Starbucks and Delta recently announced a significant new loyalty program partnership that offers members of both programs easy and innovative ways to earn more Stars and SkyMiles. It also includes some unique aspects delivering special treatment along with a sense of exclusivity. This move is a strategic one for Starbucks in particular, and sets the stage for more of these types of Loyalty Partnerships. This article digs into the five key features of this innovative loyalty partnership that can serve as inspiration for any loyalty program design.
Overview & Analysis of Starbucks/SkyMiles Loyalty Program Partnership
Partnership design is a careful balance, taking into account the needs of both partners while ensuring a simple yet compelling value proposition for the consumer. Often times a partnership can get mired in the complexities, leaving the customer with an unwieldy experience that prevents broad adoption. As you'll see, Starbucks and Delta have done a masterful job in creating a simple yet elegant design:
1. Immediacy
The partnership offers lucrative two-way bonuses for members to link accounts, which is exceptionally easy. If you join from the Starbucks side, you simply enter your name and Delta SkyMiles ID, and you get an immediate confirmation that the accounts are linked. And just for linking them, you’ll get 500 SkyMiles and 150 stars (enough for a handcrafted drink) after your first qualifying purchase.
2. True Reciprocity
When purchasing at Starbucks, members always receive both stars and miles. And when taking a flight, members always get miles and double stars for any Starbucks purchase on the same day. This kind of double dipping feels generous and is the kind of simple benefit that more loyalty programs should strive for. Plus, the ability to identify days that Starbucks members are flying is a slick feature that adds a sense of personalization.
3. Integration that Goes Beyond Points
Delta is the only major US airline to serve Starbucks on their flights, which provides a significant ongoing coffee sampling opportunity. It makes the partnership that much more synergistic for the brands and even more intuitive for the consumer. It’s not hard to imagine special benefits at Starbucks locations for SkyMiles members soon.
4. Innovative & Exclusive Rewards
As part of the partnership, Delta has introduced an amazing new benefit for their elite members: Diamond and Platinum SkyMiles members will be able to select 4,000 Stars as one of their annual Preferred Choice Benefits.
That equals 50 cups of brewed coffee! The perceived value of this benefit feels huge and proprietary. More information about how to best use Sentiment Builders in your Loyalty Program design.
5. Engagement Activators
Perhaps one of the most brilliant aspects of the partnership is linking a high ticket, infrequent purchase partner with a low ticket, high frequency partner. Ongoing visits to Starbucks will keep Delta top of mind, while the premier status that Delta can convey provides a level of recognition that would be hard for Starbucks to otherwise achieve.
“We’re continuing to evolve Delta’s SkyMiles program to give our customers valuable, premium experiences not just on the days they travel but in their everyday lives as well,” said Prashant Sharma, vice president of loyalty at Delta. “Through this new partnership with Starbucks, we can deliver more moments and interactions that matter, both in the air and on the ground.” Read more about how to build these kinds of Engagement Activators into your loyalty program here.
LoyaltyLevers Take
There is a lot to like about this simple but highly effective partnership. Strategically, it represents the first foray for Starbucks into the realm of loyalty partnerships in the US, however in Canada they have launched similar partnerships with TD Bank and Aeroplan through the Starbucks “Reward Together” initiative. The brand states “Through these loyalty partnerships, the company aims to increase awareness and drive growth of Starbucks Rewards as well as attract new members by offering valuable benefits and making it easier for customers to join.” So, this partnership certainly won’t be the last for Starbucks, and it will be interesting to see how far they go. For the airlines, as little as 1/3 of the total program revenue comes from flying. Will Starbucks Stars become the next mega currency?
The parameters that Starbucks has laid out for their partnership model are indisputably solid. When asked about his perspective on the partnership, Chuck Ehredt, CEO of Currency Alliance (a cutting edge open architecture loyalty currency exchange), he had this to say about it:
“The earning levels do not look like they will cost either company much money, but the message to members is that if you engage with both of us, we will treat you extra special. Those types of recognition and experiences are what builds loyalty with customers. The points may even be trivial to the feeling that people are recognized and rewarded for making a tiny effort to fly Delta and drink Starbucks coffee - which are entirely complementary activities. Companies should collaborate with like-minded brands in complementary categories in order to be more relevant in the daily lives of customers, while allowing them to accelerate earning points in order to reach rewards faster.”
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