Starbucks is cornering the market on coffee not simply because it has a location on almost every corner. The chain also has a deft touch when it comes to recognizing and rewarding its best customers.
The specialty coffee chain took it a tier higher this week, through its partnership with Gilt Groupe, the invitation-only shopping site where designer items are sold at fire-sale prices for short periods. Through this arrangement, Starbucks offered its Gold level My Starbucks Reward Members access to a limited supply of Galápagos San Cristóbal coffee, a rare brew grown in limited supply on just one farm in the Galápagos Islands. The coffee – at $12.50 for half a pound – sold out within a day.
Here is a partnership that goes together like, well, coffee and crème de la crème. Not all of Starbucks’ customers are luxury shoppers – nor are Gilt members – but they do have one trait in common with big spenders: the desire for exclusive experiences.
Such thinking is why Starbucks posted a fiscal 2009 profit of $391 billion, compared with $315.5 billion the year before. In the fiscal third quarter ended June 27, sales at Starbucks stores open at least a year rose 9 percent, driven by a 6 percent increase in traffic. Profits advanced to $208 million, from $151.5 million.
Starbucks – recognizing the value of its investors as well as its customers – rewarded shareholders by raising its dividend to 13 cents per share from 10 cents. These days, SBUX is trading at about $7 above where it was last year at this time, or in the mid $20s.
It doesn’t get any simpler: Knowing the customer translates to bottom line growth. And that is a corner every retailer should want to be in.
