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The fault in our Starbucks

Updated: Jul 5, 2023



Starbucks ran a BOGO deal disguised as referral campaign


Instead of the usual buy 1 get one offer, they encouraged people to bring a friend along. I want to discuss the untapped potential of Starbucks' disguised referral program.



Getting a friend means bringing anyone — your boss, parents or even your ex. This gives people more possibilities to invite people.


Instead of running a traditional, boring BOGO scheme, Starbucks turned it into a referral marketing campaign at scale.




 


There were a few advantages

  1. New user activation

  2. Resurrection of a churned user

  3. Building habit loops for existing users and driving up loyalty



 


Maximizing reach through influencer partnerships


And Starbucks promoted the offer via influencer marketing, because distribution is everything.



 


Did Starbucks Miss Out on Retaining New Customers?



But I wasn't sure if they'd retain these newly acquired users. It wasn't clear from their campaign.


So I went to Starbucks on the 7th of May to figure out what they'd do to retain new customers and drive up repeat purchases.


Surprisingly, they were doing nothing. 🤔


We went in. Paid cash. Had the coffee. And we left.



 


First impressions matter: Starbucks' overcrowding problem


It was so crowded and people had to queue up outside the store in order to be let in. This was clearly not the kind of experience what Starbucks stands for — and why people pay for. So, it'd be harder to retain first-time visitors who have a sub-optimal experience.





 


Missed opportunities to close the referral loop


On the surface, I couldn't find any initiatives that were meant to close the referral loop. So I went to look more closely and I found some.



1. There were coupons printed out


There was a pamphlet that could be used as a discount code.


There was a time limit to redeem to get people into the habit. It looks like bi-monthly is the natural frequency that Starbucks is aiming to nurture users into.


But it wasn't placed in a way where customers could see it. It was next to the cashier but was facing the baristas. The baristas didn't even give it to me when I placed the order, nor when I collected my order.


The reason why this coupon is important is so that they'd nurture habit building and bring users the second time in the store.




2. Starbucks Card


Starbucks also has a card system that requires you to load ₹ 200 before making your first purchase. In our case, it was possible to get our ₹ 400 order for ₹ 190 if we had loaded the card beforehand. However, we were rushed through the queue and didn't notice this option, nor did the baristas mention it. If we had used the card, Starbucks would have had our email or phone number to try and win us back if they noticed we were not returning. Additionally, we would have had ₹ 10 left in our account to spend.



Oh and unfortunately, one of the offers on the page was no longer valid, so it was wasting our attention without providing anything in return, adding to our cognitive load.



Conclusion


In my opinion, Starbucks did a great job.


One key takeaway for companies running buy 1 get 1 offers is to consider running them as give 1 get 1 offers. Additionally, it's important to actively promote good offers rather than relying on users to discover them on their own.

Starbucks relied on influencer marketing to do so.


Yes, they missed some opportunities to keep me engaged, like promoting the 25% discount more prominently or incentivizing new users to invite more friends.


They could also streamline the Starbucks card creation process to prevent baristas from discouraging customers.


Despite these issues, I'm certain Starbucks will consider this a successful campaign and will continue to refine it to generate even more revenue in the future.


Thanks for reading my take! I write them to add to my swipe file and to remember it when the time comes.


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