To get my child to join me at the dog park in the mornings, I had resorted to bribing him with a stop at Starbucks. With my "mom" hat on, it proved to be an effective enticement. As a frequent customer and loyalty practitioner, I cannot help but question why it was so much work (on my part) to reap my deserved recognition and rewards.
We've all talked about how Starbucks has changed us. We now talk in terms of grande, venti, frappuccinio. But now, as a "loyal" customer, Starbucks is changing my behavior further. When it comes to loyalty strategy and program design, I've always lived by KIS (keep it simple): Ensure your program is where your customer is; surprise and delight; and don't make your customer jump through hoops to participate, earn, and redeem. Well, I've learned that Starbucks has, again, flown in the face of the traditional best practice. The question is, will it work in loyalty?
For those of you who aren't familiar with its current program, let me quickly give you the particulars: The Starbucks rewards program is tied to the company's gift card product. As a consumer you can purchase a gift card for the usual gift, but if you want to join the rewards program you must also purchase a gift card. You need to preload a gift card at the store and then hop online to register it. For those of us who don't carry their computer when going for coffee, this means going home or to the office and remembering to register your card. If you don't register your card, you're not a rewards program member and will not receive any benefits.
Once registered, you need to use your gift card (now also a rewards card) for all purchases in order to qualify for your rewards. Sounds like all the other rewards programs, right? Wrong. This program requires you to always have a balance on your gift card. This means that you have to actively reload the card prior to your purchase.
Hmmmm.... This doesn't really follow the KIS strategy, does it? I sure have to do a lot to get a free cup of coffee, don't I? Oh, and I forgot to mention, your free cup of coffee isn't automatically credited to your rewards card; you actually will receive a coupon/card in the mail. You then have to bring this card into the store to get your free cup of coffee. Good news for Starbucks, but not so good for me -- I've lost the two I've received so far.
In addition to the fact that I have to proactively make sure that I'm keeping a balance on my card and make sure that I keep track of my rewards as I receive them, I'm now very conscience of how much money I'm spending on coffee. Yikes!
I've decided to preload my card each time with $50. I came by this number as an amount not so small that I will have to reload the card at each purchase, but it's also not such a large number that my commitment to Starbucks will hinder my other day to day purchases (or does it?). Does Starbucks understand that my once compulsive purchase is now a planned purchase? Hmmm...sure sounds like a good behavior change for Starbucks.
On the surface, this conscience change in the mind of "my" customer sounds like something really good: once compulsive, now is planned. Sounds like a CFO's dream. But, as a customer who has just begun to realize this dynamic and finding myself loading $50 onto my rewards card every few weeks has made me very conscience of 1) having been "trained" by this company and, more important, 2) the amount of my frivolous spend. Unfortunately for the Starbucks CFO, I've gone from a compulsive customer to a planned purchaser to no longer a customer. Raising my "spend" awareness lost Starbucks a very good customer.
This experience has reinforced my belief in KIS. Remember, the goal of loyalty strategies (and programs) is to recognize and reward your customers for their support of your brand. At the core, this recognition and reward should be part of a seamless customer experience. If you want to thank a friend for their help, you don't send them an email asking them to call you so you can then thank them, do you? Of course not! You are proactive and respectful; you call them or send them a handwritten note and thank them.
Customers have a choice, and when you put too much effort on them they will choose the competitor who makes their life easier.
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About the Author: Erin Raese is a partner with Loyalty 360 -- The Loyalty Marketer's Association