Introduction
Howard Schultz successfully and rapidly established Starbucks as the dominant
specialty-coffee brand in North America by bringing a new value proposition to the American
consumer. The idea of a “third place” had been previously unheard of in the minds and lives of
United States consumers. Today, the American third place is a direct result of Schultz’s dream to import Milan’s coffee culture to his domestic country. Through the combination of the
highest-quality coffee, unparalleled customer service, and a unique environment, the Starbucks
brand continually finds success.
Starbucks, however, was disappointed to receive the results of their 2002 market
research survey, which revealed the company was not always meeting consumer expectations
in the area of customer satisfaction. Views of the company had changed in the eyes of many
consumers. Besides some loyalists, Starbucks was widely seen as placing too much focus on
company expansion and not enough on the customers. The brand had lost its novelty and
consumers no longer felt cared for and connected to the business. This news caused major
concern for Starbucks, as previous research had revealed a direct link between satisfaction
levels and customer loyalty. Therefore, Starbucks needs to find a way to satisfy customers by
encouraging them to stay loyal to the brand.
In the new research, we wanted to delve deeper into the minds of Starbucks customers.
Our research objective specifically was to find out, “What creates a loyal Starbucks customer?”
It was important to look at what aspects keep people coming back to Starbucks and how we
could reward those customers better. By examining the current loyalty program and comparing
it to other competitors we were able to get a better sense of options and what customers
would value in a loyalty program. We conducted research in many different forms with
surveys, focus groups, a subject-matter expert interview, and experiment. Although there are
some limitations being near such a large university many of our convenience samples were
largely populated with students.
Overall the management decision will be deciding what changes need to be made to the
Starbucks current customer loyalty program. In helping with this decision we wanted to delve
into customer loyalty as a whole to discover additional factors that can heighten the loyalty of
Starbucks consumers. The research we have conducted we hope will help Starbucks’
management make educated changes to the current rewards program therefore increasing
customer loyalty in the brand.
Survey Findings
Our survey was a chance to get an initial idea of what people valued in their coffee
shops and their thoughts on coffee loyalty programs. Of our participants surveyed over 80%
were not involved in any coffee rewards programs at all! When looking at that group, one of
our most beneficial findings was that 61% didn’t participate because they were not
knowledgeable of any programs. In the graph below you can see that a significant set also said
they weren’t interested or didn’t find enough value in incentives offered.
9. Why don't you participate in a loyalty/rewards program at a coffee shop? (Check all that apply)
#
Answer
Response
%
1
I do not know of any
programs
34
61%
2
My preferred coffee
shop does not offer
one
9
16%
3
The incentives are
not significant
enough to participate
13
23%
4
I am not interested
14
25%
5
Other: Please Specify
4
7%
Another beneficial finding from our survey was that the most popular incentive that
participants wanted in their program was free drinks. In the current loyalty card group 10 out of
14 mentioned free drinks were the best aspect of their program. Matching up with the group
who didn’t participate, when asked what a loyalty program would have to offer to entice them
to participate 60% (34 out of 56) mentioned free drinks.
People seem to want the ultimate reward for participating in these programs. 18 out of
56 who didn’t participate in loyalty programs mentioned they wanted a punch card-like reward.
They wanted to know exactly when they were going to receive a free drink since that was the
desired reward. Many mentioned having a “buy 5” or “buy 9” get a drink free reward systems in
order to participate. Participants wanted to know exactly how many visits would result in a
reward.
One of the most interesting finding was discovered in our warm-up questions. We
wanted to find out what important aspects of a coffee shop kept a participant going back to the
same one. It was most surprising that price wasn’t ranked that high on importance factors.
Convenience, drink choices, and atmosphere ranked higher on the scale than price when a
participant looked at their favorite coffee shop. The majority of our survey participants made
less than $15,000 a year and were under the age of 24, it looks as though even on a budget
other factors outweigh price.