Jon Michaeli’s Blog


Starbucks and CRM don’t mix

This isn’t the first time I’ve gone on a rant about Starbucks (nor will it be the last I’m sure). Each time I feel slightly guilty, because it’s not uncommon for me to blog from Starbucks. Then again, they get more than a fair share of my wallet, so I’ll get over it by the time I’m midway through this post.

The subject of this rant is the Starbucks Card. First, some background. The card itself offers customers the convenience of electronic currency, though I’m pretty sure baristas get screwed on tips now that fewer customers are dipping into their pockets and receiving loose change. Registering a Starbucks Card means creating an online account where contact details, credit card info, etc. are stored. This gives you access to free Wi-Fi, lets you avoid $0.40 surcharges for soy milk, and enables you to auto-reload your card. This last feature could backfire for certain folks who are super-vigilant of their credit cards transactions (as I am). In fact, ever since I saw how often Starbucks was charging my card 20 bucks, I’ve cut back, perhaps not on my total caffeine consumption, but certainly in downgrades from espresso drinks to house blends and dark roasts.

No, I’m not complaining that Starbucks has made me more financially responsible. As a marketer, I am in disbelief that the company has not better seized the opportunity that registered card holders present. It’s a database marketer’s dream to have access to such a wealth of customer data, including purchase history, buying habits, personal preferences, etc. We’re talking about brand evangelists here, engaged and loyal clientele who are presumably the most receptive to special promotions and offers. Why not a rewards program? A referral incentive? Or dare I say something even more tailored and creative – “Because you like X, we think you’ll like Y, so here’s a one-time coupon.” I have my “regular” drink, but I’m always open to something new.

This is just another example how Starbucks has vastly underutilized the power of CRM. As far as I can tell, aside from an occasional offer to complete a survey and receive a free drink (which may be completely random anyway), I’m not aware of any targeting that Starbucks does to uniquely position its product to the various customer segments it reaches.starbucks-logo-thumb1

This isn’t the first time I’ve gone on a rant about Starbucks (nor will it be the last I’m sure). Each time I feel slightly guilty, because it’s not uncommon for me to blog from Starbucks. Then again, they get more than a fair share of my wallet, so I’ll get over it by the time I’m midway through this post.

The subject of this rant is the Starbucks Card. First, some background. The card itself offers customers the convenience of electronic currency, though I’m pretty sure baristas get screwed on tips now that fewer customers are dipping into their pockets and receiving loose change. Registering a Starbucks card means creating an online account where contact details, credit card info, etc. are stored. This gives you access to free Wi-Fi, lets you avoid $0.40 surcharges for soy milk, and enables you to auto-reload your card. This last feature could backfire for certain folks who are super-vigilant of their credit cards transactions (as I am). In fact, ever since I saw how often Starbucks was charging my card 20 bucks, I’ve cut back, perhaps not on my total caffeine consumption, but certainly in downgrades from espresso drinks to house blends and dark roasts.

No, I’m not complaining that Starbucks has made me more financially responsible. As a marketer, I am in disbelief that the company has not better seized the opportunity that registered card holders present. Think of the wealth of customer data it has collected, including purchase history, buying habits, personal preferences, etc. It’s a database marketer’s dream to have access to such information for segmentation and targeting purposes. We’re talking about brand evangelists here, the most engaged and loyal clientele, presumably those most receptive special promotions and offers. Just another example how Starbucks has vastly underutilized the power of CRM.

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4 Responses to 'Starbucks and CRM don’t mix'

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  1. Colleen Bruemmer said,

    As a direct/database marketer, I completely agree with your post, Jon. By making you (and presumably others) aware of how much they are spending, it seems like they have created the anti-thesis of what a successful loyalty program ought to look like. Maybe, they could use your help!

    • Jon Michaeli said,

      Thanks for your comment, Colleen. I’ve heard cardholders often overlook small recurring charges. I don’t know about you, but $20 a couple of times a month gets my attention.


  2. Great post Jon! Very insightful. I completely agree with the missed opportunities. And not just because I’m in marketing — but as a customer I’d like to have some reciprocity on loyalty. I’m willing to sign up, register, give information because I like the experience of Starbucks and the coffee, AND I’d like to receive some of that commitment back from them — in fact I expect it! And there lies the rub — I expect an exchange and Starbucks has opened themselves up to criticism about the ‘loyalty’ program that the card registration looks like because there isn’t any appreciation or commitment back. And your ranting here demonstrates the consequences…

    There are so many things they could do with that program: for really big users they could have a special customer appreciation event — virtual or otherwise; or ask for a blog entry on my favorite Starbucks experience; they could add a tip line to the card re-load so I can tip my barista if I want — automatically if I want; there could be rewards: for every $100 I get a free special drink. And so on…

    None of this would dilute the brand — I’d be an even bigger fan because I would feel cherished, not just signed up.

    So, thanks for the opportunity to do a little of my own ranting, Jon!

    Hope Starbucks reads it…;) I like what they’ve created and want it to continue to succeed.

    -Kathryn

  3. Jon Michaeli said,

    Kathryn,

    Thank you so much for your comments. Thus far, Starbucks has truly squandered this opportunity to increase revenue and endear its evangelists. These days, people seem to understand the trade-off; I put forth some effort and/or yield a bit of privacy. In return, the brand shows appreciation and delivers real value (e.g. relevant offers periodically). As you know, it doesn’t take advanced predictive modeling or collaborative filtering to start a loyalty or one-to-one marketing program.


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