Case Study: Gift Cards That Go the Extra Mile
When regular coffee drinkers began asking about perks and benefits to getting their regular fix at Starbucks, the company delivered. Launched almost a year ago, Starbucks Rewards offers more gifts and benefits to Starbucks' existing reloadable coffee card customers.
"Before we launched Starbucks Rewards, membership didn't really have any privileges," says Jessica Mills, brand manager of Starbucks Canada. Since its inception in 2001, the reloadable card only offered users an occasional $5 gift card in the mail, along with the ability to protect their balance and upload money onto the card - not much incentive to use the card over cash.
Since the launch of the incremental gifts, where customers can receive daily free additions to their coffee, customers can receive a whole slew of perks. Those perks include free syrups (hazelnut and vanilla) or a free soy option. "Customers shouldn't be penalized for things they can't control," says Mills of those customers who suffer from lactose intolerance and must drink soy products. Ordinarily the soy option costs 50 cents, but cardholders get it free.
The card also offers two hours free use of Wi-Fi inside stores, a complimentary tall beverage with the purchase of whole bean coffee, and free refills on brewed coffee, both offered on the same visit in-store.
It works this way: customers put money on the card at the point of purchase, then they must register the card online. Once they are registered, they also have the option of receiving advance notice, in the mail or online, about new products, and a special promotion to try them out for free. "We wanted to offer our loyal customers daily rewards for being a registered card carrier," says Mills.
For example, in August Starbucks began selling oatmeal for breakfast with a variety of dried fruit and sugar toppings. Cardholders received a direct mail offer to come in and try the oatmeal for free, and tell Starbucks what they thought about it.
Along the way there were hiccups. "Starbucks is a world-class retailer but we're not there yet in being a world-class CRM (Customer Relationship Marketing/Management). But we are working on it." Case in point: when customers came in to use the card, baristas had trouble swiping the card to read the data - the system wasn't intuitive and couldn't read the card easily. This resulted in more time at the cash for the customer, a sometimes frustrating experience. The company also heard through customer feedback that registering the card online took a long time; therefore, the company increased the bandwidth.
This customer feedback has been integral to the card's success and is employed to optimize the card-using experience. For example, around the same time as they launched the incremental gifts on the card, they also launched My Starbucks Idea, a forum for feedback that asks the customer how they can improve. Customers can fill out cards at the store or they can go online. "They don't hold back - good or bad - and we take that information and use it," says Mills.
The feedback has improved the use of the card, and the success of the program is evident: registered cardholder numbers have increased more than 54 per cent from this time last year and more than 1.5 million registered cardholders have saved since April 8.
