Last April, Starbucks made some significant changes to its Rewards program.Rather than requiring customers to wait until they acquired enough stars for a food or beverage item, it introduced a tiered system, with a variety of rewards at different levels of stars.
That offered more opportunities for freebies. But if you didn’t know to cash in your 125 stars for a free drink before the program changed, you might not have been happy to wake up and find that you now needed 150 stars.
Fast forward six months, and it turns out that the new Rewards system is working out pretty well. On a conference call with analysts last week, Starbucks said that membership in the Rewards program is up about 15 percent compared with 2018.
The program now has 17.5 million members, versus 16 million at the beginning of 2019. Starbucks, which rolled out the program in 2009, has updated it three times since then, earning this version the nickname Starbucks Rewards 4.0.
In reality, Starbucks chief financial officer Rosalind Brewer said most Rewards members are redeeming 150 stars for a hand-crafted coffee drink. But now that different levels of rewards are available, the company is seeing more activity by occasional customers, and more activity throughout the day, as well as during peak morning hours.
These customers seem more interested in Starbucks’ beverages, and less interested in its food offerings. Brewer said the company’s cold drinks, including refreshers, iced teas, cold coffee drinks and nitro cold brew all are performing well.
“We are pleased that we did add the other layers of redemption, just so that we can expand the excitement of the Starbucks brand to a broader customer,” she said. That’s a promising development as Starbucks prepares to open its newest type of store on Tuesday near New York City’s Penn Station.
It’s called Starbucks Pickup, and it will cater solely to customers who order their drinks via its mobile app. The process is modeled after Starbucks Now, which has become a big company push in China, where Starbucks is bent on expanding its business. In order to use the store, customers must download the Starbucks mobile app, if they don’t already have it. Then, they will select Pickup-Penn Plaza as the location, and place their order.
Once they arrive at the store, Starbucks says they will find their drink via an order status board. Baristas will be there to help if needed, but they are primarily there to make drinks as orders come in on the app. It recommends that customers designate the Pickup-Penn Plaza location as a favorite, in order to save time with their next order.
The first Starbucks Now store opened in Beijing in July, and Starbucks says it plans to expand the concept to other big cities there in the coming year. Collecting that digital information on its customers is crucial to Starbucks, which plans to open 2,000 more stores in the coming year, with half in the U.S. and China. It now has 31,000 stores world wide.
“From the point of the digital relationships, the more we learn about our customer base, the better we (have) been marketing to them,” Brewer said.“And so you will see our marketing become more personalized and that will help with retention and driving frequency in our stores.”
I’m an alumni of the New York Times and NPR. I learned to cook from my mom, and studied with Patricia Wells and at Le Cordon Bleu. E: firstname.lastname@example.org T: @mickimaynard I: @michelinemaynard Sorry, I don’t honor embargoes.