I found Starbucks new value strategy intriguing as they’re offering a Gold Card that adds freebies, discounts and more to try to increase traffic.
Take a read of the whole article today in USA Today.
Essentially, they’re going to charge you $25 annually and give you a whole bunch of deals loaded onto your Starbucks Gold Card. The biggest draw? 10% off most purchases. Purchase a $3.50 latte a couple times a week and you still have to purchase 71 lattes to earn your money back. But start adding in a free drink a couple times a year, additional discounts and free wi-fi up to two hours a day and now it’s a deal for its most loyal customers.
This is classic theme park marketing – sell a season pass, then get the passholders to spend more time in the park by offering discounts and incentives to get passholders to spend more. It’s not different, but it’s smart business.
It’s about time. Starbucks expects their fourth quarter fiscal sales which ended September 30 to be down 6%. This will help bolster sales as will the less expensive gifts they’ve announced for this holiday season and a deal with Costco to sell their gift cards which is already in progress.
THE REAL WORLD RETAILING TAKEAWAY
It’s okay to discount as long as you add value.
Starbucks’ loyal customers will see this as a huge win as they’re finally being rewarded for their loyalty.
So how can you play the same game? Add value every chance you get.
I’ve always talked about the importance of events. You can create traffic just by brining in an expert who can showcase their products or offer a clinic.
Do you have loyalty program? It’s pretty easy to get into one but it’s not for every retailer – it’s a downward spiral as once you have it, it’s hard to change, not to mention eliminate – tread lightly.
One of the best ways is to create a bounceback coupon. Get your customers in now (say through November 15) by offering a deal – say $25 off a purchase of $100 or whatever variable you choose. Then promote the fact they’ll get a second bounceback coupon when they return from November 16-December 24 that’s good for right after the holidays. It’s a way to get customers back twice. But don’t make them stretch too far in terms of what they have to spend or they won’t use either bounceback.
There are a host of different ways to make it through this. Just take a note from Starbucks’ book and add value.