There Are Better Coffees! Then Why Do Customers Keep Going Back To Starbucks

What’s the first thing that comes to your mind when you think of Starbucks (aside from the coffee)? While Starbucks is a global brand known for providing coffee lovers with a hot cup of coffee (and to others’ nightmares, the pumpkin spiced latte), across hundreds of cities via thousands of its stores, little do we pay attention to the customers’ purchasing habits whenever they make a quick stop at the popular coffee chain. 

A Starbucks coffee drinker will always pull out their Starbucks Card every time they order their coffee. Armed with exciting offers, quick discounts, and easily redeemable points, the Starbucks Card has become a brand onto its self and is one of the main drivers of the popular brand’s customer retention strategy. 

The Starbucks Card or more officially the Starbucks Loyalty Programme is a case study every marketer should religiously assess. Over the years, the brand has iterated and re-iterated its program to suit the ever-changing and ever-expanding needs of its customer. But more on that later, let us first look at why brands have chosen to go down that path in the first place. 

The answer is, brands have figured out that a customer loyalty programme is the best way to make customer retention happen.

But Why Customer Retention? Why Not Just Acquire New Customers?

As per industry estimates, acquiring a new customer costs five times more versus the cost for retaining an existing one. On top of it, a company’s profits can increase by 25%-85% with a 5% reduction in customer defection rate.

If this was not enough, according to Vilfredo Pareto, an Italian economist credited for the Pareto Sales Principle - 

“80% of your company sales come from 20% of your existing customers”.

Successful businesses thrive on an effective customer retention strategy. Yet the most common pitfall for brands remains behind the thought process that if they have a great product or service, customer retention will follow naturally. 

Gone are the days when marketers used to huddle over their workstations to come up with the most innovative ways of capturing new customers. The focus has now shifted to strategically looking at creating opportunities to retain them.

But here’s a reality that all of us trying our hardest to deal with.

Customers...leave! 

Yes, with the digital age, customers are now more empowered than ever and spoilt for choices. 

They might love their morning latte from Starbucks but what’s stopping them from trying a different variety of Moroccan coffee from another store which, FYI, delivers right to their door-step?

The tough questions that businesses continue to face then are how to make the customer experience bigger and better which goes beyond the actual product/service offering?

The answer lies in developing a sense of brand loyalty. But in this age of information overload, building a brand loyalty becomes twice as hard than building the brand itself.

But there’s still hope.

Loyalty Programmes - Helping Customers to Remember and Brands to Build Engagement 

In the race to transition from acquiring customers to retaining them, loyalty programmes have craftily managed to blend in personalisation and seamlessness to engage customers through multidimensional approaches.

A customer loyalty programme is one that offers benefits to its frequent or loyal customers. Generally, those benefits are in the form of discounts, rebates, free products, or other promotions. An effective customer loyalty program would reward its customers who buy from a business on a regular basis.

Many businesses would agree that this is an excellent way to keep frequent customers engaged with the brand for a much longer duration than any other marketing campaign. At the same time, it increases brand awareness. For a customer, this comes as a win since they can now avail certain exclusive benefits which are not available to his peers.

However…

Though the loyalty programs executed by brands have seen far better conversions as compared to other methods of marketing, with the ever-changing digital landscape, companies are now forced to think of better and innovative ways to make their loyalty programmes ‘sticky’ and effective.

Marketers have been going back to the drawing board to understand the full possibility of digital platforms and how they can utilize it to create a structured program which caters to their customer base. And they have all agreed, it is THE most important performance marketing mechanism to effectively bring down cost and boost profit.

Reimagining Loyalty with Xeno! 

If you’re wondering what will be the most effective way of building a loyalty program for your customers, we would like to invite you to try Xeno! We have worked with multiple brands to effectively bring down their customer acquisition cost which also includes running their loyalty programs via digital channels. 

If you would like to know more, get in touch with us.

Let’s delight your customers together!