How I became a Gold Card Member within months…
Starbucks is an interesting economic indicator – you can disregard any worry of recession in Canada by peering into a store and counting the sheer number of people spending their disposable income to treat themselves to specialty lattes. As I recently jumped on the Starbucks craze (a little late to the game), I’ve noticed that the stock price is climbing at the same rate as my excitement. Despite stores having closed in the past few years, new stores are opening again, they recently entered into the new Vietnam market, and Teavana Holdings was purchased to expand their tea business.
I never quite understood how people could justify their spending at Starbucks, given that I was raised with the Latte Factor in mind, but within months of working full-time I became hooked on the Starbucks culture and became a Gold Card Member. The reason really boils down to the loyalty program, the store locations and provision of a central meeting place, and expansion of their product line.
My Starbucks Rewards Membership
The loyalty program was launched in Canada just over a year ago in October 2011, and the launch of the free iPhone mobile payment app shortly followed. This was the key factor in building a base of addicted customers who will walk the extra distance to buy Starbucks over Second Cup.
The Rewards program works like so:
- Every time you pay with your registered Starbucks giftcard, you collect 1 Star.
- At 5 stars, you qualify for the Green level, getting you a free birthday drink, and free refills on the same visit.
- After collecting 30 more stars (within a 12 month period), you qualify for Gold membership, which they send you a personalized Gold Card, and you can earn a free drink or food reward every 12 stars.
- To maintain your Gold membership you need to collect 30 stars within a year (which really isn’t challenging for anyone who obtains the Gold membership in the first place).
- Various promotions are offered for additional star opportunities to get you to your free drink a little faster.
(Note that the rewards program was simplified from a more confusing scheme in October 2012)
With the Starbucks App, I can pay from my phone, view details of store locations, view and create my own menu items, and most importantly I can manage my rewards by watching a little star fall into my Starbucks cup. From the consumer perspective, the loyalty program is so much more successful than any other points card system because everything is consolidated to one engaging interface. No longer am I disconnected from the culture of the store, wondering how many points I have and too lazy to remember my password and sign in online. In my hands, I am counting down every star until the next free drink, and itching to visit the store again.
(I also haven’t come across another similar payment app that has such an easy interface, with so many features, and is essentially bug-free.)
The other key allure of Starbucks is the atmosphere, and the provision of a central meeting place. Where else can you sit for several hours, either alone or with company, eating and talking in a nice environment? It’s the ideal place to go when I have downtime between meetings, want to meet up with friends, or when I need somewhere to work away from the house or office.
My $4 latte is no longer just a drink – it suddenly grants me 1/12 of the way towards a reward, free wifi, and somewhere to sit for 2 hours with no one rushing me to leave.
Of course this is paralleled at any other coffee house, but recall that I am now a loyal customer, collecting stars towards my free rewards.
New Product Lines and Promotions
The introduction of hot foods also secured Starbucks at the top of my list for places to go when I don’t have anywhere else to be. Now I am no longer limited to only coffee or sweet snacks if I need a quick bite, and my regular visiting hours are no longer limited to mornings before work, and in the afternoons between 2-4 pm.
Take for example the introduction of all-day breakfast sandwiches. If I want something more substantial than coffee and baked goods, I can now continue my morning routine at Starbucks, rather than heading over to the nearest Tim Horton’s. And on the plus side, I can enjoy a more ‘gourmet’ breakfast, with artisan bread and better cheese.
The bonus is that new items like their sandwiches and specialty holiday drinks are cleverly tied into the rewards program. Extra stars and deals are offered at every roll out, providing clear incentive for me to try something new.
I wonder what new Teavana products will be launched in Starbucks stores next year…?
On the Downside…
The better the sales at Starbucks, the less I enjoy my Starbucks experience. The caveat of personalized drinks and increased menu items is that my wait time is substantially longer. Line ups are sometimes out the door in the mornings. The process of writing your name on each cup, and personalizing each drink with half sweet, extra hot, soy milk, no whip, mocha drizzle etc. just takes way too long with only one or two baristas. Its greatest strength doubles as the store’s greatest weakness.
Perhaps this is related to how quickly I pay with a tap of my phone, but it’s a lot more bearable on the occasions that someone takes my order while waiting in line. This is an improvement that needs to be implemented more consistently in the mornings.
You’ll notice that nowhere have I mentioned the quality of the coffee and product itself, and the reason is because it has not been an important factor in why I love (vs. like) Starbucks. I don’t drink regular coffee roasts, I don’t particularly like their espresso, and I pretty much only drink the specialty frappuccinos and lattes as a treat and an alternative to the boring office brew. The secret to the success of Starbucks resides mainly in the culture it has created by the loyalty program and membership to the elite Gold Card club.