EXAMPLES OF LOYALTY PROGRAMS
STARBUCKS — Loyalty Program Example
MY STARBUCKS REWARD
Starbucks – it’s hard to find anyone who doesn’t know what Starbucks is. It’s one of the most successful businesses in the world with more than 22,000 stores across 67 countries, multi-billion income, and countless clients.
In ‘2007, the store chain experienced a decline in sales, mass personnel dismissal, and the closure of a large number of their shops. To keep up with the crisis, they changed the menu, created new coffee recipes and developed a unique loyalty program.
Before the economic crisis, Starbucks had launched a loyalty program using cards, stating “you buy a Gold card for $25, and it gives you a permanent discount of 10%.” However, later they discovered that clients didn’t want to spend money on a discount card like that, and almost all of them refused to buy it.
Since 2008, My Starbucks Reward – a new loyalty program – was set in motion, it’s a free card that:
- can be presented as a gift certificate for clients’ friends
- is a bonus card for collecting stars
- works like a prepaid card that can be used to pay at Starbucks
My Starbucks Reward has three levels: Welcome, Green and Gold.
Welcome users get a free drink on their birthday.
Green users who collected five stars (1 order = 1 star) will get a free drink and free access to Wi-Fi (back in 2008 Wi-Fi was paid).
Gold users who collected 30 stars will get personal cards, VIP-client status and a free coffee every 12 visits.
This loyalty program was a huge success and has more than 12 million active participants.
This is a surefire strategy to success, in exchange for increased brand awareness, increased brand loyalty and a boost in sales, all Starbucks did was offer the 13th cup of coffee for free.
In 2016, Starbucks again changed the rules of its loyalty program. Now, there are only two levels (Green and Gold). The previous one star was equivalent to one visit regardless of the amount paid; now, clients only get a star if they spend a minimum of $2.
The rules governing the Gold level were also changed. Now, 30 stars are not enough, clients need 300, the free cup of coffee went from every 12 stars to every 125. One day in every month customers get two stars.
With this approach, Starbucks was able to save a fading business, stop closing shops, and return to the ranks of the most successful businesses in the world with a profit of $ 626.7 million in 2015.