Airbnbs of the world, where everything’s digital, customer feedback is listened to, and where, in exchange for collecting reams of data, brands deliver authentic, proactive experiences that tangibly improve their customers’ lives.
The Way Forward: Reinvent the Experience, Not Just the Loyalty Program
While loyalty programs in their original, Sperry & Hutchinson form may persist, true innovation will come when brands across all industries ground these initiatives in customer experience — ones that seamlessly integrate insights from data and connects with customers via new channels.
To that end, a brand must ask itself: How am I simplifying my customer’s experience and journey? Am I providing high value at the most significant parts? Am I removing friction at key moments that, as a brand, are under my control? Do I offer my customers choice and the ability to share their preferences, so I can provide simplified and consistent delivery of what they want?
Some are already heading this direction: Amtrak has adopted a simplified program where rewards are consistently valued at time of booking — a point of differentiation to the overly complicated reward charts often seen in the travel category.
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Ultimately, this wide-lens focus on experience should extend to a broader view of customer loyalty — one that goes beyond the individual and into that individual’s network. This can happen on social media, sure, but it can also happen by bringing a friend to a members-only event hosted by Starbucks, or to a concert you bought with points from the Hilton Honors program, or on a flight with Sun Country Airlines. These experiences, above all, invite participation, a feeling of reciprocity that can transcend the historically transactional nature of brand-consumer relationships.
Loyalty, in this new sense, isn’t just an output, stamps you can turn in for home goods. Rather, it’s experiential, inclusive, and focused on outcomes that can drive not only brand loyalty, but advocacy.
