Insight: Regarding Starbucks, we love it when we're right

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By: RickFerguson |

Posted on March 3, 2016

The fallout from the recently-announced changes to Starbucks� reward programme in the US continues apace, with most of the media coverage reflecting the entitlement-fueled social media outrage of casual Starbucks customers as they learned they�ll need to buy nearly twice as many grande Pike Roasts to qualify for a reward. Other voices, however, are following our lead in offering a counterpoint: that, far from damaging customer loyalty, the Starbucks changes better align the programme with the needs of its core customers.

In a Wise Marketer opinion piece last week, I argued that the changes to the My Starbucks Rewards were a positive move for Starbucks� best customers. Money quote from my article:

�Far from damaging the brand, in fact, Starbucks� move has positioned the programme for continued long-term success. Rewards will now go primarily to the retailer�s most valuable customers. Adding bonus days allows Starbucks to motivate customers along temporal and store variables, which will add to programme ROI. Starbucks executives continue to cite the programme as a key factor in their earnings. And pilot tests with such earn partners as Spotify and Lyft reveal that the retailer has designs to expand Starbucks Rewards into a true multi-merchant partner programme.�

Over at Business2Community.com, loyalty analyst Brandon Carter agrees. He argues that the evolution of the Starbucks� programme to one more narrowly focused on the retailer�s best customers exhibits best practices any retailer would be wise to emulate: Money quote from his article:

�We should applaud Starbucks for listening to its customers (who they say demanded these changes). We should also acknowledge their willingness to alienate a few in order to please their most passionate, profitable long term customers. That�s a valuable lesson for any company to learn, and the key to the most consistent source of revenue. Identify your ideal customers, then build a system to add value to their experience and keep them engaged with your brand.�

Did Starbucks customers really �demand� these changes? Believing so is a stretch, and Starbucks is certainly entitled to refocus its reward programme toward better profitability whether or not customers were actually clamoring for the changes.

Carter is on the money, however, when he agrees that the programme changes are both beneficial to Starbucks� most valuable customers and necessary to orient the programme toward long-term success. Carter understands that, for customer relationships to last, they must be symbiotic, providing increased value to both customers and the brand. That�s a lesson every brand must take to heart.

Read Carter's article here.

- Rick Ferguson

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