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Starbucks Loyalty Reigns Case Solution

Solution Id Length Case Author Case Publisher
2353 1463 Words (6 Pages) Meghan Murray Darden School of Business : UV7116
This solution includes: A Word File A Word File

The Starbucks rewards program named My Starbucks Rewards, or MSR, was first a swipe-able card system that was used at stores to earn points while making a purchase. However, as mobile applications gained popularity with time, Starbucks also launched an app in 2011. The app proved that Starbucks could use the app to attract customers and retain them in the long term. The app also helped Starbucks is increasing its purchase frequency and average order size. The Starbucks app offered a range of features, including a store locator and a payment manager. The mobile pay option allowed customers to link their Pay Pal accounts or credit cards to the Starbucks app, and then use the Starbucks app as a debit card to make purchases. The app also had an option to send gifts over to other customers using the app. Further, the mobile app offered rewards to customers who made purchases; every purchase would count towards the rewards in the form of stars. The introduction of the app helped boost sales of Starbucks.

Following questions are answered in this case study solution

  1. Which Starbucks Rewards feature in the mobile app is most valuable to the company?

  2. Could Starbucks have been as successful if it had offered only a physical Starbucks Reward card, and never introduced the app?

  3. Which features and rewards are the most important to staying relevant to the customers in the future?

  4. Do you think Starbucks has overlooked a social media touchpoint that could be valuable to the company?

Case Analysis for Starbucks Loyalty Reigns Case Solution

1. Which Starbucks Rewards feature in the mobile app is most valuable to the company? 

The most valuable feature in the mobile app is the MSR, namely My Starbucks Rewards. This was announced by the Company itself, whereby they declared that MSR is their biggest revenue generator. There are several features in the MSR app. These include a payment management feature for linking Pay Pal or Credit card to the app and operating it as a debit card, a Gift Card feature where users can send gifts to other users, a Rewards screen that collected stars on customers’ purchases at Starbucks. The most valuable feature under the MSR was the Rewards screen which offered rewards to customers if they shopped at Starbucks stores within malls or bigger stores, if they bought some products marked as premium, if they made some online purchases, or if they shopped at La Boulange. These helped the people earn stars on the Rewards screen, which rewarded them in the form of free drinks or snacks. 

This feature was the most valuable one since it helped Starbucks attract more customers and resulted in increased sales. It also helped them retain customers for the long term since the Rewards app increased loyalty among customers and encouraged them to use the app consistently. Rewarding customers for frequent usage of the app and for showing loyalty to the brand has helped distinguish Starbucks from other brands. It has also made Starbucks’ customers feel valued since they get a return for purchasing. It has acted as a great loyalty program for Starbucks. Since Starbucks was among the first very few brands who adopted such important technological ideas and marketing tactics, it paid off as the company was able to earn the first mover’s advantage. Hence, the app has been profitable for Starbucks and has helped in driving revenue for the Company as announced by the company itself. 

2. Could Starbucks have been as successful if it had offered only a physical Starbucks Reward card, and never introduced the app? 

Starbucks could not have been as successful if they had not switched to the mobile app from the physical card. There are several reasons for that. First, as technology changed, it became important for Starbucks to mend its ways so it could keep up with the advancement. Since mobile penetration was increasing rapidly in that era, people were relying more on mobile phones. In such a situation, people found such apps fascinating and fancy, and they liked to start using those apps. Secondly, switching to a mobile app was more convenient for the customers. When customers use loyalty cards, they can forget it home when visiting the outlet. There are also chances of losing the card since it is in physical form. Switching to a mobile app made it convenient for customers since people hardly forget their mobile phones at home. 

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