One bright spot in recent economic news was found in Starbucks' recent Q2 financial results. While Starbucks, like all retailers, has been impacted by the pandemic. They have seen their net revenues decreased 5% from the prior year. However, they are reporting a 15% year-over-year growth in their loyalty program with 19.4 million current active reward program members in the US.
15% growth is beyond excellent! How did Starbucks see this much growth?
Three words - EXCELLENT DIGITAL ENGAGEMENT.
The research Starbucks did to understanding the user purchase journey in-store and then modifying it to the digital experience is seen in the app experience. The Starbucks app is the center of the company's digital ecosystem, bringing together loyalty, mobile payment, and content partnerships, all seamlessly integrated into one convenient application.
As credit unions embrace their digital experience, here are three lessons to take away from Starbucks.
1. Make it a Personalized experience.
The Starbucks app recalls your favorite order, suggest what food items might pair well with that order, and suggest where you'd like to pick it up. It also offers a
geo-location feature where a user can see where the closest Starbucks locations are, the menu at each location, and even place an order that can be ready upon arrival.
And just like at an in-person store, an app user can purchase and give digital Gift cards. The Gift menu brings up a variety of gift cards for nearly every occasion and suggests cards for upcoming holidays.
A credit union can leverage the members spend information and make savings suggestions based on the members' buying behavior
2. Offer an engaging and relevant loyalty program.
The Starbucks reward program gives points (stars as they are called) to users for making certain behaviors, such as two stars for every dollar spent. The rewards program has been optimized for the online experience. Rewards members receive benefits like free in-store refills and special member offers/events (i.e., such as "challenges" where a user can collect additional points for specific purchase behavior). The reward point management and usage are also easy. Also, there are several customizable features, such as personalized suggestions based upon past orders and a free beverage on the user's birthday.
Credit unions all ready offer rewards on debit and credit card spend, why not tie it to the app and remind members of bonus points opportunities at retailers and encourage them to use your card as payment?
Warning: Back in 2018, Starbucks partnered with JP Morgan to offer a Rewards Visa Card, a co-branded credit card that integrated directly into the Starbucks Rewards™ loyalty program. Customers using the card earn stars with every purchase both in and out of Starbucks stores wherever Visa is accepted worldwide.
3. Easy Online Ordering and Paying
The primary benefit of using the app is that let customers order via Starbucks' app and skip the line. Payment is encouraged through the app, which utilizes a Starbucks gift card to process the payments. This creates seamless transactions, as the gift card can be automatically or manually reloaded using a credit card (and their rewards credit card), Apple Pay or Google Pay, or even with the balance from another gift card. The app screen can be scanned at the register to process the payment.
For iOS users, the app integrates with the Apple Watch, producing a bar code that also can be scanned for those on the go.
Starbucks also enabled orders via Amazon's Alexa, and the feature has also been integrated into Ford vehicles.
The app also allows customers to order via voice command or messaging.
By offering a wide variety of functionalities, Starbucks' Mobile Order and Pay allow users to order and pay in the most convenient way, which encourages increased sales.
Credit Unions need to revisit their member journey to identify ways to remove the friction in the member experience. With the recent surge of members using online channels to engage, it is now time to embrace the online digital experience and make it rock better than Starbucks.
Looking to learn more about member engagement?
We had a great 45 min Learn& Listen on this topic last week. For 1-day (6.17) the recording will be available. Click here to learn how to access the recorded session.