Let’s assume that most Starbucks Rewards members are regular coffee drinkers. How many would be willing to give up a free Grande Pumpkin Latte for a non-fungible token, or NFT?
Starbucks is evidently aspiring to figure that out. The coffee giant has since December 2022 been testing an ambitious extension of its Starbucks Rewards program, called Starbucks Odyssey, that’s asking regular Grande Americano-with-room drinkers if they want to go on a journey with Starbucks.
By completing these journeys – online games, quizzes and activities – members earn “collectible ‘Journey Stamps’ [NFTs] and Odyssey Points” that provide access to “immersive coffee experiences that they cannot get anywhere else,” Starbucks explains in a December 2022 news post. Members can share their experiences, and their earned NFTs, in Odyssey’s connected digital community.
The test, which is opening in phases to waitlisted members and employees, should distinguish how many members are willing to take journeys for NFTs. So far, the stamps reportedly have been hot with at least one segment of the test community. Can you guess which?
Which Comes First, The Crypto Or The Coffee?
If you guessed cryptocurrency enthusiasts, you’re right. These investors have been keen participants of Starbucks Odyssey, thanks to the NFT reward bait.
This is because NFTs are typically held on the cryptocurrency blockchain; Starbucks’ stamps are on Polygon. Here’s an example of that crypto/NFT enthusiasm: In the spring, when Starbucks Odyssey offered test members a chance to buy the stamps for $100 each – rather than earn them via journeys – 2,000 sold within minutes, Time reported.
Buyers evidently wagered that the value of the NFTs would climb. Sure enough, many Starbucks stamps had been resold for a nifty profit – some for nearly $2,000 a piece – on the secondary market, according to Decrypt.
Still, it’s not clear if the Odyssey test is stimulating Starbucks Rewards members to adopt NFTs as a perk, or if it’s simply attracting more NFT and cryptocurrency fans to become Starbucks Reward members.
An Odyssey To Loyalty’s New Frontier
Is Starbucks Odyssey the model for next-generation loyalty programs? With 31.4 million active U.S. members, Starbucks Rewards certainly has the size to make potential change.
So let’s unpack the elements of Odyssey to see what the journey holds.
Better member understanding. The activities in the Odyssey test are designed to engage members for extended times and can be designed to learn specifics about member preferences. Some of the “challenges” require making purchases over multiple weeks or months or buying from multiple locations. All of that data gets automatically tracked and recorded via the loyalty app. These insights can inform strategies that parlay Starbucks’ existing rewards structure into something richer for the company and its members. Starbucks stated, in its December 2022 announcement, that it will collaborate with members and employees to “co-create the future of the experience.” However, if only a slim share of total members remain engaged, the value of the insights is limited.
Uniquely unique rewards. Yes, Odyssey NFTs are one-of-a-kind, and by collecting them, members can aspire to make a profit on the secondary market. Some of these new adopters could become regular Starbucks customers. Convincing regular Joes to participate in Odyssey might take more work, however. As one recent user described it to me: “I had to spend 20 minutes watching videos and then taking a quiz. You don’t get your points unless you get it 100% correct. I’ve yet to complete a challenge because each requires an additional task, like visiting a location with a camera phone, or making $5 in purchases for several weeks in a row. It’s a lot of hoops to jump through. All people want is discounted/free coffee!”
A potentially less liable form of currency. Each Starbucks Odyssey stamp comes with one bonus point. If one point is earned on a journey, versus several points through the purchase of a Venti Frappuccino, then Starbucks could issue fewer points overall. This would reduce the number of outstanding points on its balance sheet – a benefit for Starbucks because unused points are recorded as a debt, or liability. Starbucks further tempts Odyssey members to use their points to access other benefits and experiences, a gaming tactic that could ensure points move steadily off the balance sheet.
There’s more than one way to earn stamps. According to Starbucks’ 2022 announcement, Odyssey participants could purchase stamps directly with a credit card – no cryptocurrency required – which enables them to skirt the journey. Odyssey’s terms and conditions also specify that it may periodically make limited-edition stamps available for purchase. This option would make it easier for NFT fans and investors to get what they want faster, and that should boost engagement. However, this option also reduces the number of people interacting with Starbucks through its games and other experiences. One theory: Perhaps by making the stamps more accessible, Starbucks expects to stimulate more activity in Odyssey’s digital community, which would produce valuable peer-to-peer insights.
Starbucks Is Taking A Risk. Isn’t That Grande?
Starbuck’s Odyssey is, of course, still unfolding, so we can only guess what the test feedback will produce. One point is hard to argue, however: Starbucks Odyssey is an pioneering effort; one that few, if any, national rewards programs have risked.
For taking the risk, other program operators should thank Starbucks in a way that benefits them all. How about a round of Pumpkin Spice Lattes for their own loyalty innovation teams? It’s not a journey, but it should get a stamp of approval.
This article originally appeared in Forbes
