Given how many times “coffee” has appeared in my blog titles, you might think I’m obsessed (or addicted). You might be right. Nevertheless, I love the combination of these two important parts of my life, so I’m going to keep on posting. But unlike my last coffee post dealing with the branch experience, today’s subject returns back to my comfort zone, the digital world.
Starbucks recently opened their rewards platform so that third parties could issue Starbucks stars as a reward. The first major brand leveraging this massive platform is ride-sharing service Lyft (promo landing page). In an email today, they offered 125 stars for the first ride (through 9 Nov 2016) plus 5 stars per “morning commute” on an ongoing basis.
Given that 125 stars earns a free item at Starbucks, the Lyft program is essentially a free coffee for the first ride, then one free drink after every 25 morning commutes (e.g., about $0.20 value per ride). That’s probably a little stingy, but with rewards, even small numbers can be motivating. In addition, Starbucks is selling Lyft gift cards in its stores, offering an extra $5 Starbucks card for every $20 Lyft card back. That’s far more generous, but is likely a short-term promotion.
With the Durbin-induced death of debit-card rewards, combined with ultra-low interest rates, it’s difficult to find rewards that are affordable and meaningful. But the Starbucks Star has potential, though you have to dole out rewards judiciously.
Let’s assume you can buy stars in bulk for 2 cents each (for major partners, I’m guessing it’s less than that, probably closer to a penny per star). You could incent deposits at 1 star per $10 annually with a balance cap of $5,000 or $10,000. For a $5,000 savings account, the account holder would receive 40 stars per month, enough for a free cup of coffee (or better, a sandwich).
Transaction accounts could provide 5 stars for every debit transaction; 10 for credit card charges; 5 for mobile deposits; 100 for paperless; and so on. That could easily add up to a free drink every month, a meaningful incentive. Perhaps even enough to get a bit of viral lift (aka word-of-mouth).
Yes, it adds costs, but free caffeine is one of the best retention devices on the planet. You already provide free coffee in the branch, why not extend the same courtesy to your digital customers?
Looking for more integrations? Don’t miss our upcoming techfest,
FinDEVr, in Santa Clara, 18/19 Oct 2016.
The Starbucks is on us!