How Starbucks builds loyal customers

Have you ever noticed that people are really loyal to their favorite coffee brand? Dunkin’ Donuts, Tim Horton’s, or Starbucks… some people get completely offended at the thought of drinking coffee that isn’t their preference.

I’m one of them! I love Starbucks, and my Twitter bio even says so. But what’s really weird is that in a taste test, I probably couldn’t tell the difference. So what makes Starbucks so much better, in my opinion?

Starbucks is a Millennial business

With the smartphone revolution, it’s interesting to see which businesses can adapt to the changing times the fastest, and the clear answer to me is Starbucks. With its mobile app, I can stay completely connected to my coffee habbit.

It starts with the Rewards Program.

With Starbucks, each time I buy a drink I get a star. After 30 stars, I’ll be upgraded to Gold Level, entitling me to a free drink after each 15 stars that I collect, as well as a personalized reward card with my name on it. How cool is that?

It continues with the Rewards Card.

From my mobile app, I can:

  • Add money to my card from anywhere.
  • View the balance on my card
  • View my card’s recent transactions

That brings me to the best part… Paying for drinks using my smartphone.

Last week I walked up to a Starbucks counter, ordered a drink, and paid for it by holding my phone up to a scanner. Again, how cool is that?

It makes me wonder if one day we will ever need to carry a wallet. Isn’t it conceivable that we all have credit card apps on our phone that we can use the same way that we use the physical cards themselves?

Who knows if it will ever get that far, but what is certain is that Starbucks is a pioneer in this respect. And who wants to be on the tail end of changing times? I don’t know about you, but I think everyone from my generation has an obsession with discovering new things first.

The Starbucks mobile app has plenty of other cool features, too. I can locate stores, send eGifts, browse menus, and even apply for a job.

Tim Hortons, in their defense, does have a mobile app. However, all it can really be used for is checking the balance of a card, finding stores, and browsing nutrition info. It certainly can’t be used to pay for purchases or add money to a card.

Dunkin’ Donuts doesn’t even have a mobile app yet.

When I go to Starbucks, I feel like I’m part of a larger community… Not just a consumer. I’m loyal. I feel like I’m using the newest and latest technology, and I’ve just hopped onto a bandwagon that most businesses won’t take out of the garage for a few more years.

Why are you loyal to your coffee? Are they doing something that Starbucks isn’t?

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About Jim Mignano

Jim Mignano is a young professional practicing and learning Public Relations in Rochester, NY. He is passionate about the possibilities that digital media provide and loves utilizing new platforms for a variety of functions. James' blog is about people and the technology they use. It's about communication and persuasion... the old and the new ways of doing things... the struggle between sticking to the tried, true recipes and experimenting with intuitive, innovative ideas. It's an extension and reflection of James himself: the convergence of ambition & ability.
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6 Responses to How Starbucks builds loyal customers

  1. Interesting article and perspectives!

    Being the first to do something always brings you benefits: people will always remember the first thing something happened in a category. The same way we remember winners – not the ones who came second or third.

    I think Starbucks has adopted that perspective from the very beginning: Doing and trying out new things. Leading instead of being lead. This is true at least in many cases, even when I’m not intimately familiar with their business. Even in the start of their business, was about being the 1st one, when they took the lead role in making coffee something more than just coffee (as it was regarded not so long ago). Being the first real player in that category, they managed to get a permanent place in people’s minds. One of the key factors why they remain to be so successful today.

    Do you see this loyalty you speak about extending to FMCG coffee products or do you see it being specific to ‘coffee houses’?

    Br,
    Jussi P.
    http://theoutsideviewblog.com

  2. jmignano10 says:

    Thank you for the kind words, Jussi! You make some good points yourself. I hadn’t really thought about the brand loyalty in terms of consumer goods in stores, etc., but I do think that it would extend. It would be interesting to study more scientifically, but I would definitely bet that once someone has a favorite or preferred brand (especially if they feel as strongly as I do about Starbucks), they want to buy that brand all the time.

    • Thank you for your fast response! I was intrigued to see how you see yourself as a customer and a consumer, as we rarely see ourselves in the way we act in reality.

      If you’re interested, there’s plenty of research done on brand loyalty, which you can access for free (a few web searches should do the trick). Most of it is on FMCG products, but there are other info available as well. If you want to delve more into the topic, you could first check out the ‘old school’ articles the wikipedia article on brand loyalty uses as a reference (http://en.wikipedia.org/wiki/Brand_loyalty). It gives a good starting point for understanding the basics on our behavior. For a different take on the topic, I’d recommend a look into e.g. the books by Malcolm Gladwell titled The Tipping Point or The Blink (there’s some more psychological stuff there also, but they are quite an easy and partly very fascinating reads)

      On a personal experience, and I believe it is discussed in textbooks / white papers as well, I’ve seen a huge large variance between different product categories on how loyal people tend to be to their brands (and products).

      There’s also a lot of variance on the factors that can cause the ‘brand-switch’ to occur. A good example of this is that on some personal products (some skin care products etc.), if your product/brand isn’t available on the store at the moment, you will either not buy anything or will look for it in another store (a generalization of some shopper study results), while with some daily groceries just the the shelf being empty can be enough for the switch to occur even permanently or till further notice (and most likely will occur at least for that purchase occasion). And still, trying to get you to change the store you buy your daily groceries from is one of the most challenging tasks any marketeer could face.

      On all fronts I remember the psychology of buying or consumer behavior as one of the most interesting (and later useful) parts of my marketing studies. I’d encourage you to delve deeper into it. Understanding the target audience and the basic motives we have will make you a better marketeer and help you to avoid the most common mistakes in the business.

      – Jussi P.

      Ps. Sorry for the long text, but the topic always gets me excited. 🙂

      • jmignano10 says:

        Jussi, I appreciate the long comment… What better use for a blog than to start a conversation?

        Brand switch seems very interesting to me. I would find it very fascinating to know what brands people are so loyal to that they won’t switch from it for anything, as well as what makes them so loyal to that brand. It seems to me like the marketers behind those brands are doing something right!

        Thank you also for the book suggestions, as I am always in search of a good book to read! You’ve been a big help.

        Can I find you on Twitter?

        -James

  3. I think there’s no such things as a brand you wont switch away from. The barriers for switching, I believe, can never be so high as to completely stop you from switching – no matter how loyal you are. I’ve got no proof on this one, but then there hardly ever is on the absolutes (you can always contradict them). There are definitely cases, and then there are also individuals – that we both know in our circle of friends – where the loyalty runs so deep in some area, that they would never switch away from their brand choice (sports and home teams being one of the classic examples of ‘brands’ that people are extremely loyal to). In any case, it is a very interesting topic.

    I’m on twitter on the blog title spreading messages and giving opinions on marketing, design and things of new tech + all other related tings that tickle my fancy. You can find me with @outsideviewblog. I’m also on most other major social sites like Facebook, Klout, LinkedIn, etc. either with my personal name or with the blog title. 🙂

    – Jussi

  4. Pingback: LEXUS! BMW! MERCEDES! … Hyundai? | Millennial's Marketing

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