We can’t discuss the epic restaurant customer loyalty without looking at Starbucks. Starbucks, the leading coffeehouse chain across the world, built a customer-centric brand that aims to deliver an ambience, in its stores, which consumers perceive they can live. Their customer-centric brand is reflected throughout their loyalty strategy.
Starbucks recently introduced a rewards program based on spend. The concept is simple, the more people go to Starbucks to drink coffee, and the more they are rewarded, thanks to “My Starbucks Rewards,” their new loyalty program.
How it Works:
Customers register for “My Starbucks rewards” for free and choose a gift card or loyalty card.
The gift card enables customers to load spend onto the card and start collecting Starbucks ‘stars’. This option makes them feel like their drinks are free when they redeem using their gift card and speeds up the purchasing process at the till giving the customer a better experience in store.
Every time a customer purchases a beverage they earn one star, the more they buy the more stars they collect, the greater the reward.
The loyalty card starts customers at the welcome level, which includes a free birthday drink. Once a customer earns five stars on their loyalty card they reach the green level which entitles them to get free refills of tea or coffee.
Customers with 30 stars are considered Gold-level customers. These customers receive a free drink for every 15 stars, a personalised Gold Card that recognises them as preferred customers, and customised offers and coupons based on past purchases.
Starbucks also added another channel to their loyalty program by introducing a mobile rewards app. The app allows customers order and pay through the app, check their loyalty account details and avail of promotions. Again, making the ordering of coffee effortless for Starbucks customers.
Over 1 million Starbucks customers are registered on the My Starbucks app. This has been a great attribute to Starbucks Loyalty program success. Starbucks has seen an increase in customer engagement and customer retention since they added a rewards-based loyalty program and mobile app.
“The average Starbucks consumer frequents a Starbucks at least 18 times a month and 10% of those, tend to visit twice in a day”.
Chipotle, a fast food restaurant established in 1993 and loved by consumers across the US. Chipotle provides burritos, salads, and tacos made with fresh ingredients. In 2015, the company faced a dramatic downturn following an E Coli outbreak that was traced to one of their restaurants in Washington.
Chipotle executives decided to launch a three-month rewards program “Chiptopia” in an effort to redeem their reputation, reconnect with their customer and increase revenue.
Following the E Coli scandal news, Chipotle decided to trail a rewards program “Chiptopia” with these objectives in mind
1. Restore a positive brand perception.
2. Rebuild their customer base.
3. Increase customer retention.
4. Understand their customers better.
The Chiptopia rewards program was set up to run over a three-month period from July to September this idea make use of sacristy marketing, a bold move when offering customers a loyalty program because you set a standard that your customer grows to expect and suddenly it’s gone. However, sacristy marketing can lead to customer perceiving that something has a higher value due to its limited availability.
How it works
Chiptopia rewards its members with free meals after purchasing a certain number of entrees.
Chiptopia rewards program is dived into three tiers based the amount you buy within a month. The three tiers are
1. Mild, buy four in a month and get your first free entrée.
2. Medium, buy 8 in a month and get your 2nd free entrée.
3. Hot, buy 11 in a month and get your 3rd free entrée.
Chipotle’s program encourages customers to repeat purchase throughout the month in order progress through three different levels. The incentive to progress through the different tiers is, each tier requires a less and less of a financial investment.
The chiptopia program offered other rewards throughout the three months to keep it exciting for their customers and to ensure customers value at each stage of the program. Rewards included a free entrée if you achieved a mild a status in all three months, a $20 in merchandise if you earned a medium status every month and finally if you obtained a hot status in every month you were rewarded a catering package to the value of $240.
In a statement given by Chipotle CEO just three weeks after launching the program. The company saw an increase in customer engagement with 100,000 people added to the program each day and 28% have been back to the store already within the three weeks.
They gained valuable insights from customer feedback that lead to Chipotle adding chorizo to the menu, a menu which was not updated in 23 years until then. Chorizo accounts for six to seven percent of entrée sales in the restaurants where it is available.
Data obtained also showed that most of the company’s once-loyal customers have returned, but not at the same frequency. So the company are making an effort to focus on traffic frequency and brand messaging as they plan to launch a permanent rewards program.