A storm in a coffee cup

  • Opinion
  • April 19, 2016
  • Ben Goodale
A storm in a coffee cup

So Starbucks have created a bit of a stir in the last few weeks with what looks like a badly signalled and poorly executed loyalty programme change.

Starbucks describe the change as follows: “It’s an exciting new program that gives members more stars awarded based on what you buy, no matter how often you visit.”

I love it. Because our own work in loyalty and rewards in the QSR sector, and all the data we looked at, demonstrated that above all else you want to drive frequency of visitation. Spend will follow, and there are entirely different tactics for that.

It’s interesting the storm this has caused – even to the extent that one clever person has created an online programme to show you simply based on what you regularly buy how much longer it is going to take to earn a reward than it used to (check it out here). In my case, I used to have to visit 12 times to get a free drink, now apparently it will be 36 visits! Crikey. The passion that is involved in doing this tells you a lot about the way that a successful loyalty/rewards programme can become a critical pillar for why you buy from brand X rather than brand Y, why you visit regularly. And the impact of miscalculating the equity of this in the mind of the consumer.

So what are Starbucks thinking ? You would assume that they have done the math. They do indicate that there are more ways than ever before to earn stars (after all it is not visits now, it’s how much you spend) and that you can earn partial stars so your micro spend isn’t lost.

In their data modelling, you would expect that they would have worked out the value to them of the potential loss in frequency, compared to the motivation of the value gain. But I’m struggling with this compared to our experience. You want people in the door. They will buy what they want – it’s much harder to motivate people in that sort of environment to want to spend up to get an extra star – it’s coffee and cookies after all!

Time will tell – the Starbucks loyalty programme has been a big success historically, with over 12m members, and held up as one of the best in the world. This change doesn’t feel right – it feels like the accountants have got hold of it and looked at the wrong metrics – but as in all these things, their data modelling and research may have told them it’s the right thing to do. But what accountants often miss is the emotional aspect of a programme which plugs into a quite different set of drivers of loyalty and visitation, one which the marketers need to identify and defend before it is too late – with customers disconnecting with the brand.

This story originally appeared on justONE's blog.

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