Starbucks Loyalty Fail
Starbucks knows a thing or two about loyalty. I’m a Gold Card member, and enjoy the free refills as well as the periodic free drinks I accrue by using it. (Green Card members get the refill benefit, but not the free beverage after every 15 purchases. In addition, Gold Card members get a personalized card in that color and, theoretically, are addressed by name by the baristas.)
Many other coffee shops offer complimentary in-store refills to all customers, but Starbucks has converted refills into a loyalty benefit. (Similarly, Starbucks has put their own spin on the ubiquitous “free wi-fi” offered at most establishments. They created their own portal with special content like free access to pay sites like WSJ.com and NYTimes.com.) So, I was surprised when normally savvy Starbucks sent a friend this message:
This year you didn’t maintain Gold Level Status…
But it’s easy to get back again.
In order to keep your Gold level membership in My Starbucks Rewards™, you needed to earn 30 Stars within 12 months from the date you first reached the Gold level.
Without having earned those Stars, you’re transitioning back to Green level membership. Which is still pretty great. You can continue to use your Gold card and enjoy free select syrups and milks, plus free refills on hot or iced brewed coffee or tea during your same-store visit. Even though your Star counter is reset, if you earn 30 Stars in 12 months, you’ll get back to Gold…
Despite their friendly and upbeat tone, Starbucks missed the boat on this loyalty communication from a neuromarketing standpoint. They delivered a negative New Year surprise to my friend, and more or less told her she had to start from scratch to regain her Gold status. At least they didn’t wait until she appeared in a store so a barista could seize her gold card and cut it up!
What Starbucks Should Have Done
As described in Loyalty Programs: Of Rats and Men and my new book Brainfluence: 100 Ways to Persuade and Convince Consumers with Neuromarketing, the goal gradient hypothesis applies here: the closer rats got to a food reward, the faster they ran. Furthermore, a Columbia University study using coffee loyalty cards (yes, Starbucks, actual coffee loyalty cards) showed that the closer people got to their goal of a free drink, the more frequently they consumed coffee. So, if you believe that research here are three things Starbucks should to make their loyalty program more effective:
- Show progress toward free drinks. I’m a frequent Starbucks visitor, but I never know where I am in relation to my free drink after 15 stars. A barista has never said, “Roger, just four more coffees and you earn a free one!” The printed receipt has never encouraged me by showing how many stars I’ve accumulated. Instead, a print postcard appears in my mailbox every now and then. (I could check my stars online, but I don’t bother.) The research findings show that customers would be more motivated if they knew they were getting close to an award.
- Give advance notice of status loss. The loss of gold status came as an unwelcome surprise to my friend. Starbucks could have turned the same event into a motivator by sending an email, say, a month in advance that said something like,
“You have 25 stars! To retain your Gold Card status, you only need to purchase five beverages in the next 30 days!”
The timing of the notice, or series of notices, could be predicated on the number of drinks needed (a larger number would need longer notice) and consumption patterns. Emphasizing the substantial progress the customer had made toward keeping gold status would produce the same goal-gradient motivation described above, and would be far more likely to get a customer back in the store quickly than telling them they had to start over. Motivate, don’t DEmotivate!
- Give expired members a head start. If a customer went to the trouble to register on line and then consume enough coffee to earn a gold card in the first place, they are likely someone with above-average interest in coffee in general and in Starbucks in particular. There may be some reason their consumption fell off so dramatically that they lost gold status – a new workplace, a competitive store that was more convenient, etc. Whatever the reason, it doesn’t make sense to alienate this customer by sending them back to zero. If the “last chance” email(s) don’t get the customer up to Gold status, don’t give up, try another neuro-incentive:
“We’re sorry that you weren’t able to get back to Gold status, but because of your loyalty to Starbucks we’re making it easier for you! While new customers need 30 stars to achieve that level, as a past Gold member yourself, you won’t need that many. We’re adding ten stars to your account right now, so you’re already a third of the way to becoming a Gold member once again!”
The cost of this change in terms is low, and if it gets a slow-consuming customer back in the habit of visiting Starbucks it will pay itself back many times over.
- Use the Starbucks Digital Network for loyalty. Why not provide loyalty members with some kind of incentive to log in, and place a cookie on their laptop or mobile device so they can be recognized on each visit? The same, “You are just four stars away from a free drink!” message could be prominently displayed, producing an increase in goal-oriented motivation. In addition, targeted offers could be displayed. Haven’t ordered a breakfast sandwich in a while? Here’s a coupon to get you back in the habit. Competitor Panera seems to be doing something like that with the random, or not so random, offerings from their own loyalty program. (Of course, the proprietary network has to work; about a third of the time I log on from Starbucks, I can connect to wifi but can’t access their special content.)
Do you think the Starbucks email was off-putting? Do you have any other suggestions to improve their loyalty efforts? Leave a comment with your thoughts!