Starbucks’ Revamped CRM Program Clever, But New Web Effort Misses The Mark

Written by Evan Schuman
March 21st, 2008

When Starbucks used its shareholders’ meeting on Wednesday to roll out several new initiatives, the new coffee makers and blends got much of the attention. But two of the new plans—a revised CRM program and a new Web site—illustrate nicely how well Starbucks understands customer service and how it still hasn’t figured out the Web.

The change to the Starbucks Card Rewards program shows not just an understanding of customer service, but a realization that the best way to make a CRM program successful is to focus on benefits—true benefits—for both the customer and the retailer.

Instead of merely tracking purchases and offering small discounts (adjusting the price of a cup of flavored coffee down from ludicrously overpriced to merely absurdly overpriced. Buy one more croissant and tomorrow you can enjoy a cup of Joe that is only insultingly overpriced), Starbucks is getting creative about rewards.

The stats are impressive. Since starting the program, Starbucks says it has issued more than 193 million cards. Today, only about five million are still active. The rewards for those folk include:

  • "Complimentary customization on select syrups (including flavors such as vanilla, hazelnut and cinnamon) and milk alternatives (such as soy or half and half). For instance, a Tall Vanilla Soy Latte would be the same price as a regular Tall Café Latte because the soy and the vanilla are free."

    Probably not the best one to start with, as it only serves to remind people that management had the chutzpa to charge extra for those in the first place. But it is treating loyalty card customers better.

  • Complimentary beverage with purchase of coffee beans.
  • Free refills on brewed coffee, assuming it’s on the same visit.
  • "Two hours daily of free, in-store Wi-Fi, starting this spring in company-operated stores in the U.S. (per registered cardholder)."

    Now this is getting interesting. This may start pulling some consumers back in.

  • "The opportunity to join Starbucks in supporting charitable causes."

    Sorry, but they just lost half their brownie points. Starbucks is trying to tout as a loyalty card benefit that they’ll now permit CRM participants to contribute money to Starbuck’s favorite causes? Are we to believe that this is, A, a benefit, and B, that they’ll not permit anyone who wants in off the street to do the same? This from the same chain that argued with customers about whether cash is cash.

    On the Web side, things start looking sad. Starbucks is one of the great Web missed opportunity stories. Five years ago, it had the buzz and excitement of the young and the Yuppie across the country, like a Barack Obama rally but with more overpriced coffee.

    Starbucks had mastered social networking long before MySpace, Facebook and YouTube had any prominence. And yet, Starbucks focused almost exclusively on stores, dismissing the Web as a place to sell coffee beans, grinders and maybe some jazz CDs.

    They didn’t even try to get the Web to pull those visitors into an online community. Starbucks saw their store sales as healthy so it didn’t think it needed the help. Of course, by not doing so, it lost much of the buzz, allowed those social network sites to grow and flourish an suddenly they’re seeing store sale shrink.

    So they finally decide to launch a true Web presence, right? Starbucks got my hopes up with this quote from its news release: "The Starbucks Experience grows, in part, from the unique combination of a shared passion for coffee and the exchange of great ideas. For years, Starbucks stores have served as the center of vibrant communities, welcoming customers and encouraging creativity and dialogue. Starbucks today announced the extension of that community beyond the doors of its stores with the launch of"

    Great! So this new site is a social community to extend that dialogue, right? Nope. The new site is—wait for it—an online suggestion box.

    That "exchange of great ideas" referenced? They want it, as long as the ideas revolve around how can Starbucks make more money. The irony is that a less blatantly self-centered approach to a discussion could very well engender true discussion and interest and, yes, more store visits and revenue. It’s like credibility. The only certain way to not get it is to ask for it.

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