Expanding Loyalty & Securing Revenue Through the Ideal Customer
Last week we posted about the changes Starbucks is making to its rewards program. That post stirred up some great discussion about the roles loyalty programs play and whether Starbucks' moves were the right ones or not. We were glad to help facilitate the conversation.
A look at the national coverage of the changes provides a different perspective.
Of course, negativity and anger generate more clicks and comments. It’s no surprise that media outlets would amplify the loudest, angriest voices in the room.
They’re missing the bigger picture, however. While there is a large group of customers that just had the goalposts moved back, Starbucks just rolled out the red carpet for another.
They just made it easier - way easier - for their ideal customers to earn rewards. It just happens that their ideal customer isn’t the one who spends $3 for basic drip coffee. It’s the customer with the highly-customized order who also picks up items from the food menu and buys Starbucks branded items.
If there’s a real lesson we can all take away from these changes, that's it. Identify your ideal customers, and bend your operation to meet their needs and keep them engaged.
It goes without saying that not all customers are equal. Some spend more than others. Some spend less but are more engaged. Others may use your brand only out of convenience.
Bluntly stated, your ideal customers are your most profitable. But that doesn’t mean they’re the customers who spend the most, or spend the most frequently.
They’re the customers who get the most value out of your product or service without high maintenance.
These ideal customers don’t need their hands held to maximize their return on your product or service. That makes them more profitable than the customer who spends a ton but also requires a heavy investment back to simply maintain their status.
Because they reap so much value, ideal customers are also more likely to recommend your brand to others. They're also more like to provide necessary feedback to further improve your offering.
Winning the Relationship
So, who’s your ideal customer?
In Starbucks’ terms, that plain coffee drinker isn’t getting the most return from his investment. Starbucks isn’t indispensable to them. They can get a cup of coffee from just about anywhere. There isn’t much Starbucks can do that would stop that customer from going elsewhere on a whim.
The customer with the complicated order can’t replicate their drink at the local convenience store.
They can’t pick up a danish and a birthday gift at their office’s coffee pot.
Starbucks is invaluable to them, and so it’s wise that Starbucks would offer incentives to continue those behaviors.
There are other motivations for the changes, such as speeding up the transaction process.
But for you and I, the takeaway is this: find the people who know they’re winning the relationship with your brand.
Identify your ideal customers, and do whatever it takes to keep them engaged. Besides securing your revenue picture, you’ll be in a position to go out and secure more customers who appear to be just like your existing ideals.
As we pointed out in our previous post, pursuing the ideal doesn't mean leaving every other customer in the dust. Regular coffee drinkers will still receive freebies at Starbucks; just not as rapidly as the ideal customers.
Some will churn. As they do, that's an opportunity to secure more ideal customers - and all the loyalty and consistent revenue they bring. Looking at the lifetime value of a customer, and the lifetime value proposition of your organization, that's a good thing.
Topics: customer loyalty
Written by: Brandon Carter