Starbucks has been getting a lot of attention in regards to their newly rolled out loyalty program. Mainly because of the sudden changes that caused an uproar in the Starbucks loving community. The controversy around their “improvements” is teaching business owners that it’s important to know how to launch a successful loyalty program. It should be strategically planned for growth and revenue building. Let’s look at Starbucks and take away some pointers from their new program.
Starbucks started out with a stamps based program, awarding one stamp per visit and then switched their program to points based. Now people are being rewarded for spending more, rather than visiting more. It is a tactical plan to switch from stamps to points, forcing customers to hand over those extra dollars. If you’re a business with a large variety of products, it’s advisable to start with a points based program. Awarding your customers for spending larger amounts with you, rather than forcing them to head to a competitor for the extras.
Allowing customers flexibility is one way to make them feel like they are really part of a loyalty program. Starbucks is now driving personalised offers to customers based on their prior behaviours. This is a complex feature of a loyalty program but can be simulated by offering accumulative rewards. Meaning the more points the customer accumulates, the better the rewards. Consumers can then choose to redeem the smaller offers or keep building more points for something of better value. Once again pushing customers to spend more with you, which at the end of the day is what you want out of a good loyalty program.
Don’t fall into the trap of sending marketing emails to your loyal customers. In fact this is the wrong way to go about signing up customers to your loyalty program. There is a lot of stigma around signing up to a loyalty program and then only receiving uninteresting updates about a business. Give your customers something to get excited about! Plan promotions a couple of times a month and send them out via SMS or push. This will really get your customers going and get them to take action instantaneously. Starbucks do this really well by providing promotions by push notification in their app.
So maybe the critics have it all wrong? After the storm of its new release, Starbucks new loyalty program is still proving to be a hit but it has taught us a valuable lesson. Plan a successful loyalty program and not only will your customers thank you for it but you will be thanking yourself for a nice revenue boost!