"Starbucks has a higher customer retention rate of 44% than the industry average of 25%"
(CoffeeDasher).
Starbucks is a retention behemoth, with a key component being Starbucks Rewards.
Their approach is straightforward, centering on a point-based model. Let’s take a high-level overview of this program's main mechanics.
Notes:
#1
This analysis focuses on Starbucks's U.S. market, acknowledging that international markets may employ different strategies, such as tiered memberships.
#2
The machinations you see below are not an exact representation, as Starbucks, along with participant usage, data is unavailable to the public and changes based on the promotion.
Main Mechanics
App RequirementDebatable move.
Depending on the implemented mechanics, a native app could provide an unbeatable personalized experience.
However, requiring individuals to download an app is risky, as that's an additional barrier to entry. What advantages you may gain with a native app, you may lose in conversion rate.
Given Starbuck's brand recognition, the drawback may be minimal. However new brands may not be as lucky.
PoS programs, like
Square or SAAS companies, like
Antavo and
Open Loyalty, will give you similar, if not better, functionality, but with the added convenience of being located closer to the point of purchase.
Static EnginePoints are known as "Stars" in this program's economy; participants earn them through two primary actions:
1 Star per dollarPaying directly through the app.
2 Stars per dollar Using a preloaded Starbucks Card within the app.
This structure provides a reason to keep funds within the Starbucks ecosystem, essentially committing people to future purchases.
Dynamic Elements
Starbucks doesn't make much use of actual dynamic elements; however, they have incorporated some brand events to add some variety, such as:
Double Star Days: Occasional promotions where participants earn double stars on purchases.
(To turn dynamic, you could provide participants with the ability to choose their own double star days, such as a voting system)
Bonus Star Challenges: Personalized challenges offering extra Stars for trying different products.
(Will visualize in a subsequent section)
Rewards
Starbucks offers a tiered redemption system, providing participants the freedom to choose rewards that align with their interests:
25 Stars
Customize a drink with an extra espresso shot, syrup, or alternative milk.
100 Stars
Redeem for a brewed hot, iced coffee, tea, or bakery item.
200 Stars
Enjoy a handcrafted beverage, hot breakfast item, or parfait.
300 Stars
Select from a lunch sandwich, protein box, or salad.
400 Stars
Choose select merchandise or at-home coffee products.
Deep Dive
Earning Stars
As mentioned earlier, there are only two ways to gain stars, but more generally, there is only one: purchasing. This runs into our one-class university problem.
To prevent this, Starbucks has implemented challenges to increase the variety, one being a popular game mechanic.
Bonus Star Challenges

Hades is a well-known classic in the gaming world. To severely simplify, your goal is to pick a single weapon and use it to beat the game in one go.
To prevent players from routinely using the same weapon, the designers implemented a 20% bonus on resources if they choose an unfamiliar one.
Similarly, Starbucks has implemented
Bonus Star Challenges to get participants to double down or try new products.
These challenges offer additional Stars when participants purchase specific products or visit several times within a set period.
For instance, an individual who typically orders a frappuccino might be prompted with a seasonal frappe challenge for extra Stars.
To further enhance this strategy, Starbucks could introduce limited-pool challenges.
These would allow only a set number of individuals to take the mission to redeem.
Allowing the most interested individuals to get an exclusive prize.
(To make this challenge more dynamic, allow individuals to choose the challenge they want to aim for.)
Reusable Cup Benefit
Given Starbucks's focus on sustainability, they have implemented a challenge to aid: Reusable Cup Benefit.
This initiative rewards participants with extra Stars for bringing in their reusable cups.
Even though they've recently changed the benefit mechanic, the value is there. If you like stars, sustainability is a route to access them.
This initiative accomplishes three key elements along the way:
#1
Provides autonomy in terms of possible actions within the reward program.
#2
Protects the environment from the cups that would be thrown away.
#3
Saves Starbucks costs as they can produce fewer of those cups.
Great implementation, although to enhance the impact even further, Starbucks could make reusable cups an integral part of its brand.
Here's a potential stak:
#1: Offer customizable cups that gain you stars when used (Foundation).
#2: Provide accessories, as rewards, for these cups, which can be redeemed at the local Starbucks.
(Bonus points if each accessory provides a unique benefit)
#3: Add a seasonal bonus challenge asking fans to share pictures of their cups under #mycup.
(This is more of a branding thing, entirely up for debate)
The intention is to create a loop of sharing, leading toward probable seasonal virality:
(I have reduced the purchase delay and reward cost to better visualize the viral loop)
(This diagram hypothesizes the actions if this stak is implemented. The exact % increase is unknown.)
Now, let’s look at the other side of the coin:
Rewards
Starbucks’ rewards system stands out for its tiered approach, giving members the freedom to choose how they redeem.
This allows participants to apply various strategies, i.e., use immediately vs save for merch.
However, there can still be improvements.
The gold standard is autonomy.
This is where the concept of static versus dynamic engines comes into play.
Engine Recap
In the context of rewards programs, a static engine offers fixed methods of point accumulation and redemption.
Participants earn points through predetermined actions and redeem them for specific rewards without much variation.
Conversely, a dynamic engine introduces variability and participant control into the system. It allows multiple strategies for point accumulation and redemption.
Introducing Consumables
A practical way to implement a dynamic engine is through consumables.
In video games, consumables are temporary items or abilities that assist players in overcoming challenges. They offer flexibility and strategic depth.
Duolingo is a big fan of this mechanic.

Applying this concept to Starbucks: consumables could serve as rewards that temporarily enhance participants' ability to earn stars or access benefits.
For example, Starbucks might introduce a Point Multiplier Consumable.
Point Multiplier Consumable Sample Bio
Description: Increase star accumulation rate for a limited time.
Cost: 20 Stars
Effect: 2x multiplier on Stars earned on your next purchase
This approach differs from Starbucks’ current Double Star Days, where participants receive Double Star opportunities on preordained days.
With the consumable approach, participants have the autonomy to decide if they'd like to participate and when to apply the multiplier, adding another tool for them to strategically use.
Balancing the System
Introducing consumables does not come without risk. If not managed correctly, it could lead to an inflated economy, loss of profitability, and boredom for the participant.
To mitigate this, introducing friction is essential.
Friction
noun
1. A drain that consumes resources produced by a player. They act as constraints designed to prevent positive feedback loops from becoming unmanageable.
An example would be to introduce usage caps. This will limit the number of times a consumable can be used within a specific timeframe.
For example, a participant can use the Point Multiplier Consumable twice a month.
Another friction mechanic to mitigate hoarding is introducing a constant drain on participants point's over time.
Starbucks has addressed this through its point expiration system, requiring accumulated Stars to be used within six months.
By integrating gamification elements like consumables and balancing the system with friction, Starbucks could add another layer of strategy, appealing to different preferences and reaching different individuals.
Notable Mentions
Throughout this piece, we’ve dove into various aspects of gamification, yet many elements, which are associated with gamification, haven't made their debut due to time.
Features such as leaderboards, badges, and multiplayer components can add an added layer of complexity, making the program more interesting.
When executed thoughtfully, these elements can create a platform for self-expression, competition, and community.
However, when not, they risk becoming superficial additions to the user interface.