What defines loyalty in the customer-brand relationship? Until this week, Starbucks defined it as the number of times the customer bought a cup of coffee; buy 12 cups and you get one for free. The retailer has now re-defined loyalty as the amount of money spent. This has caused upset among some of its “loyal” customers, who now must purchase 32 cups of coffee to get that free cup. Starbucks apparently was inspired by certain airlines — Delta and United — that now award loyalty points based on the amount of dollars spent, and not on the number of miles traveled. This might telegraph as: We want your money but we don’t want you.
The Starbucks switch was at least partly motivated by profits; obviously it is more profitable to motivate its most profitable customers. However, it also suggests a change in culture. As reported in The New York Times, the Starbucks loyalty program previously was premised on a warmer, fuzzier idea, as articulated by a Starbucks marketing manager in a 2012 blog post: “At Starbucks, our rewards program comes from a different philosophy. At its simplest, we like seeing you, regardless of whether your purchase is a short-brewed coffee or four Venti White Chocolate Mochas. My Starbucks Rewards is designed to show our appreciation simply for stopping by.”
This would be consistent with the way Starbucks famously welcomes everyone to hang out as long as they like at their stores, even if they buy nothing at all. Sadly, such “customers” are the poor cousins of those who gamed the Starbucks loyalty program by asking cashiers to ring up each item separately to artificially inflate their number of visits. This subterfuge also caused lines to slow, making the Starbucks experience worse for everyone else.
The Starbucks-customer relationship in total calls into question the very meaning of “loyalty,” and whether it even exists in a commercial context. As the Times article notes: “Starbucks fell into a trap that is common with loyalty programs: establishing not just an exchange relationship with its customers based on mutual benefit, but a communal relationship based on mutual caring and support … If customers are going to take a ‘hey, it’s just business’ approach to their relationship with Starbucks, they should expect the company to do the same — and it has.”
The New York Times: “In some ways, what we experience as consumers is like what we experience when we listen to music or lift a heavy object. For example, we are more likely to notice that a drumbeat is loud if we have been listening to, say, a gentle violin. And we will notice that we are lifting extra pounds if they are added to a lightly packed suitcase. The same additional weight is barely noticeable in a heavy one. Vision, heat perception, smell and taste all obey a similar law: Perception is largely a relative mechanism.”
This dynamic manifests itself when we compare prices: “We tend to focus on the percentage rather than the amount we save, and fall prey to a mental illusion. After all, when your shopping is done, it is dollars — not percentages — that will be in your bank account … Ofer H. Azar, an economist at Ben-Gurion University in Israel, asked consumers in the United States how much they needed to save to justify spending an extra 20 minutes … When shopping for a $10 pen, they required only a $3.75 savings, on average. For a $30,000 car, though, they needed $277.83 for that 20 minutes.”
Less affluent shoppers are less likely to fall prey to the illusion: “Poorer people tend to value a dollar more consistently, irrespective of the context. It is not simply that those with less money pinch more pennies; it is that they are compelled to value those pennies in absolute rather than relative terms … To them, a dollar has real tangible value. A dollar saved is a dollar to be spent elsewhere, not merely a piece of token accounting.”
The Wall Street Journal: “In some ways, the soda industry is returning to its early 20th century roots, when bottles were typically about 6 ounces and pop was a treat saved for a special occasion. It wasn’t until 1976 that 7-Eleven Inc. launched the 32-ounce Big Gulp at its convenience stores.”
“Now, once again, American soda drinkers ‘want to consume less but they still enjoy their favorite brands,’ said Marty Ellen, Dr Pepper’s chief financial officer. Dr Pepper is rolling out 7.5-ounce cans nationally this year, replacing 8-ounce cans it launched as an alternative to 12-ounce cans. Each 7.5-ounce can holds about 95 calories, compared with 150 calories for a 12-ounce can.”
This works out well for soda companies, which have stemmed losses by charging more for less: “At a Publix supermarket in Atlanta recently, a 12-pack of 12-ounce Coke cans was priced at $5.29, or 3.67 cents per ounce. An 8-pack of 7.5-ounce cans was priced at $3.99, or 6.65 cents per ounce.”
Mr. Ellen says the higher cost per-ounce aligns with consumer behavior because soda is still a “cheap treat.”
Those who are slower to adopt new products or services tend to be more loyal to their choices, reports The Wall Street Journal.
Typically, a late adopter is “a person who buys a product or service after half of a population has done so. Late adopters tend to share certain characteristics: They are skeptical of marketing and tend to point out differences between advertised claims and the actual product. They often value a product’s core attributes, ignoring the bells and whistles intended to upsell the latest model. They may not try something new until weeks, months or even years after the crowd has moved on.”
“It takes a long time to change late adopters, but once they’ve done all that research, and once they are convinced about a product, they are going to stay for a long time,” says Sara Jahanmir of the Nova School of Business and Economics in Lisbon.
Late adopters are also believed to have “important things to tell companies about the role new products should play. Because they tend to be highly critical, late adopters can be useful to companies perfecting their wares … By listening to late adopters of the old version of a product, developers can create a new version that is quicker to be adopted.”
Hyperallergic: “In plain terms, across the field, in museums, art institutions, performance forums, and even historical societies, the visitor’s experience is now being personalized. This means that not only is the visit marked by enhanced, interactive, and ‘dialogic’ engagement, but also there is an institutional recognition of the visitor as an independent maker of meaning who uses the museum in a variety of ways to fulfill particular, individual needs and desires.”
“Three key means of accomplishing this is first, recognizing visitors’ capacity to make meaning for themselves; two, partnering with them to discover what they personally want from the museum; and lastly, mobilizing the museum’s resources to meet these needs. These tasks can be met by, among other things, new curatorial strategies through which museums partner with visitors to develop activities and events: co-curation projects, and crowdsourcing exhibition content.”
“Visitors are no longer passive receptacles for the curator’s knowledge, but rather active, engaged participants.”
In The New York Times, Nick Bilton offers several reasons why so much wearable technology has not worn so well. “First, almost all of them require a smartphone to be fully operational … a wearable becomes yet another gadget that we need to lug around. There’s also the fact that most of these devices are quite ugly … Then there’s the unpleasant fact that the technology just doesn’t seem ready … But the biggest issue may be the price … consumers just can’t justify buying a smartwatch that costs nearly as much as a smartphone.”
Geoffrey A. Fowler, writing in The Wall Street Journal, meanwhile extols the virtues of the Mio, which uses a metric called Personal Activity Intelligence (PAI), which tracks heart patterns rather than foot movement. “Mio’s hardware isn’t as elegant as others on the market, but PAI is the best example yet of how wearables can turn data into tailored, actionable advice, and hopefully longer lives,” Geoffrey writes.
“Unlike step counting, where you start over each morning at zero, PAI runs on a rolling weekly tally … Everyone’s PAI is a little different, by design. The formula takes into account your age, gender, resting heart rate, max heart rate and other unique signals. It’s personal Big Data,” Geoffrey writes.