Rewarding customers is nothing new. It works every time as it breeds more loyalty, creates a sense of belonging and brings in more customers. Starbucks, the world's largest coffee chain, has taken this idea to the next level with its innovative rewards program.
The initiative, which the brand calls "Starbucks Rewards," started like most other customer rewards programs where customers accumulate points for every purchase. But it has since evolved to include an even more valuable reward structure that allows frequent customers to get personalized rewards and exclusive offers tailored specifically to their tastes.
A value-based loyalty system was implemented in 2016, where customers who collected 125 stars could use the same to redeem a free drink or food. But it only took three years before Starbucks tweaked the program by allowing loyal customers to redeem certain rewards even at a measly 25 stars.
Also, the stars no longer had expiration dates. It makes sense because putting an expiration on loyalty points means customers are less likely to use them, which means lost revenue for the coffee giant.
The next initiative saw Starbucks incorporate mobile technology through the Starbucks Rewards app.
The app can be used as a virtual card, where customers can place orders before they arrive at the store and earn rewards for their purchases.
In addition, customers can track their rewards points, get personalized offers and discounts, and access exclusive loyalty events.
This mobile-driven approach has seen Starbucks Rewards become one of the most successful customer loyalty programs in US retailing, with over 15 million members as of 2018.
And then there's Starbucks Odyssey.
Last year was a step towards the future of loyalty programs with the introduction of Starbucks Odyssey.
Using advanced Web3 technology allows members to unlock exclusive benefits and experiences. Through these "Journeys," users get the chance to partake in thrilling interactive activities.
So, what activities are in store for Starbucks Rewards members, you say?
How about earning and buying digital collectibles? The purchase of digital collectible assets will lead to access to unique coffee experiences, exclusive virtual gifts and more. The possibilities are practically endless as Starbucks markets it.
NFTs at the Forefront
It's hard to think of any other brand with the same level of innovation as Starbucks when it comes to customer loyalty. Apparently, the world's biggest coffee chain has barely scratched the surface with its signature Starbucks Rewards.
Last year, the company started integrating NFTs into its rewards program.
It's a ground-breaking move by the company as NFTs are still a relatively new technology in the loyalty space. Using NFTs, Starbucks will offer even more engaging experiences for its customers, some of which go beyond the company's products.
In a way, Starbucks is successfully creating a digital community.
While the concept remains a marketing strategy, it has moved well beyond mere loyalty points. By leveraging the power of blockchain technology, Starbucks is creating a digital economy that rewards its customers for their continued patronage.
NFTs makes perfect sense for loyalty programs. For one, they're incredibly secure and immutable, meaning they can be used to store important data, like a user's purchase history or preferences. This data could then be used to customize rewards and offers for customers.
There's even a prospect for Starbucks customers to trade their NFTs with each other on various marketplaces, such as OpenSea. This is no fluke since the announcement of Starbucks Odyssey is essentially the company's effort to start a digital marketplace.
NFT-Centric Promotions is the Future of Rewards Programs
Starbucks is one player among the very few companies that are taking advantage of the potential of NFTs. The coffee chain is set to revolutionize loyalty programs and rewards for its customers with a more digital, personalized experience.
As other retailers note what Starbucks is doing, NFTs in customer loyalty programs will become increasingly popular, maybe even a standard. It's not a far-fetched idea, considering the growing acceptance of NFTs as a mainstream asset class.
Starbucks knows its customers are looking for more than just discounts and freebies. By introducing NFTs into their rewards program, they have created a digital economy based on the experiential value that users can trade.
On the surface, anyone can look at it as an added expenditure for a brand that wishes to implement such a rewards system. But in reality, it's an investment that can pay off tenfold if done correctly. For instance, NFTs allow brands to give data-rich rewards that customers want.
This could mean exclusive experiences, access to products and services, or even cryptocurrency rewards. While the promised return on investment comes from added purchases and brand loyalty, customer satisfaction is the real win.
The Role of Web3 and DeFi
Starbucks' entry into the NFT rewards space also marks an important milestone for Web3 and DeFi.
Web 3, or decentralized web, is a new way of accessing the web in which users have more control over their data privacy and security. It's typically carried out through various protocols and platforms, i.e., blockchain. It makes sense from the perspective of Starbucks since its rewards program is transitioning to the blockchain.
Meanwhile, DeFi, or decentralized finance, is a suite of financial products and services based on blockchain technology that enables users to access banking solutions without intermediaries.
That said, anyone gets access to financial services normally reserved for traditional institutions at lower costs and more efficiently.
If loyalty programs take full advantage of DeFi, customers will have more control over their rewards, such as how and when they want to redeem them.
The integration of NFTs in Starbucks' rewards program has opened the door for other companies to explore Web3 and DeFi. It's an excellent opportunity for a brand to expand its customer base, increase engagement, and create new revenue streams as the end game.
Ultimately, using NFTs will no longer be confined to the thought of it as nothing but a novelty but rather seen as a legitimate and powerful tool for customer retention.