How does Starbucks build a membership growth system?

In the morning, I took the curriculum development teacher to Starbucks to drink coffee and talk about things. The waiter said:

"If you buy two cups of coffee, you can actually enjoy the buy one get one free privilege, but the prerequisite is to apply for a membership card. After applying for the card, you only need to pay the price of one cup of coffee when buying two cups of coffee, and this opportunity can be repeated three times in total."

"How much is the card?" I asked expectantly.

"98, it's just the price of three cups of coffee. The three buy one get one free coupons included are enough to make your money back, and there's also a breakfast invitation coupon and a coupon for a cup upgrade..."

Before the young man finished speaking, I paid for the card.

Just like that, Starbucks turned me into its "loyal customer" in less than a minute.

Regarding loyal users, there is a saying in the industry called "5 purchases to become loyal", which means that a user needs to make 5 purchases on the platform, and it takes about 1 month to transform from a novice user to a loyal user.

This morning, Starbucks was able to hook me in such a short time, which made me very interested in its membership program.

Do you want users who like to spend money on your products and are unlikely to leave?

If so, today’s article can help you.

01

Why does Starbucks have a high conversion rate when selling membership cards?

Speaking of selling membership cards, I think of the gym memberships sold at the subway entrances. The salespeople there would sell memberships to everyone they met, "Would you like to take a look at the gym and swimming pool?"

This kind of questioning that is asked to everyone not only has a low conversion rate, but is also likely to cause user disgust.

Why did I happily sign up for Starbucks membership? Besides the fact that it is not expensive, I think a very important reason is that membership is promoted when users need special benefits the most.

Starbucks staff usually target those who buy two cups of coffee, because the buy-one-get-one-free coupon is what those who buy two cups need most. For those who only buy one cup of coffee, they rarely promote membership cards.

In addition, I found that e-commerce platforms have been promoting memberships like crazy recently.

JD.com members highlight free shipping and doubled JD Beans; Xiaohongshu members highlight free shipping and exclusive prices; NetEase Kaola highlights the value of free shipping coupons, duty-free coupons, and discount coupons; NetEase Yanxuan highlights doubling of points and the privilege of free trials every month.

However, these platforms are quite rational when selling memberships. Usually when you check out, they will put up a small pop-up saying “Get a membership and get a free discount”, and at this time you will be tricked into buying a membership.

NetEase Kaola purchase interface

02

How does Starbucks get its members to shop more?

The essence of membership is to allow users to shop with a purpose. The key to transforming users' casual shopping into a shopping with a sense of mission lies in the design of membership levels.

Starbucks has three levels of membership.

Before becoming a Starbucks member, you need to buy a Starbucks Rewards card. The price of the Star Rewards card is 98 yuan (108 yuan with a Starbucks keychain, and the co-branded card that Starbucks occasionally cooperates with other brands is 299 yuan).

After you buy and activate the Star Rewards card, you will become a junior member.

The initial level is a silver-level member, and then by buying more, you can upgrade to a jade-level member, and by drinking more, you can become a gold-level member.

You see, their membership levels are set up to encourage users to buy and drink coffee.

Why are so many users willing to buy coffee from it? In fact, this is due to Starbucks’ membership level setting skills - making users feel that upgrading is very simple!

For example, when you have used up the three buy-one-get-one-free coupons in your junior membership and are about to buy your fourth cup, the store clerk will say to you:

"If you buy one more cup, you can upgrade to a Jade Star Card member and get a free coffee voucher."

It only costs 250 yuan to go from silver star to jade star, and only 1,250 yuan to go from jade star to gold star. In order to reduce the perceived difficulty of upgrading for users, Starbucks also launched the “Little Star” strategy.

Little Stars is a way to earn points, using stars to replace the amount of consumption. For every 50 yuan of consumption, one star will be generated (similar to virtual points).

In the Starbucks App, you can also see how many stars you have. The visual upgrade progress will encourage you to shop at Starbucks more frequently.

When you collect the corresponding number of stars, it means you can unlock the privileges of the next level. Starbucks’ tier privileges are simple yet full of tricks, always giving you a sense of great value.

03

Why does Starbucks membership feel so valuable?

"You have a free upgrade ticket. You can get a large cup of coffee by adding 3 yuan to the price of a small cup."

Starbucks staff always surprise you with membership benefits when you pay the bill.

Good membership privileges mean that users feel that the membership is of great value while merchants can also make money "very quickly".

According to Starbucks' financial report, even when the entire coffee industry was not very prosperous, it still maintained rapid growth, and the sales from members were three times that of non-members.

This performance growth is due to the privileges Starbucks provides to its members.

1) Buy 1 Get 1 Free coupon

Strictly speaking, this privilege is purchased by you spending 98 yuan. The biggest trick is that you have to buy one cup before you can get another one for free.

So, who has nothing better to do than buy two drinks for themselves? In most cases, we go to drink with our friends and bring potential customers to Starbucks.

2) Free breakfast coupon

If you have this coupon, you can get a free medium coffee before 11:00 am.

It is said that Starbucks uses free breakfast coupons to make cross-category product recommendations, hoping that we will also buy some breakfast pastries when buying coffee.

3) Cup upgrade coupon

With this coupon, you can upgrade a medium cup to a large cup, and a large cup to an extra large cup without spending any money. This is a magic coupon that can quickly improve member satisfaction.

4) 1 cup for free in the month of birthday

On your birthday, you will usually receive greetings from various platforms, but the free drinks from Starbucks are the most practical.

5) Buy 3 get 1 free coupon

This means that I can drink 4 cups for the price of 3 cups of coffee. Although I got one cup of coffee for free, it also means that my single consumption was nearly 100 yuan.

6) Anniversary Free Coupon

You can get a free cup of coffee during the anniversary month.

7) Spend 10 times of any amount and get 1 free cup

No matter how much I spend, Starbucks records every purchase I make. If I spend 10 times, I can get another cup of coffee. Therefore, whenever I want to buy coffee, I always think of going to Starbucks.

8) Exclusive Gold Card

A gold card engraved with the consumer's unique name. Don’t underestimate this gold card. It will give people a sense of exclusivity and superiority through differential treatment based on identity.

Starbucks allocates these privileges to different membership levels. Starbucks has three membership levels, and each level has different privileges.

• Silver-star privileges are mainly used to cultivate new members' spending habits;
• Jade-level privileges are mainly used to increase members’ total spending;
• Gold-star privileges are mainly used to increase members’ consumption frequency.

Starbucks' sales from members are three times that of non-members. In addition to increasing the average customer spending and frequency of consumption through privilege settings, it is also due to what I will talk about below: "how to increase the consumption frequency of members."

04

How to increase members’ consumption frequency?

What should members do if the coupons are lying in their accounts and they don’t use them?

Starbucks has used another trick to get you to buy quickly. Its benefits are not valid throughout the year, and each offer has a fixed validity period.

Except for birthday and anniversary coupons which are valid for the current month, other coupons are valid for 90 days.

This operation of increasing users' sense of urgency has invisibly shortened users' consumption cycle and further increased members' purchase frequency.

What’s even more amazing is that membership is not lifelong. In the second year of membership, Starbucks will remove all the stars and coupons in your account and downgrade you to a lower level.

At this time, there are two options: either continue to consume and upgrade; or directly buy a Silver Star Card. Most people choose the second option.

Why do you dare to do this? Aren’t you afraid that users will be angry? Because we let you enjoy various membership benefits and cultivate your habits, in simple terms, we make you addicted. Then the next year they tell you, sorry, you have been demoted and you can no longer enjoy your previous rights.

What should I do at this time? We have become accustomed to enjoying the benefits, just like when we bought an iQiyi membership, we could skip ads for free. If we suddenly stopped being a member, we would definitely not be used to it. So at this time, we have to buy it again, or upgrade to a higher membership.

So Starbucks’ goal has been achieved.

05

Summarize

In the past, you could allow users to grow into loyal users step by step. Now, business competition is very fierce. If you still cultivate loyal users slowly, the biggest risk is that users can easily be snatched away by competing products.

If you want your users to grow exponentially into loyal users with high spending and low churn risk, you can consider studying the Starbucks membership gameplay in this article. In general, there are four key inspirations:

1) There is a fee for entry-level membership, and privileges are set up to improve consumption habits.

2) The threshold for membership upgrade cannot be too high and must be linked to core business indicators.

3) The main settings for premium members include privileges to increase average order value and number of purchases.

4) Promote membership when users need special benefits the most, so that the conversion rate will be high.

A good membership system makes users feel that they are getting great value while allowing users to earn a lot of money.

The author of this article @郭晓爽 is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

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