For Starbucks, managing growth is becoming a matter of their loyalty program. New stores will continue to be necessary, but profitability will be driven by customers using their mobile app. Not only are those customers rewarded, they are measured, tested and tracked in a way that retailers haven't known before. In the future, rents will still be paid, but managing a successful retail business will be more about a company's ability to leverage mobile-based relationships.
The Motley Fool: How Important Is Starbucks' Loyalty Program?, 2019-May-5 by Daniel B. Kline
The program has grown steadily for two reasons. First, it's tied to the company's app, which has a mobile order and pay function that allows customers to skip the line in stores. Second, it offers real value beyond just the rewards you can earn, including access to events like Happy Hours (discounts for certain drinks on some afternoons), days where you can earn double "stars" (rewards points), and other special offers.
For consumers, it makes sense to join Starbucks Rewards because the app makes it easier to place and receive an order in a timely fashion. CEO Kevin Johnson gave an update on the program's growth during the company's second-quarter earnings call.
"With respect to driving digital relationships, we are pleased with the continued momentum of our Starbucks Rewards program," he said. "In the second quarter, we expanded our active member base by half a million customers, a 13% increase that takes active Rewards membership to 16.8 million."
Mobile Marketer: Starbucks boosts loyalty membership by 13% following switch to spend-based program, 2019-Apr-29 by Robert Williams
At the end of last year, Starbucks revamped its loyalty program, moving away from frequency-based rewards to spend-based ones, Group President John Culver said during the call. Since the change, the chain's 90-day active membership has increased 25% year-over year. "We now have 8.3 million active 90-day members, and that is a significant step change in terms of the growth rate from what we've seen previously in the program," Culver stated....
By switching the focus of the loyalty program from frequency of visits to how customers spend, Starbucks is attempting to broaden the appeal of the loyalty program beyond it most loyal customers with the expectation that once consumers become loyalty members, they will visit more regularly to earn rewards. The growth in Starbucks' rewards program also underscores the importance of mobile in helping to solidify its relationships with key customers who are most likely to visit its stores.