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Loyalty Lessons From Starbucks & Spotify’s Partnership

Starbucks Spotify Partnership Loyalty Lessons

Photo by Rudolf S.

We’ve long lauded Starbucks for being a pioneer brand in marketing, mobile payment and loyalty. And now they’ve done it again with their recent announcement about their partnership with music streaming service Spotify. Here we will examine what makes this partnership so forward-thinking and the loyalty lessons that retailers can learn from it.

Starbucks puts power into the hands of its baristas and its customers.

Virtual reality concepts are kicking into high gear, but why ask customers to imagine what their ideal store would be like, when you can give them the tool to actually create the environment they want? Starbucks is not just a coffee shop—it is a lifestyle brand. When a customer walks into a Starbucks, there is an expectation of a certain experience and vibe that works hand-in-hand with the coffee it brews. Music has long been a part of the Starbucks experience, from the music that is piped into the store, to the free downloads offered weekly, to the music that is sold in physical and digital form at the checkout counter.

By giving baristas the power to create their own playlists and customers the ability to influence the music they want to hear when they are in any given store, Starbucks is empowering its employees and customers, which leads to deep engagement. That is loyalty you can’t buy. As a retailer, think about how you can put some power into your customers’ hands to own part of the retail experience.

The partnership has created a demand for Starbucks currency.

By signing up for a Spotify Premium membership, customers can earn Starbucks “stars” and then use those rewards to influence the baristas’ playlists. This is groundbreaking: Starbucks’ loyalty platform will be open to a third party for the first time. With the benefit of being able to earn stars and also use them to influence playlists, customers will spend more at Starbucks to redeem on Spotify – they have effectively created demand for a non-traditional currency. Neither partner can lose here.

With Spotify looking towards video as its next frontier, will the future be one where Starbucks loyalty members can use their stars to stream Spotify videos? We’ve seen how collaboration with customers can yield great results. As a retailer, think about how your loyalty program rewards can be converted into other meaningful benefits for your customers by collaborating with a suitable partner. Collaborating is more than just joining a coalition loyalty program, it is working closely with a partner to create an experience that benefits the consumer and both partners. Are there digital experiences that align with your retail brand that your customers would find compelling enough that they would be willing to trade loyalty points for?

Starbucks selected a partner with flexibility.

It would have been easy for Starbucks to try to start discussions with Apple. A Tier 1 brand working in partnership with another Tier 1 brand – what could go wrong? Apple is a hugely creative and innovative company, but it works under such exacting and rigid standards that there is rarely flexibility to truly collaborate on a co-branded partnership.

Spotify still has something to prove, especially with the entry of Jay-Z’s Tidal service on the market, and that makes for a motivated partner that is willing to take risks and play outside the sandbox. Starbucks – as large as it is – is still entrepreneurial at heart. It needed a partner like Spotify to succeed. Retailers should not necessarily always look for the Tier 1 brands to partner with. Among your roster of supplier brands, who are the real innovators, the ones – like Avis – that have to try harder?

The most successful and creative partnerships seek out real win-win situations, engage customers for both brands and always involve a little risk-taking. Take a look at some of the leading disruptive tech companies that are focused on providing useful digital experiences for consumers, beyond a mere digital in-store advertisement. How you could form a partnership that will strengthen loyalty and forge a deeper relationship with your customers?

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