Starbucks eyes expanded loyalty offerings as digital push delivers
- Starbucks has gained 6 million "digitally registered" users on its platforms since March, after ramping up targeting of new users, including those who were not previously members of its rewards program, per a GeekWire report analyzing the chain's Q2 results.
- The push for new users has featured a marketing campaign and asking customers to share their email addresses to connect to in-store Wi-Fi and Starbucks' Happy Hour promotions. Starbucks reported 15.1 million active Starbucks Rewards members, a 14% year-over-year increase, in a call discussing the earnings. The membership growth drove a 40% increase in U.S. sales, and spend per member has increased in the "mid-single digits," company officials said.
- Starbucks helped drive an increase in membership for Q2 by providing special offers, including through the invitation-only Happy Hour. The company plans to continue going after non-reward members, who number around 60 million, by collecting data on their ordering habits and targeting them with relevant offers, per GeekWire. Mobile ordering and pay accounted for 13% of transactions in Q2, a 1% increase from Q1 2018. For Q2, the company posted $6.31 billion in revenue, an 11% increase, beating analysts' predictions of $6.26 billion.
Starbucks was an early leader among quick-service restaurants for mobile ordering and loyalty options, but competitors, including Dunkin' Donuts and even fast-food chains that sell coffee like McDonald's, have started to catch up and have potentially created greater pressure to innovate. Given the success of simple changes in attracting new users, like asking customers to use their email addresses to access Wi-Fi, it will be interesting to see how Starbucks builds on some of its momentum going forward this year.
The company plans to introduce new rewards offerings, including a program called "Stars for Everyone," which will let consumers earn points with their credit or debit cards, as opposed to through the mobile app. Consumers will also be able to redeem their points for different products, including saving them up for higher-ticket items like packaged coffee and merchandise. The coffee chain will also add new digital menu boards and use artificial intelligence to help increase efficiency and sales.
Consumers are growing to prefer mobile-ordering options and often spend more on mobile transactions. They are also interested in hearing from brands with discounts, offers and personalized messages. Earlier this year, Starbucks expanded its mobile ordering feature to everyone, including non-reward members, and let consumers who ordered via mobile to skip the line.
Starbucks' Q2 results follow after a controversy that led the company to close 8,000 locations in May for anti-bias training for employees, which analysts predicted would cost the company $12 million in lost sales, according to The Wall Street Journal.