Starbucks Rewards Program: Case Study with Lessons for Businesses

Starbucks Rewards is the beloved loyalty program from the renowned coffeehouse chain. It empowers customers to earn stars for their purchases and unlock a world of benefits.

From complimentary drinks and delicious treats to coveted merchandise, members can indulge in the rewards of their loyalty.

The program doesn't stop there - personalized offers, early access to new products, and the convenience of mobile ordering and payment options are just a taste of the exclusive perks awaiting loyal customers.

Moreover, Starbucks Rewards isn't confined to the physical stores; it's a tool that ecommerce businesses can wield to bolster customer loyalty and ignite sales. With a similar rewards system, online retailers can incentivize repeat purchases and foster a devoted customer base.

The allure of rewards, discounts, and exclusive product access can sway customers in favor of a particular ecommerce platform, instilling a deep sense of appreciation and loyalty.

For businesses who want a comprehensive platform for effortless and customized loyalty programs, we have Core Loyalty.

Seamlessly integrating Core Loyalty into their ecommerce platforms, businesses can offer enticing rewards, effortlessly track customer activities, and extract valuable insights from data analysis - just like Starbucks Rewards.

With Core Loyalty, online stores can harness the undeniable power of loyalty programs to elevate customer engagement, drive customer retention, and achieve resounding success.

Table of Contents

• What Is the Starbucks Rewards Card?
• How Does Starbucks Rewards Work After the Changes?
• What Did Starbucks Do Right with Its Rewards Program?
• What Did Starbucks Do Wrong with Its Rewards Program?
• 6 Lessons to Learn from Starbucks
• Launching Your Customer Rewards Program

What Is the Starbucks Rewards Card?

The Starbucks Rewards Card is a loyalty rewards program offered by Starbucks, the renowned coffeehouse chain. It is a card-based program designed to enhance the customer experience and foster brand loyalty.

When you sign up for the Starbucks Rewards Card, you can start earning stars to gain access to a host of benefits and rewards. You get perks like double stars or freebies on drink launch days, on random days, and on your birthday with the Starbucks birthday rewards.

The card functions as a prepaid card that customers can load with funds and use to make purchases at Starbucks locations.

Every time a customer makes a purchase using their card, they earn stars, which act as currency within the Starbucks Rewards program.

These stars accumulate and can redeem a range of rewards, including free drinks, food items, or merchandise.

The Starbucks Rewards Card goes beyond just providing a convenient payment method; it also offers exclusive perks to cardholders.

These perks may include personalized offers tailored to the individual's preferences, early access to new products or promotions, and the ability to earn bonus stars on select purchases.

How Does Starbucks Rewards Work After the Changes?

The revamped Starbucks Rewards program operates based on a straightforward and transparent system that rewards customers for their loyalty in a more flexible and personalized manner.

Under the updated program, members earn stars for every dollar they spend at Starbucks stores or through the Starbucks rewards app.

The earning rate is 2 stars per dollar spent. However, with the Starbucks rewards changes, customers can now redeem their stars for a wider range of rewards, including both drinks and food items.

This flexibility allows members to choose from a more extensive menu when redeeming their stars, providing greater options to suit their preferences and dietary choices.

The tier system has also been simplified. In the program upgrade, Starbucks Star rewards is making changes to the tier levels and reward redemptions.

With the new structure, even the most expensive drink can be earned for 150 stars, allowing for more flexibility in redeeming rewards.

Starbucks' changing rewards also placed some shifts in stars required for certain items, such as iced coffee and iced tea now costing 100 stars instead of 150 stars, and packaged coffee and select merchandise items requiring fewer stars.

The new rewards program also eliminates expiration dates for earned stars, ensuring that members can accumulate stars over time and redeem them whenever they choose.

What Did Starbucks Do Right with Its Rewards Program?

Starbucks has successfully crafted a rewards program that captures the hearts of its customers in every cup of coffee they order.

Here are several aspects in which Starbucks excels with its Rewards program:

1. Generous Earning Structure

Starbucks rewards customers with 2 stars for every dollar spent, allowing them to accumulate rewards quickly. This incentivizes frequent visits and purchases, encouraging loyal customers to get more products.

2. Diverse Reward Options

Expanding the redemption options beyond just beverages helps Starbucks cater to a wider range of customer preferences. This flexibility ensures that members can redeem their stars for food items that suit their taste and dietary choices.

3. Tiered Benefits

Starbucks implements a tiered system, offering additional perks to Gold-level members. This creates a sense of achievement and exclusivity, motivating customers to reach higher tiers and enjoy enhanced benefits like free items and personalized offers.

4. Extended Star Expiration

As long as you have an active prepaid or credit card account, the stars you earn through the Starbucks® Rewards Visa® Prepaid Card and the Starbucks® Rewards Visa® Card Rewards Program never expire.

Your Stars will expire 6 months following the month in which your prepaid or credit card account is closed or expires if this happens for any reason.

5. Personalized Offers

Starbucks leverages data insights to provide personalized offers to its members. Tailoring promotions and rewards based on individual preferences and purchase history helps Starbucks create a more personalized and relevant experience, enhancing customer satisfaction and retaining customers.

6. Mobile Ordering and Payment

Starbucks integrates its rewards program seamlessly with its mobile app, allowing members to conveniently order and pay for their purchases. This streamlined process saves time and enhances the overall customer experience, fostering loyalty.

7. Early Access and Special Events

Starbucks Rewards members get early access to new product launches and exclusive events. Through these opportunities, Starbucks makes its members feel valued and privileged, fostering a deeper connection with the brand.

8. Partnerships and Bonus Stars

Starbucks collaborates with partner brands and occasionally offers bonus stars, providing additional opportunities for members to earn rewards faster. This strategic approach increases engagement and adds value to the rewards program.

What Did Starbucks Do Wrong with Its Rewards Program?

While Starbucks has generally been successful with its Rewards program, there are a few areas where the company could improve

1. Lack of Customization

While Starbucks offers personalized offers, the program could benefit from more extensive customization options. Allowing members to choose their preferred rewards or tailor offers based on specific preferences would create a more personalized and engaging experience.

2. Tier Advancement Challenges

Starbucks' tier system relies solely on the number of stars earned in a year, which might make it challenging for some customers to progress to the higher Gold tier. Introducing alternative pathways for tier advancement, such as incorporating additional engagement metrics, would provide more attainable goals for members.

3. Limited Communication Channels

Starbucks could improve by expanding its communication channels to keep members informed about new promotions, rewards, and program updates. Providing more avenues for communication, such as email newsletters or in-app notifications, would ensure members are well-informed and engaged with the program. \

4. Lack of Guest Rewards

Starbucks currently focuses primarily on rewarding individual customers rather than providing incentives for group or guest visits. Introducing rewards or benefits specifically aimed at group visits or encouraging customers to bring guests could help drive social engagement and expand the program's reach.

5. Inflexible Redemption Options

While Starbucks has diversified its reward options, some customers may still find the selection limited. Expanding the range of redemption options to include more choices, such as reusable merchandise or charitable donations, would cater to a broader array of member interests and values.

6 Lessons to Learn from Starbucks

Starbucks has set a remarkable example with its successful Rewards program, offering valuable lessons for ecommerce businesses looking to enhance customer loyalty.

Here are several distinct lessons that can be learned from the Starbucks program:

1. Seamless Integration

Starbucks demonstrates the importance of seamlessly integrating the rewards program with existing customer touchpoints, such as mobile apps and in-store experiences, to provide a seamless and convenient customer journey.

2. Personalization at Scale

Starbucks showcases the power of leveraging customer data to deliver personalized offers and recommendations, even on a large scale. By tailoring rewards and promotions based on individual preferences and purchase history, businesses can create a more personalized and relevant experience for their customers.

3. Flexibility in Redemption

The Starbucks Rewards program highlights the value of offering a wide range of redemption options beyond just beverages, accommodating diverse customer preferences and dietary choices. Providing flexible redemption choices ensures customers can use their rewards for items that truly resonate with them.

4. Tiered Benefits for Engagement

Starbucks employs a tiered system that rewards customers with additional benefits as they progress through the program. This incentivizes continued engagement, motivates customers to reach higher tiers, and fosters a sense of exclusivity and achievement.

5. Strategic Partnerships

Starbucks collaborates with partner brands and occasionally offers bonus stars, enhancing the rewards program's value and attracting new customers. Exploring partnerships with complementary businesses can expand reach, increase engagement, and unlock new growth opportunities.

6. Continuous Improvement and Adaptation

Starbucks exemplifies the importance of continuously evaluating and evolving the rewards program based on customer feedback and market trends.

Actively listening to their customers and making necessary adjustments ensures that their loyalty program remains relevant, exciting, and aligned with evolving customer preferences.

Launching Your Customer Rewards Program

Starbucks Rewards is a gold-standard loyalty program with approximately 30 million program participants. The brand has transformed the coffee industry and altered how coffee is consumed worldwide.

Starbucks has used strong collaborations, gorgeous branding, and a wide range of coffee drinks to take something that had been done the same way for decades and turn it on its head.

Since then, they have changed how they conduct everything, including customer loyalty.

To embark on the same growth journey, businesses can turn to Core Loyalty, a comprehensive platform that simplifies the implementation and management of rewards programs.

With Core Loyalty, businesses can tailor their loyalty program to their unique needs, offer enticing rewards, track customer interactions, and gain valuable insights to inform their business strategies.

Launch a customer rewards program with Core Loyalty today.