Undoubtedly, Starbucks is a trailblazer when it comes to retail customer experience. However, its loyalty program, Starbucks Rewards, is equally impressive. Recognized as a top-tier loyalty experience, the app played a significant role in driving a remarkable 53% of Starbucks U.S. revenue, as shared by interim CEO Howard Schultz in 2022. So, how did Starbucks Rewards secure its position as the reigning champ of loyalty programs?
Background: What Makes Rewards Addictive
The Habit Loop describes the neurological patterns that govern routines, and was coined in the 1990s by researchers from MIT.
The loop consists of three parts:
- The trigger (or cue): These are signals to our unconscious minds that it’s time to perform our habit.
- The routine: This is the habit or behavior itself.
- The reward: This is the payoff you get from performing your habit.
What is loyalty if not the habit of shopping with your brand? (In fact, most of the latest research on customer loyalty finds that it isn’t really loyalty driving repeat purchase so much as habit).
To create a habit, all three elements of the Habit Loop need to be firing.
Here’s how Starbucks Rewards does it:
Here's how Starbucks Rewards does it:
Triggers:
1. Push Notifications Remind Users To "Think Starbucks":
This morning I checked my phone to find a push notification from Starbucks Rewards that read “Exclusive early access to Summer.” When I clicked it I saw that new drinks had arrived, including the Mango Dragonfruit Refresha (I’m saving that one for when it’s a little warmer than 52 degrees in the UK).
2. Special Events Keep Users Interested:
Starbucks knows that it needs reasons to get people to open the app and order a drink, so they run special events like Double Star Days (when your purchases earn you 2x the rewards points) and Bonus Star Challenges (when certain purchase will net more rewards points - aka stars).
3. Morning Caffeine Fixes Trigger (without the app):
And last, there is a trigger that Starbucks Rewards doesn’t fire, but that it benefits from just the same: The grogginess of waking up that many people fix with coffee.
Routine:
The Starbucks Rewards UX makes using the app simple, valuable, and meaningful for customers:
1. Personalized Experience:
Behavioral Science tells us that Personalization is a powerful tool to capture user attention and interest. From a personalized home page (“Good afternoon Jennifer”) to a experience that makes saving and recording your favorites a breeze, Starbucks Rewards makes its experience as personalized as possible. 2. Gamification Drives Engagement:
Users don’t just earn stars (rewards points), they can also move from the Green to Gold rewards tier once they earn enough 450 stars in one year. Gold status members get even more rewards - like free extra shots of espresso, syrups and whipped cream.
Rewards:
1. Stars Translate to Free Stuff:
At its most basic, Starbucks Rewards is a points-based loyalty program. It gives you points (stars) to spend on whatever you want, and the more you buy at Starbucks the more free things you get. It sounds almost too basic, but Starbucks get right what too many brands get wrong - they have a simple proposition that customers value.
2. Rewarding “Good” Behaviors:
You can earn more points depending on how and when you use your card. For example, if you load your Starbucks Reward app with cash instead of paying with a debit or credit card, you earn 2x the rewards.
This probably doesn’t matter as much to users, but to Starbucks this behavior makes a big difference to its bottom line is partially why - believe it or not - Starbucks is one of the biggest “banks” in the United States based on the amount of customers' money it holds via the Starbucks Rewards app.
3. A Variety of Rewards Gives Users Control:
When the program first launched, users could only trade in stars for drinks. But as it’s evolved, the rewards have evolved as well. Customers can now use stars to get food, coffee beans, and merchandise. U.S.-based users can also earn airline miles from their purchases through a partnership between Starbucks and Delta Airlines. By offering so many rewards options, Starbucks is giving customers control over their rewards - or, autonomy as psychologists would call it.
Looking to create loyal customers who habitually shop with your brand? It's time to harness the power of the Habit Loop. Here's a three-step action plan to get started:
- Identify triggers: Take a closer look at the cues that prompt customers to engage with your brand. Is it an email reminder? A sale notification? Identify these triggers to better understand how to tap into your customers' habits.
- Create a consistent routine: Once you've identified the triggers, it's time to develop a consistent routine that your customers can easily adopt. This could be anything from a personalized shopping experience to a streamlined checkout process.
- Reward your customers: Finally, don't forget to reward your customers for their loyalty. Whether it's a discount on their next purchase or exclusive access to new products, providing a tangible reward is crucial for reinforcing the habit loop and encouraging repeat business.
By following this action plan, you can leverage the Habit Loop to build a loyal customer base and achieve your business goals.