Coffee Giant Starbucks 2nd Quarter Earning Surge Amid Loyalty Program Revamp

Coffee giant Starbucks Corp. reported high second-quarter earnings amid strong comparable sales growth in two key markets: the U.S. and China. The recent announcement of rival Luckin filing an IPO didn’t seem to phase the coffee company at all.
Starbucks attributes much of the recent growth to its newly revamped customer loyalty program. Starbucks said its Rewards loyalty program grew to 16.8 million active members in the U.S., up 13% year-over-year. The updated program has eliminated two tiers of Starbucks Rewards: green and gold levels. Before the changes, only gold members, who earned 300 points to reach to that tier, were able to redeem their stars for free food or drink.
Another change also recognizes points hoarders. With the revamped program, customers who attached the loyalty program membership to their Starbucks Rewards Visa credit card or a prepaid card will no longer have to worry about their points expiring. The greater range of options is meant to appeal to the wider customer base, inclusive of customers who prefer to spend rewards points quickly to those who hoard them. Starbucks hopes the changes will get new members more engaged with the program.
Recent growth can also be credited to the Starbucks mobile app. The digital ordering app is quite popular, it allows customers to skip long lines by ordering and paying ahead of time. It also builds awareness for the Rewards loyalty program by pushing nonmembers to join and collecting customer data, which can help the company create promotions and new products.
Starbucks remains focused on three key priorities: accelerating growth in the U.S. and China, expanding the global reach of the Starbucks brand through their global coffee alliance with partner Nestlé, and increasing shareholder returns. As Starbucks works to become streamlined and elevate the brand, they are positioning the company to provide stable and growing returns to shareholders in the future.
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