I read the announcement made recently by Starbucks about some new innovations with Starbucks Rewards. The one that intrigued me the most was this one, from the company’s March 20, 2013 press release:
Starbucks Introduces Innovative Cross-Channel, Multi-Brand Loyalty Program
The announcement by Adam Brotman, chief digital officer, of an expansion of the company’s loyalty and rewards program, and an industry-first innovation that will enable customers to earn rewards for grocery channel purchases that can be redeemed in Starbucks retail stores and is expected to double the number of customers enrolled in the company’s programs in fiscal 2013.
While I saw everyone in the Twitter-sphere jumping up and down about how cool this is, I was thinking about something different. We live in the world of the details behind loyalty programs including data integrity and data collection. Having spent plenty of time working with loyalty programs (including in the grocery store retail industry) I know that the idea of trying to make an SKU linkage in the grocery basket that transfers to a manufacturer’s loyalty program carries significant complications.
How are they going to make this work?
The feature isn’t live yet, but details are beginning to emerge.
The program will include specially-marked packaged coffees — both whole bean and ground — that will feature a code that can be redeemed online at the company’s website. Guests will be able to earn “stars” for their My Starbucks Reward accounts, enabling them to receive free food or beverages at Starbucks stores, along with other special offers.
Aha! Special packages that will include a code that Starbucks Rewards members may redeem online to earn “stars.” For those of you not quite familiar with Starbucks Rewards, “stars” are the promotional currency of the program. Members earn stars for their purchases and the number of stars you’ve earned translates into your status and benefits. So the responsibility is on the shoulders of the member to make sure that they get the code from the package. I suspect it will be inside the package because otherwise I’d be able to simply walk through the grocery store and collect/scan codes from the outside of dozens of Starbucks packages without buying a single one. You’ll need to make sure you get the code and scan it or input it online to get your credit. In some ways, it’s like the 21st century version of collecting boxtops.
Don’t get me wrong, I think it’s a reasonably good move for Starbucks. It will be interesting to see whether it plays a big role in getting current Starbucks Rewards members to earn stars on grocery purchases or a big role in getting grocery customers to join Starbucks Rewards. Or both.
The precedent set is important. It is now credible to put codes on your packaging that may allow certain restaurant brands to tie in their grocery brands with a restaurant loyalty/rewards program. Well, the first in line for that one will be Dunkin’ Donuts who announced recently that they’ll be rolling out loyalty in the near future. There are many other candidates with grocery brands including companies such as California Pizza Kitchen, T.G.I. Friday’s and Taco Bell.