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.”
Samsung’s NYC flagship store — Samsung 837 — is a “cultural center” that is designed “to build experiences rather than push product,” reports Engadget. “Across three floors you’ll find a 75-seat amphitheater, a full working kitchen and plenty of bench space for tech support and workshops. The amphitheater hosts a three-story interactive screen that was used for an art installation this week, but will be repurposed for screenings and presentations as well.”
“The ground level art gallery showcases works that use technology in a major way. The current exhibition, ‘Social Galaxy’ by Black Egg, contains a mirrored tunnel lined with Samsung devices. Users input their Instagram handle at the entrance and then, within seconds, the displays pull in images and comments from their accounts, creating a rapid cacophony of sound and color.”
“A set of chairs in the front of the store offer up a ‘4D’ virtual reality experience, by having you strap a Gear VR to your face as you sit in a chair that bobs in time whatever you’re looking at … Samsung 837 sourced a lot of its style locally as well. The employee uniforms came from designer line Rag & Bone, which has a location right across the street. The store also has a partnership with the nearby Standard hotel. Samsung 837 considers itself part of the Meatpacking District community, as well as a destination for both tourists and locals.”
Seattle Times: A new, small-format Kroger store in Gig Harbor, WA, combines quality produce (like Whole Foods) and lower prices (like Trader Joe’s) but most of all is positioned as “not just as a grocery store but as a community hub, where local products are prominently displayed, community involvement is highlighted and people can hang out in the store’s two-level cafe area.”
“In the ‘brew and blend’ cafe area, beers including those from Gig Harbor’s 7 Seas Brewing are on tap, and coffee from Gig Harbor’s Cutters Point Coffee is served. Customers can eat sitting at tables and chairs or can people watch from lounge chairs on the upper level.”
“Local and regional wines and beers are arrayed prominently in the adult-beverage section, Gig Harbor’s Artondale Farm has its own stand for soaps and lotions, local artists painted the murals on the walls, and a product display features a small wooden boat built by Gig Harbor BoatShop … The name came from what the company wanted the brand to represent, with ‘Main’ evoking the Main Street of a community and ‘Vine’ conveying green and fresh.”
“On the whole, the problem with new books is that there’s a list price set by the publisher and a discount price that’s also set by the publisher. So, as a new bookseller, you have no control over what the book sells for or what you pay for it. With used books, if you’re smart, you find ways to get them cheap, and you decide what you price them at.”
“As a general rule, on any book, a used bookseller is probably making twice as much profit as a new bookseller. And that’s the difference between making it and not making it, because the profit margins on new books are razor-thin. At a used bookstore, no one is getting rich, but you can make enough to stay alive.” – Benjamin Friedman, co-founder, Topos Bookstore Café, as quoted by The Awl.
“Known for its beverages, Pepsi is now moving into the restaurant business,” The New York Times reports. “The 5,000-square-foot space — on the same block as Milk Studios in Chelsea … will become Kola House, a restaurant-bar-event space that the company hopes will be both social hub and testing ground for new products.”
Kola House “will not be plastered with the Pepsi logo or filled with Pepsi products. Everything at Kola House will be centered on the kola nut, a bitter fruit that contains caffeine and gives cola beverages their name. Essentially, Pepsi is trying to market its product without marketing its product.”
Pepsi design chief Mauro Porcini: “Consumers will love your brand because your brand enables you to have the experience, but they don’t want to have the brand in their face. It needs to be very subtle, elegant, sophisticated.”
Pepsi marketing chief Seth Kaufman: “We are in a time where we have to transform how we connect with and engage consumers. If brands don’t do that today, they will be irrelevant tomorrow, whatever tomorrow is.”