Starbucks leverages loyalty program, digital to navigate customers' new normal

Starbucks Rewards customers contributed 50% of U.S. company-operated sales in the first quarter.
Written by Larry Dignan, Contributor

Starbucks is using its loyalty program and technology to grow sales, engagement and navigate the volatility as economies reopen from the COVID-19 pandemic at varying rates.

The company reported second quarter same store growth of 9% in the US and 91% in China. CEO Kevin Johnson said that Starbucks will be a reconnection spot where people can meet face-to-face.

But the old way of operating at Starbucks is not the future. Starbucks fared well due to digital engagement, new ways of operating and analytics that can navigate an ever-changing environment. Starbucks reported first quarter revenue of $6.7 billion, up 11% from a year ago, with earnings of 56 cents a share. 

Starbucks, an early mobile payment leader, said its Starbucks Reward loyalty program had 22.9 million 90-day active members, up 18% from a year ago. That tally surpasses Starbucks pre-COVID member base. In China, Starbucks has 15.4 million 90-day active members, up 51% from a year ago.

Rewards members have higher average tickets and order more overall. Johnson said:

As the number of active Starbucks Rewards members grew during the quarter, so did their engagement. Rewards customers contributed 50% of U.S. company-operated sales in Q1, up from 43% last year before the onset of COVID-19 and up from 47% in the prior quarter, demonstrating our loyal customers' resilience and affinity for Starbucks.

Meanwhile, member engagement campaigns were used throughout the quarter to juice sales.

In addition, Starbucks' digital platform is also informing how the company approaches its coffee. Rosalind Gates Brewer, chief operating officer and group president of Americas, said:

The work that our team has been doing around our digital platform and getting to know our customers better than we've ever known them before, we're understanding how their preferences are trending. What this is also allowing us to do is to make great coffee as well because now we're learning how to match and pair coffee with great food and beverage items so that we bring together both a food and beverage combination.

Starbucks upped its 2021 outlook with revenue of $28.5 billion to $29.3 billion with non-GAAP earnings of $2.90 a share to $3 a share. Global same store sales growth will be between 18% and 23%.  

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