How Starbucks’ Rewards Program is modeling itself after platinum credit cardsHow Starbucks’ Rewards Program is modeling itself after platinum credit cards

Joanna Fantozzi

Although most operators experienced a lot of highs, lows, and challenges during the pandemic and in the aftermath in dealing with macroeconomic bumps in the road, Starbucks has consistently been a winner in the foodservice category. For the first quarter of 2023, Starbucks had a record-setting period for sales, gift cards, and mobile app downloads, with an 8% YoY revenue increase from 2022, bolstered by a massively successful “red cup” season.

But as interim Starbucks CEO reported his swan song quarterly earnings as the Seattle-based coffee giant prepares to welcome new CEO Laxman Narasimha this quarter, where is the company going next? We predict that with Starbucks’ dominance in the café space—particularly with cold beverages and digital orders — that the company will look to expand into a multimedia lifestyle company next with opportunities for its biggest fans to interact with the brand beyond just their morning coffee and seasonal beverages.

We already know that Starbucks has launched its version of the multiverse, called Starbucks Odyssey, in beta testing in December, which has “been driving increased engagement and loyalty from our members and now ownership in their loyalty experience,” CMO Brady Brewer said during last week’s earnings call. But also during the earnings call, Brewer spoke about Starbucks’ new foray into podcasting.

Related:Starbucks U.S. sets records for sales, gift cards and mobile app downloads in Q1

“We're furthering the value delivered to our Starbucks Rewards members by bringing them coffeehouse culture and content through a new series in the Starbucks app called the Starbucks Daily, which will launch with Hark Audio [a podcast curation platform] this month,” he said.

Starbucks appears to be turning its rewards program into a lifestyle brand complete with perks akin to platinum credit cards: from offering podcasts about coffee culture and chances to earn and win prizes like private espresso martini making classes or trips to a coffee farm, to new partnerships with outside companies like Delta to earn Skymiles by buying Starbucks coffee through Reward Together.

“We look at the Starbucks Rewards program as offering two things: both product and experiential benefits,” Brewer said. “We’re really looking at both sides of the equation. The experiential benefits that you've seen out of this quarter were things like Reward Together, the Starbucks Odyssey program and other special events, like offering members the first chance to see the opening of the new Empire State Building.”

There’s even more on the horizon for Starbucks: Howard Schultz hinted at a brand-new platform inspired by Italy, though declined to give further details.

Related:Behind the drama surrounding Starbucks rewards

“While I was in Italy last summer, I discovered an enduring, transformative new category and platform for the company, unlike anything I had ever experienced,” he said during last week’s earnings call. “The word I would use to describe it without giving too much away is alchemy.”

Although he would not divulge more, we can hypothesize that the “alchemy” clue might refer to the Alchemy Web3 development platform, which would allow Starbucks to delve even deeper into the NFT/cryptocurrency metaverse.

The goal is for Starbucks to be a lifestyle brand for their rewards members. Your interaction with Starbucks doesn’t end when you pick up your coffee for the day: you might listen to their podcast, play games in the Odyssey app to earn NFTs, and attend Starbucks events in the evening.

Contact Joanna at [email protected]