Starbucks believes that its artificial intelligence data efforts are improving the effectiveness of rewards programs, encouraging consumers to spend more money and visit more often.
On Tuesday (January 30), on a conference call accompanying the coffee house giant’s first quarter fiscal 2024 earnings report, CEO Laxman Narasimhan said the company’s successful efforts to extract greater value from Starbucks Rewards members He talked about his efforts.
“In the U.S., we implemented targeted offers aimed at drawing occasional customers into our loyalty program,” Narasimhan said. “As we’ve seen, Starbucks Rewards members develop daily, long-term relationships with our brands, increasing both tickets and transactions. Additionally, our proprietary Deep Brew data analysis and enabled new capabilities within our AI tools to identify and incentivize specific reward member cohorts.”
Consumers want personalized deals and discounts. PYMNTS Intelligence Report “Personalized offers are powerful, but they too often miss the mark” gathered responses from more than 2,500 U.S. consumers and found that 71% have received and are interested in a personalized offer, and an additional 12% say they are interested in receiving a personalized offer. It became clear that he wasn’t, but that he was interested.
During the quarter, Starbucks had 34.3 million active 90-day members in its U.S. rewards program, an increase of 13% year over year, and approximately 4 million new members. To further drive engagement, the brand is looking to leverage reward partnerships and target other companies’ built-in audiences in other industries. The brand announced this collaboration with Bank of America on Tuesday.
“We…will be happy to share.” [that] Bank of America will be our next Starbucks Rewards partner and will provide even more value to our most loyal customers,” Narasimhan said by phone. “This opportunity…is one of two new Starbucks Rewards partnerships that we’re rolling out this year.”
The move follows an existing rewards partnership between Starbucks and Delta Air Lines’ SkyMiles program, which Narasimhan said on Tuesday’s conference call has been a “huge success” and will help loyalty members “connect and engage.” He said it had gotten even deeper.
Many consumers take advantage of restaurant loyalty programs. In a PYMNTS Intelligence study, “Connected Dining: Consumers prefer the taste of discounted meals” Based on a survey of more than 1,800 U.S. consumers, 51% of respondents reported using restaurant loyalty programs, with 49% of those participating in these programs at quick-service restaurants. and 34% participate in these programs at full-service restaurants.
Additionally, consumers are increasingly engaging with restaurants digitally. Findings from PYMNTS IntelligenceConsumer interest in apps they use every day”, which leverages insights from a survey of more than 3,300 consumers in the U.S. and Australia, found that one in four U.S. restaurant customers exclusively use an internet-connected device to cook food. I understand that you are ordering. Furthermore, an additional 36% are accessed through both traditional channels (in-person or over the phone) and internet-connected devices.
Starbucks saw an increase in engagement across its digital channels.
“Mobile orders and mobile payments accounted for more than 30% of all transactions in the quarter, a record high, and we reduced mobile order and mobile payment downtime by half,” Narasimhan said on a conference call. “…our U.S. delivery business delivered record results, growing approximately 80% year-over-year thanks to our expanded partnership with DoorDash. Shipping represents only 2% of our transactions; We expect continued incremental growth going forward.”
