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Starbucks’ Personalized Marketing Initiatives To Grow Sales

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Personalized marketing

In the last part of this series, we learned that customers are spending more at Starbucks (SBUX) using their mobiles. In 2014, ~15%, or 1.5 billion, of the revenue contribution came from mobile. Strategic marketing initiatives helped increase traffic. Eventually, it helps same-store sales.

SBUX actively uses personalized marketing to make the customer feel more engaged with the company. For example, through its My Starbucks Rewards program, the company provides program members with a free drink or treat on their birthdays. It also sends personalized custom offers to the customers in emails.

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Incentives

One of SBUX’s marketing techniques also includes getting customers to makes purchases using SBUX, Teavana, or La Boulange loyalty cards. For example, SBUX has three loyalty levels:

  1. welcome level
  2. green level
  3. gold level

Customers start at the welcome level. Then, they receive stars for their purchases. When customers get five stars, they upgrade to the green level. When the customers get 30 stars, they upgrade to the gold level.

At the green and gold levels, a customer gets free refills on iced or hot-brewed coffee and tea. At the gold level, a customer gets a free drink or food after collecting another 12 stars.

Effective and efficient

SBUX says that this advertising channel is more effective and efficient. As you can see in the above chart, SBUX expects revenue to grow five times due to the personalized marketing techniques.

Tim Hortons (THI) has a similar rewards card. It rewards $10 for every $1,000 worth of purchases. Dunkin’ Brands (DNKN) and McDonald’s (MCD) also have their own apps.

Some of the restaurants mentioned above are also included in the SPDR S&P 500 ETF (SPY).

While these are some measures management is taking to increase same-store sales, it’s also expanding different dayparts to increase the average volume per restaurant. We’ll discuss this in more detail in the next part of this series.

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