Starbucks customers continue to give a jolt to sales through expanding adoption of its mobile driven rewards program. Last quarter’s sales showed 41% were made by rewards members, which shows the power of loyalty, especially when there’s an integration of payment, points earned, and personalized marketing offers. Starbucks recently made a change to its rewards redemption. For the most part, customers will have to burn more points to get similar rewards compared to the previous system. We will watch for any impact these changes have on the program for next quarter.
A Motley Fool article discusses more on this topic which is excerpted below.
Starbucks has one of the strongest loyalty programs in the United States. Its Starbucks Rewards program allows members to earn free drinks, food, and more.
The program has grown steadily for two reasons. First, it’s tied to the company’s app, which has a mobile order and pay function that allows customers to skip the line in stores. Second, it offers real value beyond just the rewards you can earn, including access to events like Happy Hours (discounts for certain drinks on some afternoons), days where you can earn double “stars” (rewards points), and other special offers.
For consumers, it makes sense to join Starbucks Rewards because the app makes it easier to place and receive an order in a timely fashion. CEO Kevin Johnson gave an update on the program’s growth during the company’s second-quarter earnings call.
“With respect to driving digital relationships, we are pleased with the continued momentum of our Starbucks Rewards program,” he said. “In the second quarter, we expanded our active member base by half a million customers, a 13% increase that takes active Rewards membership to 16.8 million.”
That’s a big number, and an important one when you realize how Starbucks Rewards works to drive sales.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group