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By4 Min Read
September 28, 2023
Nothing screams “Good Morning” like the first sip of freshly brewed coffee.
In the United States alone, the coffee industry is a bustling arena, with approximately 59,000 coffee shops generating a staggering $45 billion in annual revenue. As the demand for that perfect cup of joe continues to surge despite the economic fluctuations, a lot of new players are looking to set foot in the market. To thrive in this competitive landscape, there’s only one tried and tested strategy- increasing the number of repeat customers using valuable loyalty programs.
In this article, we’ll explore how innovative loyalty programs have helped major American coffee brands maintain existing customer bases, increase sales, and boost profits.
You can’t begin a listicle on loyalty programs without naming Starbucks! With a revenue of 32.3 billion dollars in 2022, Starbucks is one of the biggest coffee brands in the world. Starbucks, a true heavyweight in the American coffee business, accounts for a staggering 75% of all coffee shop sales in the country. A significant portion of their success can be attributed to Starbucks Rewards, one of the most successful programs of its kind. This loyalty program has become the linchpin of their operations, contributing 40% of their total sales and boasting a membership base of 24.2 million in the US alone.
“Starbucks Rewards also generates massive amounts of cash for the enterprise. Although not a bank, it reported $1.6 billion in outstanding gift card balances and $196 million in breakage (unused gift card balances) in FY 2022. Those cash balances are a cash manager’s dream as they are equivalent to an interest-free loan from the customer base (source).”
In the year 2019, Dunkin’ QSR chains had earned a total of 1.37 billion dollars. According to a 2020 report, Dunkin’, a stalwart in the U.S. coffee shop market, maintains a 26% share of the American coffee market. In just three years after the launch of their loyalty program, an impressive 7.5 million people signed up for the Dunkin’ app. Some of the exciting features of the Dunkin’s App that have made it so convenient are:
The rewards offered by Dunkin’ go beyond just crediting points for every purchase. Customers get rewarded for several; occasions like during a business milestone, or when some festivities are around the corner, and so on.
Capillary’s Rewards+ helps brands leverage the power of rewards using AI automation to drive business and add customer value. You can read more about it here: Rewards+
With a revenue of 983 million dollars, Peet’s Coffee is a significant player in the market. Peet’s Coffee, with its roots in sunny Berkeley, California, has crafted a loyalty program known as Peetnik Rewards. The program’s simplicity resonates with customers, offering 125 points after the first order and one point for every dollar spent in-store or when ordering ahead. The cherry on top? A free birthday beverage and 25 points on the Peetnik Rewards Anniversary.
Peet’s Coffee proves that sometimes with a good campaign management platform less is more in loyalty program design.
Even fast-food giants like McDonald’s have recognized the potential of loyalty marketing within their McCafe brand. The coffee chain of McDonald’s McCafe generates a staggering revenue of $4 billion dollars alone. MyMcDonald’s Rewards operates on a straightforward premise: For every dollar spent, customers earn 100 points that can later be redeemed for free meals. The more points accumulated, the higher the tier, allowing for more valuable prizes. It’s a winning formula that drives customer engagement and loyalty in the quick-service restaurant sector.
The success stories of Starbucks, Dunkin’, Peet’s Coffee, and McDonald’s demonstrate that loyalty programs are not just about points and rewards; they are about building lasting connections with customers.
As we look ahead to the continued growth of the coffee industry in America, it is evident that loyalty marketing will remain a key ingredient in the recipe for success. Whether you’re a coffee industry veteran or a budding entrepreneur in the United States, taking a page from these coffee giants’ playbook and crafting a well-thought-out loyalty program can be the secret ingredient that helps your coffee shop thrive in this ever-expanding market. After all, in the world of American coffee, a loyal customer is worth their weight in beans.
If you are looking to kickstart your journey towards building a loyal customer base, we at Capillary can help you. Connect with us now and book a demo and help build a long term RoI driven loyalty program for your brand. .
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