The Coffee Chronicles: can loyalty programmes alone create loyalty?

As the endless stream of editorials and opinion pieces have discussed since the announcement in February, Starbucks are implementing significant changes to their loyalty programme in North America today. Joining most retailers, hotels, and all of the big US airlines, Starbucks are moving from coffees bought to dollars spent. There’s understandably been a mixed response to Starbucks moving their loyalty goalposts, as the majority of customers will now need to spend twice or three times as much to get a free coffee.  Overnight, Starbucks now value you buying a large vanilla latte with extra hazelnut syrup and a toastie twice a week more than just getting a single macchiato every day on your commute. There’s potential for this to reach the UK soon enough, so it got me thinking...

How much does a ‘free’ coffee actually cost? Which coffee chain rewards me the best for spending my hard-earned cash? Assuming, for argument’s sake, that Starbucks would introduce this programme in the UK with ￡1 getting you two ‘stars’, comparing Starbucks’ changes versus the rest of the high street makes interesting reading:

The first thing that jumps out here is the range of loyalty currencies. In my wallet right now, I can get coffee through stars, points, stamps, or just because the Pret barista wants to brighten my day. Simple stamp cards have become ubiquitous with even the smallest independent coffeehouse, but I have so many options to choose from, so what factors really influence my choice?  If I was counting my pennies, then Caffe Nero would be the obvious choice – in fact nearly three times as much as Starbucks or Costa. From a customer perspective, it’s a simple proposition to understand. I also don’t need to give them my data, so I don’t get bombarded with irrelevant emails and offers. On the other hand, I still get treated the same as everyone else, because from a business point of view, Nero have no idea who I am or how much I am worth to them.

Should I feel devoted to a brand and advocate their coffee, if they don't know who I am, what my coffee preferences are, or give me nothing extra in return? What’s more, is long-term caffeinated loyalty all worth it just for a ￡2.40 free drink every so often? And have you ever heard anyone rave about Costa, or Nero to the same degree of obsession as for Starbucks?

Increasingly in the digital world, the brand that enables convenient interactions and consistently high customer experience across app, online, and in-store is second to none. In the coffee world, this is the Starbucks effect: it’s neither purely coffee, nor a generous loyalty programme that actually encourages loyalty, but a marrying of convenience and experience into a holistic customer value proposition across all touchpoints that really drives customer devotion.

Few other coffee brands have a crowdsourcing platform to generate new coffee ideas from its faithful fans, nor as slick gamified elements in its app. To bridge the gap between in-store and out-of-store without missing a beat, Starbucks developed in-app functionality allowing you to order remotely so you can pick up and take out the moment you walk in. Combine those with a great in-store experience (including free wireless device chargers at the tables) and strategically frequent store locations, Starbucks have created an ecosystem that enables an ultra-convenient and rewarding interactions every time you buy, or even think about buying, a coffee. Everyone's experience is catered for and the loyalty currency gives Starbucks greater understanding of their customers, providing the personal data in the holistic brand experience that takes coffee beyond a functional practicality.

Loyalty 'programmes' are not the answer to all your problems, but they can definitely be the first step to driving customer devotion. If you just care that your customers buy more coffee, rather than putting them as valued assets at the heart of your business, then you risk your brand becoming a dusty piece of plastic in a wallet, or an unloved app in a phone. This is why Starbucks are getting loyalty right, and while customers may be a little disgruntled at the loyalty changes, I don't expect many people to ditch Starbucks coffee any time soon. I don’t like cappuccinos enough to be devoted to Starbucks quite yet, but they’re definitely pressing all the right buttons on my coffee machine.

If you're kept awake at night by any burning loyalty questions, or just from drinking too much coffee, drop me a line at [email protected] and we’ll answer them and help you move forward. Please do comment below, as I’d love to hear your thoughts.