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April 1, 2013

Mobile Loyalty Cards: The Future is Here

by vv3a

As Precision Marketing has outlined for us “We are coming full circle…Relationships matter again and can become even more successful when they are relationships built on rich data bases and mediated with advanced communications technology.”  Gone are the days where sales growth could be derived from mass email schemes that depended on sending out cost efficient mass emails, hoping that it reached the 1% of relevant audiences.  In today’s fast paced, multimedia driven world, consumers are becoming increasingly immune to the mass amounts of promotional emails (91% of consumers are opting out of emails, while 63% are likely to disengage from brands that send irrelevant messages).  Precision Marketing argues that data enabled customer insights are key to creating relevant, customizable marketing campaigns to engage customers and build their loyalty.  One of the most successful examples of how companies could gain these consumer insights and collect big data was that of the British grocery store, Tesco and its popularization of the loyalty card/program amongst its customers.  

As technology continues to evolve and companies continue to push to remain relevant, new loyalty program trends seem to have evolved in the form of app—shocking, I’m sure.  On a recent jaunt to the Corner Starbucks, my friend introduced me to the My Starbucks Rewards card, and I have not looked back ever since.  Although Starbucks has had a rewards program since 2008,  it has decided to digitize the entire rewards system and rolled out its new system this past October (2012), saving a million dollars a month in mailing costs (from the old system of mailing customers a reward redemption postcard) (starbucksmelody).  Customers can create a free account at  and are given a re-loadable card, which must be pre-loaded with money.  Customers who use the pre-loaded card will then accrue rewards points for every purchase made.  Customers may also download the Starbucks app, which houses a bar code that can be scanned by cashiers to pay for their drink if they do not want to carry a card or forget their cards.  I have found this feature to be particularly useful and ingenius.  As a girl I find it so hassle some to always have to carry around a wallet that never fits into my tiny jean pockets (if they can even be called pockets).  Therefore, the app provides a great solution on my daily hunt coffee/food hunt on the corner, as I can just “pay” with my phone.  

However, despite these advantages, Starbucks, seems like the ultimate winner.  Not only are they able to continue to monitor my spending habits and gain more data on what I’m buying, which location I’m buying it at, etc, they are also gaining my future purchases before I’ve even purchased it.  The use of the pre-loaded card system in order to obtain reward points, forces consumers to have essentially already paid for “X” amount worth of future Starbucks food or drink.  Although, I could mitigate my investments by putting $5 on my card each time prior to purchase, the task is too tedious and I often find myself putting at least $20 bucks on my card, $15 more than I had originally intended to spend that day at Starbucks.  Anyone notice the vicious money sucking ecosystem/cycle that’s been created?  Well, if you didn’t, my wallet has, as have the other $10 million ( registered Starbucks rewards’ users, I’m sure.  

Continuing to push for relevancy, add customer value, and increase its bottom line, Starbucks has recently announced that it will be extending  its rewards system to apply to its newly acquired Teavana tea shops, as well.  Consumers will even be able to earn reward points when they buy Starbucks products at their local grocery stores.  These new extensions will undoubtably increase the cards $3 billion( yearly sales contributions and further extend Starbucks informatics on its consumers.  Thus, Starbucks is, yet, another example, of how, when used correctly, big data can provide continuing relevant insights to consumers’ minds and generate bottom line gains for companies.

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