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Love it or hate it: life in the 21st-century is intrinsically linked with the influence of Starbucks. With its unique business strategy, accessibility, and wide usage in popular culture, Starbucks is arguably the biggest coffee shop in the world.
Today, there is at least one Starbucks every tenth of a square mile. And, though the number of café brands and competitors has been on a steady rise since the early days of the coffee culture movement, Starbucks still commands a loyal customer base that forms the backbone of its revenue stream.
Repeat visits from Starbucks Rewards members generates a whopping 40% of the brand’s UK revenue — and the impact of the loyalty program can be measured in the sharp 7% uptick in sales that’s happened since 2019, when the Starbucks Rewards program was introduced.
So, how does Starbucks Rewards work? And how has that loyalty program helped Starbucks secure a dedicated customer base and boost revenue? Let’s dive in.
(For the purposes of this article, we’re focusing on the UK version of Starbucks Rewards, but it shares many elements with other versions across the world — and the learnings are comparable.)
Starbucks Rewards is a loyalty program with a simple, but effective, points-based system. Members can sign up for free and start collecting member points (known, unsurprisingly, as stars) immediately using a dedicated app.
The Starbucks loyalty app is incredibly popular. Research by Manifest revealed that nearly half (48%) of all mobile users who regularly use restaurant apps use Starbucks Rewards.
Using the app, members gain access to a dedicated member’s dashboard that they can use to track their point balance and explore the menu and place orders before they even get to the cafe.
The 2 Starbucks loyalty program tiers
Starbucks has a strong, instantly recognizable look that they lean into with all their marketing and decor; so it’s only natural that they stayed on-brand with their tier system.
Starbucks Rewards uses a very simple system — there are only two tiers: Green and Gold. And the difference between them is purely points-based.
Green Level is the standard level every member joins as. All members remain Green Level, until they spend enough with Starbucks.
Once they reach 450 stars (or £150 of caffeinated spending), they advance to Gold Level — and, with it, they unlock a new range of rewards.
Gold tarnishes though; members get 12 months of Gold Level for every 450 stars earned. But if they don’t reach the requisite number of stars by their next Gold anniversary date, they drop back down to Green Level.
A dedicated mobile app for Starbucks Rewards
Starbucks created an app for its loyalty program, downloadable on any device. Through the app, members can check their star balance, track how far from the next reward they are, place click-and-collect advance orders to prevent waiting, preload their app-based Starbucks Card with credit which they can use to pay in store, and send gift cards.
And that’s great for loyalty program uptake, because an estimated 57% of consumers prefer to engage with loyalty programs via their mobile devices.
A simple, gamified point system for repeatable rewards
Starbucks Rewards has a simple, easy-to-remember system. Members collect points with every (logged) purchase — and when they have enough points, they can start to redeem rewards.
For every 150 stars earned, a member is able to redeem a free drink.
And, when they reach 450 stars (and, thus, level-up to Gold) they’re able to compound their freebie with extra treats such as extra shots of espresso, selected syrups, and whipped cream — all on the house.
Free birthday drink for Gold Level members
Those who get the Gold can also enjoy a free drink every year on their birthday. Nothing says, “I appreciate you” like a birthday coffee, after all. (That’s not a joke, by the way; 78% of customers become loyal to a brand if they’re individually recognized and rewarded for their loyalty — say, with a birthday freebie.)
In-app personalization to make ordering easier
When signing up, members are invited to set their preferences for their drinks — everything from their milk of choice to size, number of shots, and more. These preferences are auto-filled when exploring drinks through the app, making ordering drinks easier than ever and adding that much-loved personal touch.
Loyalty programs in general tend to encourage repeat visits and spending. But Starbucks has got their system working like clockwork.
The accessible point system makes getting started easy, while the app’s sleek look and user friendliness makes people want to return. Stars also have an expiry date; but one that’s long-lived enough to keep people invested and not to incite frustration.
The tiers system is cleverly constructed too. Gold comes with just enough free perks — and an obtainable minimum spend — that members are encouraged to reach Gold and stay there. But, if the carrot isn’t enough of an incentive, there is a stick too; Green members keep their star balance as long as they have activity in their account over the past two years, but Gold members who fail to qualify for Gold again in the next year revert to Green and have their member Star count reset to zero.
The app is also geared to entice members into making purchases. Members can explore nearby stores — including viewing opening times and distance — and set their favorites. The app homepage has a range of seasonal Featured Drinks to entice people into trying something new or exploring the Order tab. And, to encourage customers to return to the store more often, the app also sends push notifications advertising promotions.
Even when members aren’t currently within striking distance of a Starbucks, the app encourages members to spend with the presence of a digital Starbucks Card. Members can preload the card with money to use in-store — like a dedicated coffee credit card.
Starbucks doesn’t just sell beverages; it also collects a lot of data. With over 100 million transactions per week globally and nearly 31 million active members, there’s a lot of data to choose from.
This data is invaluable to the organization, because it holds so much information about customers. Not in a creepy, I-know-your-name-and-where-you-live kind of way (though, hey, they may know that too), but in terms of customer preferences and buying behaviors.
With that data, Starbucks is able to tailor offers, create new products, see what locations are thriving (and which ones aren’t), monitor app usage, and more.
All of the above-mentioned benefits individually can create brand loyalty, but the success of the Starbucks Rewards program lies in the company’s ability to use its data effectively to create an excellent customer experience.
By centralizing its members’ purchase and behavioral data via the app, Starbucks is able to provide a plethora of customized offers and targeted comms that allow them to build longer-lasting relationships with their members.
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