Starbucks: Loyalty, Mobile Ordering and the Store Experience

Starbucks Corporation is a roaster, marketer and retailer of specialty coffee that operates and licenses stores worldwide. It operates a customer rewards program and lets customers order and pay ahead through its mobile app.

Coffee is easy to buy almost anywhere, so competitive rivalry and substitutes (home brewing, convenience stores, local cafés) are strong. Starbucks must keep customers returning while managing busy stores, where fast mobile-order volume can conflict with the in-store experience.

• Rewards programs build customer relationships: repeat visits raise lifetime value, and referrals from satisfied customers lower acquisition cost.
• App data is big data that supports personalized offers. It also creates a responsibility to protect customer privacy.
• An unexpected gift, such as a free birthday reward, applies the reciprocity principle: customers who receive something of value feel inclined to return.
• Operations KPIs, such as order wait times and order accuracy, must keep pace with digital demand.

A fictional coffee shop finds that 45% of morning orders now come through its app, and in-store customers complain about waits. It must decide whether to add staff, create a separate pickup counter, or limit app ordering at peak times.