BUT FIRST, COFFEE (and second, and third, and...)

Scott Robinson

Starbucks' Black Friday deal shows us that loyalty mechanics can brew good things outside of formal loyalty programs. 

This Black Friday, Starbucks is offering a special tumbler that can be used to get free coffee every day in January. That's right my caffeine-addicted friends, for the low, low price of $40, you can enjoy a shiny new 16-ounce tumbler and get all the free, grande size drip coffee (or tea) you can drink for 31 days in a row.  


But wait, there's more.

A closer look shows us that Starbucks is going outside of its Starbucks Rewards loyalty program to bake loyalty mechanics directly into its products. This clever bit of marketing, deployed as a Black Friday promotion, does several things in one fell swoop:

1. Reward best customers already frequenting Starbucks locations, giving them a month's worth of rational value.

2. Leverage best customers to potentially acquire new customers through a gift that keeps on giving, brewing up some emotional equity.

3. Imbue hard goods with additional value and use a scarcity principle that limits availability.

4. Engineer a bounce-back campaign that drives frequency and opens the door to incremental spend in other areas of the menu - if customers feel like they're getting a good deal, they'll rationalize spending the money they're saving on a treat for themselves, like a baked good or other food items.

5. Last, but certainly not least, when this promo lights up we are kicking off a new year - a new decade in fact - the perfect time to start building new (coffee preference) behaviors to replace old habits (purchases at competitors).

At $40, the break even point for a customer is about 18 visits - that's only slightly more than a daily weekday visitor, and is still limited to only basic drip coffee and tea (which would carry a low cost of good for Starbucks). So while it might not necessarily be suited for boosting the spend of an existing customer, who's an already-daily visitor, it's definitely a way to attract new customers, train new behaviors, and drive new loyalty for the coffee giant.

By taking loyalty mechanics out of the loyalty program and using them to create value for anonymous and new customers, Starbucks is creating the kind of QSR customer experience that does heavy lifting for the brand by giving people a way to feel good about their purchases, and further loading the top of the funnel for their program.

There's goodness in every cup for the CFO too... This habit forming subscription vessel also cleverly circumvents rules that prohibit the expiry of traditional gift cards. At the end of the month, this Cinderella tumbler turns back into a plain reusable cup.

Nice work, Starbucks - we see what you're doing, and we like it.