Starbucks is a consistent staple for many of us. Be it our stomping ground for a daily caffeine injection, escape for a tasty treat or a go-to gift card dispensary, a lot of us spend large portions of time and money with the company.

The coffee giant has spent time refining its rewards program over the years. Regardless of how the masses initially reacted when they changed from a “rewards per visit” to a “rewards per dollar” system a few years ago, the change has ultimately seen success. The primary goal of the rewards program is to incentivize the buyer to reach a set number of stars (125 stars at the current time of writing) to get a free item. At a base level, this works for daily spenders who have a consistent rhythm getting their fix at the chain. But does this straight spend-to-get-free stuff model work on a cognitive level for everyone?

Dragon Army is greatly interested in the use of game mechanics in non-game applications, so much so that we developed our own framework around it coined Applied Game Theory™. Naturally, we couldn’t help but take a deeper look at the mechanics and measures Starbucks is currently employing in its own rewards program. Here’s our take on what is working, what’s not and how Starbucks can push its program to the next level.

What’s working...

Social Pressure

   

Starbucks does a good job of making you feel like you’re missing out if you don’t jump on the rewards bandwagon. My closest store has no less than three large signs that make sure I’m aware of this fact. Social pressure can be used as a great psychological tactic in order to coerce participation.

Points

The entire points (Stars) system is easy to understand. You get 2 stars for every $1 spent, and you get a redeemable reward at 125 stars (approx. $61 spent). There is no real mystery to this, and nearly everything inside the program/app is based on this purchase relationship. Very easy to follow.

Challenges/Quests

  

The rewards program has some interesting missions you can complete once you are eligible for bonus stars. These are well designed and sometimes have multiple thresholds, so you can partially complete the mission and still collect a portion of points. These also include Limited Timed Events, which are a great component to get users hooked into constantly checking the program.

What’s not working...

Progression/Levels

The biggest place the Starbucks Reward program suffers is the requirement of earning 300 stars before you are ELIGIBLE to earn rewards. Given the structure of the current program, that means spending $150 before you can actually participate and earn free drinks that are only available to Gold Level members. The Green Level is basically a glorified paywall.

This stifles the incredibly important mechanic of progression. If a new user doesn’t see any tangible results until they've invested $150 (on coffee, no less), then the odds of retaining their attention and cultivating return to the program is going to be a tough sell.  

In contrast, Dunkin' Donuts DD Perks program starts users with a tangible reward from the outset. There is never a period where your purchases aren’t earning rewards. This new member experience is instantly more appealing because the reciprocity of gifting vs. reward bonds a better initial impression of the brand. Because Dunkin' Donuts is giving from the start and doesn't keep users from initially earning on the program, guests are more easily positioned to spend their dollars with the company.

Loss Aversion

On top of the initial requirement of spending $150 to be eligible to earn rewards, a member has only three months to reach that spend threshold — or they don’t qualify for the Gold Level. This is also an effort in loss aversion, but it doesn’t have near the effectiveness because users don’t have anything to really lose at this point.

Loss aversion works, but only when guests can cash in for an actual, tangible reward. Loss aversion, in this case, leaves a sour taste in the mouth because the threshold to enter is too costly and participation is unrewarding.

Let’s look at Best Buy Rewards. They have multiple membership tiers like Starbucks such as Standard, Elite, and ElitePlus. Both Elite and ElitePlus also have spending thresholds you need to reach within a time frame, but for UPGRADED benefits. You aren’t required to reach a certain threshold before getting access to basic standard benefits. This ensures there is always value in purchasing from Best Buy. This is the ideal use of loss aversion for membership features — to retain high value features not available in the lower tiers.

Lack of Social…anything

For being a business where tons of hangouts, talks, meetings and more happen, there is a curious lack of social initiatives. This is not only a missed opportunity but is a major drawback that users can’t interact with their peers to further engage with the program. Teamwork, competition, status and networking are all tactics that are missing, yet are totally capable of being included. Those mechanics also have the benefit of drawing more engagement out of a user over time, as well as driving organic growth due to the group dynamics.

For example, Tarte Cosmetics uses some base level social engagement, rewarding their users for performing social actions like retweeting and using specific hashtags. Shoe and clothing company Adidas uses the same tactics but does it on their retail store level. Buffalo Wild Wings incentivizes users to dine with friends, letting you cash in on your entire groups' rewards if everyone checks in together.

How to Level Up...

So, we have some things that are working and some things that aren’t so much. Where is the practical application? Glad you asked.

First, fix the stuff that isn’t working

Focus on the low hanging fruit by fixing the basic mechanics that are being improperly utilized. I've listed a few ideas below:

  • Fix progression and leveling by giving new members reason to spend and engage from the beginning
  • Fix unneeded loss aversion on the basic tier by removing it and allowing users to reach Gold Level at their own pace
Add more ways to engage besides spending money

Currently, everything in the Starbucks Rewards program is purely economic — you get points for purchase — but there is a huge opportunity to engage users outside of a purchase life cycle, which can increase brand recall and allow users to begin looking at Starbucks through more than one lens, such as:

  • Give members the opportunity to taste test a new beverage for free the first time
  • Give users minimal amounts of points for checking the app each day
  • Reward users for spending time in Starbucks stores
  • Reward users for visiting multiple locations
Meet people in the midst of their habits

Many of the offers in the Starbucks app are “buy # lattes for rewards” or “get a Frappuccino for $3”. This is fine if you usually buy those specific items, but many people are habitual when it comes to their coffee selections, and these kinds of offers fall completely flat. Given the fact that Starbucks tracks your purchases in-app, this info could be used more effectively to personalize your offers, and even deliver them at the times the app knows you like to get beverages.

For instance, the black coffee drinker (totally not referring to myself) might benefit more from a nudge to upgrade to a larger size or try the iced version, rather than trying to have me purchase a sugary Frappe.

Successful rewards programs sit nice and transparently in the midst of normal user behavior instead of requiring actions the user isn’t accustomed to. Let a user do their own thing and get offers and rewards the way they want to.

Leverage community and social

Having frequently and rabidly visited storefronts means that there is ripe opportunity to capitalize on group dynamics. Starbucks has countless options to engage their members in a community aspect, for instance:

  • Give bonus rewards for multiple members checking in at the same time
  • “King of the Hill” for certain actions, such as in-store visits, most "X" purchases, etc.
  • Bonus stars for two or more drinks on one card to encourage friendly purchases
  • Sharing favorite drinks/recipes with the community

Starbucks has a well-known and loved product set, great store environments and a forward-thinking brand positioning. They have so much potential to innovate and really push their rewards program forward. They just need to look beyond the simple implementation of how it currently exists.

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By: Jesse Wallace, Sr. UX Designer at Dragon Army, @jesse_wallace