I’ve had the new Starbucks Gold card for a few weeks now and alot of people have been asking me what I think about it and how I got in. I figured a blog entry would be good to catch people up and since I have been in charge or a rewards program before, maybe I can add a few tips for Starbucks.

I was invited into the program early, before it was open to the public, and for free. Great! I love being an early adopter, I love Starbucks, and I’m not going to lie, I like being “that guy” who the baristas say “Ohh, this is a Gold Card.”

After using the card for a few weeks I wanted to give some early feedback, and maybe some information for anybody that is thinking about buying one when they become available November 4th. Starbucks, if you want to hire me for these insights, feel free. :)

Previously to being invited to join the Starbucks Gold Card program I had been a registered Starbucks Card holder since they started giving you free syrups and milks and had been using a Starbucks Card for much longer than that. In fact I have been using the Ichiro card that came out over three years ago until I got the new, slick looking, Gold Card. All that being said, yes, I go to Starbucks a good amount.

So what does the Starbucks Gold card get you? So far it has gotten me 10% off my drinks and food. They say there will be other benefits given online over time, but I haven’t seen anything in the past few weeks. You get 10% off of other products as well and a free drink on your birthday.

Over the last few weeks I have probably earned 2 free drinks (based on saving 10% a drink). To make things easy, let’s say I buy a grande Americano everyday (which I don’t, although I do buy Americanos not the expensive drinks). That would cost me apx. $890 over the year, and with the Starbucks Gold card I would save apx. $89, or roughly 36 free grande Americanos. That’s quite the savings if you ask me, and for a free card (or even a $25 card) it is well worth it. Factor in buying for other people, snacks, gifts, and you could be making back 10X your investment fairly quickly. Sounds great, it is…but is it could easily be better.

Here are the knocks I have with the card;

1. You don’t get refills, even though it is a registered card.
2. You don’t get free Soy or Syrups, even if you have registered the card.

I guess those are the only two knocks that I have on the Gold card, but trying to be an elite or somewhat exclusive program they should take care of these benefits that they already offer to other “registered” card holders.

What does this mean on your bottom line? If you buy Soy drinks of any size, get coffee refills, or buy tall or short drinks with syrups the registered card, as opposed to the Gold Card, is actually is a better deal.  For me, being an Americano drinker who likes refills it has actually led to me having to carry two Starbucks cards. To save money on the Americano I use the Gold Card, then when it’s time for my refill I use the registered card. You can call me cheap if you’d like, but if you know me you know it comes down to the principal of the program and the benefits.

Why doesn’t Starbucks just let the registered Gold Card members get free syrups, milk upgrades, and of course the refills?  Obviously the Gold Card members are loyal and with the special invites going out Starbucks wants these card carriers them feel valued.  Not taking care off these small details will hurt the overall experience for those who buy the Gold Card and make them question if they should join, or if joining was the right choice.

Overall I love the program, but would love these small changes made.  Not only to save me the hassle and the money but to also make me, as a Gold Card member, feel just that much more exclusive than I was as a regular “registered” Starbucks Card holder.

Brad Steven’s giving Starbucks Ideas a sneak peek

A sign from the Willowbrook Starbucks in Houston, TX.

Starbucks finally listened to me!*

Back on December 12 of last yearI wrote a piece in response to an Ad Age article that was sent to me by faithful commenter TD. As I said at the time, I think Starbucks should offer a happy hour. It would help their stock bounce back as it would lure a new audience at a slow time of their business. Simply offer discounted drinks from 5-6:30 to get people to stop by Starbucks rather than a bar to catch up after work and before dinner.

Well, last week “kyle” commented on that post saying that there is a store in Houston that is offering a happy hour of kinds.

“This just in… There is one Starbucks in Houston actually doing a happy hour. I know this to be true, because I work at it. In the Northwest Part of Houston, in the Willowbrook area Starbucks has Happy Hour between 5pm-7pm EVERYDAY (yes Sat and Sun, too). All Frappuccinos are 50% off!
Address 7606 FM 1960W Houston TX 77070″

Luckily, a good friend of mine, and fellow Starbuck’s fan lives in Houston and was able to go check out what “kyle” had reported on this here site. For the full report checkout Lach’s post here. As Lach did some investigative reporting this is brief report on if this was a test market, or what was going on with this new Starbucks happy hour.

“The employees working there said it was this store only, and not a push from corporate. They just printed the signs and started selling half off frapps during happy hour that Monday. They did seem nervous about all my questions, but they should be. The Mother Ship will not be pleased. They run a tight ship and don’t generally give stores flexibility over pricing.”

Well, we’ll see how long THAT happy hour lasts. I doubt that the Starbucks Support Center will be a fan of hearing about a rouge Starbucks offering half price drinks. I bet it’s working out well for “Frap” sales as well as overall store sales, but unless they have phenomenal numbers, I have a feeling this is going to go the way of the Iced Coffee’s in stores.

Thanks for the tip kyle and the follow up Lach! Howard, please bring this offer to the masses!

*Starbucks probably did not listen to me in particular.

Here are the things I am hoping to see unveiled today.  Some I think we might see, some might be wishful thinking.

• Clover’s in every Starbucks.  Or at least in higher volume stores. (The Clover is a machine that Starbucks has been test marketing in a few stores in Seattle and Boston that makes a fresh coffee press in 1 minute.  It makes great brewed coffee that is similar to a french press.)
• Anew customer loyalty plan of some kind.  Not a typical buy 10 get 1 free, but hopefully something new and innovative.
• More coverage.  It’s a tough move to make, but Howard Behar made the move when he was working with Howard and it certainly paid off.  Having more than 2 people actually working of the first hour and and last hour of operations seems to be key.
• An actual make your own Starbucks Card, not just put a few words in a template.
• That they will close….(I don’t know 75%?) of their license stores when the contracts run out.  It would take awhile for this to take place, but it has to start somewhere.  It has ruined the coffee experience and guided people in the direction of not seeing a difference between Starbucks and McDonalds coffee.

I think those would be some good first steps and I hope to see something along those lines later today.  Any other ideas?

Then this coming Thursday is the beginning of March Madness.  The best sporting event of the year that typically does not have Oregon State in it.  With the tournament comes office pools and many many brackets being filled out, distributed, and talked about with almost every person you know.  I have what I think is my final bracket, but with UCLA having two potential game changing injuries, I may have to change it again tomorrow.

As there is a rumor that Starbucks may be unveiling a customer loyalty program tomorrow it got me thinking as to what this program can, will, and should look like.  A free drink every ten drinks?  Doesn’t seem like it’s worth it.  A bonus for auto-filling your Starbucks Card?  Potentially.  More personalized emails, offers, recommendations, etc.  Hopefully.  However, with my regular Starbucks having the occasional trivia games with free drinks (or high-fives), it hit me. 

Starbucks should unveil a nation wide NCAA bracket challenge.  Everyone is getting into it, even John McCain has his bracket, that you can sign up for and win McCain shwag (Sounds exciting).  

Think about it.  Starbucks makes a brackets that you can fill out online, or fill out in person at your local Starbucks.  They then tie each bracket to a registered Starbucks Card holder.  Starbucks is then able to put updates on their chalk boards each morning as to who the leaders at that particular Starbucks are and where they rank in the state or nation (if they are close to the top).  This creates a HUGE connection in the store, between the baristas and customers and even among the customers.  Starbucks offers, a weeks worth (1 a day) of whatever the customers most frequently ordered drink is (as it’s tied to their Starbucks Card) if they win the individual store bracket, maybe a month if they win the state, and a year if they win the whole thing.  A year worth of coffee at say $4 is still only apx $1500.  Not much to create the type of buzz and community that this would bring with it.This would bring people back to either the store or the website, create a bond between a large group of people, and in my opinion would drive up loyalty which in turn drives up sales.  They can then parlay this into other trivia games, fantasy sports leagues, random drawings, etc.

Now THAT is a good customer loyalty program for Starbucks if you ask me.  What do you think?  Am I to wrapped up in these two events?  Is it to crazy of an idea?

With the stock price dropping 50% over the past 12 months and hitting a 4 year closing low last Friday Starbucks had to do something to help their stock and this appears to be the biggest step they could have made.  Howard took Starbucks out of a bean selling coffee shop in Pike Place to the International company that it has become.  Already, the stock has jumped 10% since the announcement and we will see where it goes from here.

Since Howard instilled the original values of the Starbucks Experience, I am looking forward to seeing what will happen over the next 6 months to a year.  We will see poor performing stores closed, better training for front line “parnters,” and an overhall on the entire coffee experience.  One prediction I will make, some kind of change to the breakfast sadwich stations.  They create an aroma that covers the coffee smell that I understand Howard hates.  I know they’re a high margin item, but if Howard wants to take back the coffee shop experience, I see a change happening here.

Oh, and for those of you that I asked about investing in SBUX last Friday…man, I wish I would have pulled the trigger.  I still think there is alot of room for growth.  What do you think, will SBUX bounce back to the high $20’s low $30’s?

Forbes Article

Starbucks Press Release 

Some Seattle natives may remember when Tully’s in their continue quest to find something, anything, that will help lure customers away from Starbucks had the 3:21 special.  It was a promotion that would give you between 33% and 50% off of your drink between 3:21 and 3:51.  I loved the promotion, and in turn became a big fan of the Tully’s Espresso Oreo Shake (still highly recommended), however I felt it was a gimmick.  I also felt that it was to early in the day to add new customers and what it was in fact doing was cutting into their margins during a time in the day where people are needing a quick pick me up from the after lunch lull.  Their thinking, I take it, was to get people in the mind set that you do in fact need that afternoon coffee everyday.  It did help engrain that thinking, but once they stopped the offer, I returned to Starbucks for my coffee needs.

A happy hour though in its most true sense could really drive additional business into Starbucks.  Imagine a happy hour from 5pm until 6:30.  You aren’t cannibalizing the post dinner group and you aren’t cutting into the margins on the afternoon coffee break from work crowd.  If you implemented a more open atmosphere with the Baristas (some would shine, others would not) where the Baristas could become more like your local bartenders and the patrons could find a new place to interact after work.  I go to happy hours fairly frequently and usually more than the food or the drink the place is decided upon based on price, atmosphere, and location.  Starbucks has the locations (any location) down, and if they were to offer happy hour prices and a more open barista atmosphere along with different music there would be the other two deciding factors.

Howard Schultz founded Starbucks after a trip to Italy where he saw how much people were interacting in the cafes there.  This could rejuvenate the cafe environment in the US as well as increase profits for Starbucks.  In my opinion, after the lackluster performance and the many competitors who cannot offer the atmosphere that Starbucks can, it is now time to create the new Starbucks Happy Hour.

Nordstrom has such a personal connection with most of its shoppers that the customers will trust their person shoppers recommendations.  In contrast to Starbucks selling top sellers, this book will be exclusive for Nordstrom, which will also make it special for those Nordstrom moms that spend their days trying to find something to buy.  On top of this, the stores will also be using characters from the book to help decorate this holiday season, bringing even more recognition to the book. 

I know it’s just one book, and I don’t think it can grow much from that, but I think ONE, and only one, book is a great idea for Nordstrom to sell during the holiday season.  Now it comes down to execution. 

[Nordstrom adds story to Christmas canon]

If you want a real treat, try a grande chai with one pump of pumpkin spice in there. They usually won’t charge you extra for one pump, even if they do it’s worth it.

What do you think, is it weird that Starbucks, a giant corporation is selling a Grateful Dead album?

[Sidenote: I bet I have motivated at least one person to go down to Starbucks and buy the album as soon as they read this post.  Starbucks, you're welcome.]

I wish that I had my book "Pour Your Heart Into It" which talks about how Starbucks became the empire it is today (or in ‘99 at least) and gives alot of background on both Howard Schultz and the company itself.  One part in the book that struck a chord with me was when Starbucks wanted to introduce non-fat milk as an option.  Howard would not budge on even offering non-fat as an option until he went in and observed a store and how many people asked for non-fat milk while wearing workout clothes.  He still said that they would not change the default milk from whole because whole milk is what lattes are supposed to be made from (through his experiences in Italy).  Probably 10 years (I can’t fact check without my book) after they introduced non-fat, 1%, 2%, and even breve as options they are now changing their default drink to be 2% rather than whole.

Isn’t this changing the latte from what is supposed to be?  Isn’t this changing the entire coffee and Starbucks experience?  For something that took Howard so long to budge on (to even have an option) it is dissapointing to see them change their core offering.  What I really want to know is why?

Is it because they are trying to stop people from gaining weight?  They fased out all of the trans-fats in their pastry case and offer many more "reduced fat" options in the case now.  Could this be due to the fact that McDonalds was recently sued for the weight problem we have in America?  I would hate this to be the case as it’s not Starbucks, or McDonalds fault for people gaining weight.

Or is it this…the stock hitting an 18 month low.  It has rallied some in the past month, but on June 22 it hit $25.54 and had been on the decline for about a year and a half.  I have a feeling that this is the reason for the change and it is sad to see.  I know the pressures of being a public company and especially of a company that has performed so well are high, but it should not change who you are as a company.  Something that Howard thought was so key to the company was maintaining the consistent coffee and latte experience that he had in Italy.  2% milk is cheaper than whole milk so this will help with the profit margin signficantly.  This paired with the increase in prices starting next week (the second increase in a year) should result in some good numbers next quarter and next year. 

Now as much as I wish they weren’t changing for principal reasons, I think I’m going to buy some Starbucks stock tomorrow after I just wrote this post.