Web3 Academy | W3A PRO | How Starbucks Odyssey is Building a Better Loyalty Program Onchain

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Last December, Starbucks launched their web3 loyalty program - Starbucks Odyssey.

Soon after, I made a prediction that Starbucks would onboard 5 million new wallets in 2023. 🌊

Sadly, I was wrong. 🥲

The Starbucks Odyssey program is still in beta, with just over 10,000 users.

This doesn’t mean that Starbucks hasn’t been building and shipping, though.

Here are some quick highlights of what’s happened since Starbucks Odyssey launched:

Users have minted 254,842 NFTs across 20 collections.
That’s an average of ~25 NFTs minted per user, which is fantastic engagement.
Secondary sales have generated over $3,093,395 in volume.
Not to mention that over $2.6 million has come from free mints.
Did you ever think you’d be able to sell your loyalty points for cash on a global online market?
Starbucks has made $234,745 in revenue from royalties.
Clearly, this number is small for a billion-dollar enterprise like Starbucks, but the fact that they made any revenue in a closed beta is a positive sign.

When you consider that this program is still in closed beta with only 10k total users, those are pretty incredible numbers.

This is no surprise to me.

Because I strongly believe that one of the best use cases for blockchain is loyalty programs.

One which all business leaders and marketers need to be paying attention to. 👀

But how do you learn about this when Starbucks Odyssey is a closed program? You subscribe to Web3 Academy PRO, of course. 😎

Everyone in web3 loves to talk about Yuga Labs as the role model for success.

However, brands aren’t trying to build a Yuga Labs-like ecosystem. Brands are simply trying to build better customer engagement experiences.

What Yuga Labs is doing is innovative and exciting, but it’s not a model for any businesses to learn from.

Starbucks Odyssey program, on the other hand, is ripe with consumer engagement models and tactics we can all learn from.

So grab your favorite Starbucks drink (Grande Soy Dirty Chai with 2 shots for me), and let's dive deep into why blockchain is going to completely revolutionize loyalty programs.

Web2 vs Web3 Loyalty Programs

I still believe that my prediction will come true and Starbucks will onboard millions of wallets.

Why? Because their existing loyalty program has 30 million active users!

It’s one of the most successful loyalty programs in the world.

If the most successful loyalty program in the world is reinventing themselves onchain, it’s probably something we should all pay attention to.

In an interview, Adam Brotman, former Chief Digital Officer at Starbucks and creator of the Starbucks Rewards mobile app, talked about the impact of the pandemic on consumer behavior.

He specifically mentioned a few very important consumer trends:

Consumers have become hyper digitized
Consumers expect more participatory engagement opportunities from brands
Social media is the largest driver of purchase behavior
Reaching consumers has changed drastically as a result of the iOS privacy policy

Unfortunately, existing web2 loyalty programs, including Starbucks, fall short of meeting these consumer-changing behaviors.

In a survey with leading CMOs, data showed they believe that in the next 3 years, 80% of loyalty programs will be redesigned.

Many brands struggle with loyalty because of the limited options for rewards. They either have to manufacture physical goods or give discounts. This is expensive.

Compare this to the cost of a digital collectible as a reward. Not only is this less expensive, it’s also logistically much easier to manage since you don’t have to deal with shipping.

There was a time when shop-to-earn loyalty programs were new and innovative. Not anymore.

Loyalty is saturated. SAAS tools enable every business to have a shop-to-earn loyalty program, making these loyalty programs feel very transactional.

There’s no emotion or fun involved. Just a consumer looking to extract as much value as possible and a brand looking to capture attention for the lowest price possible.

This is a clear lose-lose relationship. ❌

Digital ownership changes this relationship between brands and consumers completely.

Blockchain enables brands like Starbucks to create a digital asset that can be coveted by consumers for emotional reasons but also has utility as a coupon or access pass.

That’s an amazing combination!

In order to understand the difference between Web2 Loyalty programs vs Web3 Loyalty programs, let's break it down in a direct comparison.

We’re All Collectors

The collectables market was $450 billion in 2022.

That’s mostly physical collectibles including art, sports memorabilia, trading cards, and toy collectibles.

The market is expected to be over $1 trillion by 2033. Most of that growth will be driven by new forms of collectibles. You guessed it… NFTs.

Even if you don’t consider yourself a collector, I’m sure you have some old airplane tickets, concert tickets, or an old shirt that means something special to you. We all collect.

Why? Because humans care deeply about remembering and sharing the moments of our lives.

Perhaps you visit a Starbucks every time you go on a road trip. I know I do. Well, wouldn’t it be fun to know all the countries where you’ve been to a Starbucks?

With Starbucks Odyssey, they could give you a digital collectable (a fun piece of local art) every time you go to a Starbucks in a new country.

They could program a set of collectables together where you get additional benefits every 5 new countries you visit.

And they could create a digital gallery where you can easily show off your collection and relive each trip by remembering the order you made at each Starbucks.

I’m willing to bet that this collection of digital art would have real intrinsic value to you.

Now this is a hypothetical. Starbucks Odyssey doesn’t have country collectibles yet. But it easily could, and I’m sure it will.

What’s incredible is that Starbucks has created an asset that costs them very little but has very high value to you.

This is the power of onchain loyalty!

Starbucks for Life

Every December, Starbucks runs a loyalty program called Starbucks for Life.

The idea for Starbucks Odyssey originated from this incredibly successful program.

Consumers collect stamps for purchases made every day at Starbucks.

Collect the right combination, and you could win Starbucks for life (30 years if you read the fine print).

Then comes January, and Starbucks for Life ends and all the digital stuff that consumers collected disappears.

Poof. It’s gone.

There’s no community, no ownership and no utility beyond the game rewards.

Millions of people play and it all just disappears.

This is why Starbucks wanted to build onchain.

Because blockchain will take their already successful program and supercharge it with digital ownership.

The best part by simply giving Odyssey members access to a discord Starbucks is building deeper relationships between customers and the brand.

How Starbucks Odyssey Works

Starbucks Odyssey is an ambitious extension of the Starbucks loyalty program, leveraging web3 technologies to engage customers in a more interactive, ownership-driven experience.

Let's distill the key points of how the program works, its potential benefits, and the technology behind it:

Program Mechanics:

Access: Starbucks Rewards members can log in to the Odyssey program using their existing credentials.
Engagement: Members participate in 'journeys'—interactive experiences like quizzes or challenges—to learn about coffee and Starbucks and earn NFTs called 'Stamps.'
Trading: These digital collectibles can be bought or sold within the Starbucks Odyssey ecosystem, enhancing the sense of ownership and community.
Abstracted Blockchain: No crypto wallet or cryptocurrency needed; purchases can be made with credit cards.

It all starts with Journeys.

Here’s an example of a Journey celebrating Starbucks Doing Good.

As you complete each step in the Journey, you get points.

These points are not onchain. They are simply web2 points within the Odyssey ecosystem. However, they do serve a purpose beyond a single journey. We’ll talk about that in a minute.

Once you complete a journey, you unlock a stamp (NFT). Here’s an example of 4 stamps our community member CandyToyBox has collected from completing Journeys.

There are 2 types of stamps within the Odyssey program.

Limited edition, which can only be earned through participation in the program.
Open edition which can be purchased (access granted based upon user participation)

Limited Edition Stamps

Imagine grabbing your usual latte, and it comes with an exclusive digital stamp—think of them like rare collectible stickers for grown-ups.

Now, here's the twist: these aren't just any old logo you'd stick on your laptop and forget about.

They're more like digital trophies, each with a unique design that's all about the Starbucks vibe—from the first-ever store to the iconic green apron your friendly barista wears.

But these stamps aren't just for showing off.

They're like VIP passes to some cool Starbucks experiences.

Each one's a tiny piece of digital art that says, "Hey, I'm part of the club," and they come with some neat bonus points to boost your status in the Starbucks universe.

You can even sell these digital assets to other coffee lovers in the Odyssey marketplace.

Open Edition Stamps

Unlike their limited edition counterparts, these stamps are more accessible because they're not as scarce.

Rather than earning these stamps, they can be purchased by Odyssey members during a sales window.

Starbucks has sold 2 OE stamp collections so far:

Each stamp is inspired by Starbucks' own creations, such as the iconic Pumpkin Spice Latte.

These stamps carry a fixed amount of points, adding a nice little bonus to your loyalty scorecard.

Now, there's an intriguing strategy you can play with called "Blending and Roasting."

It's Starbucks' take on a "burn" mechanic—where you trade in a set of these open edition stamps for a rarer one, called the Venti Stamp, which is like combining four quarter-cups into one full cup of benefits and points.

This move doesn't just upsize your points with a significant boost; it’s also a fun nod to the superfans who “collect them all”.

Points Benefits

At the heart of the Starbucks Odyssey experience is a points system that's much more than just a numerical scorecard; it's the user's passport to a world of exclusive perks.

As members navigate through the Odyssey by completing activities and earning stamps, they accumulate points.

These points are akin to a currency of commitment, reflecting the member's engagement with the brand.

The program is designed with a tiered benefits structure. As members rack up points, they ascend to higher levels, each unlocking a new stratum of rewards.

The points you earn are yours to keep forever, setting the stage for an ever-evolving leaderboard that showcases the most engaged members of the Starbucks tribe.

And when the Benefit Selection Periods roll around, it's like the holidays coming early.

During these times, points turn into power - the power to claim a variety of benefits, from virtual experiences to physical goods.

Here’s an example from a Benefit Selection Period:

Level 1 might get your feel-good vibes going by enabling you to direct a Starbucks donation to Water.org.
Level 2 invites you into the virtual world of coffee with a virtual Cold Brew workshop, perfect for refining your barista skills at home.
Level 3 adds some Starbucks swagger to your wardrobe with exclusive Odyssey merchandise - choose from a chic t-shirt, a handy fanny pack, or an eco-friendly tote.
Level 4 turns up the indulgence with a bimonthly coffee drop, delivering the rich tastes of Starbucks Reserve® straight to your doorstep along with a coffee passport for a year.

By marrying the emotional appeal of digital ownership with the tangible joys of rewards, Starbucks is redefining the loyalty landscape, one point at a time.

The Evolution of Customer Loyalty in the Digital Era

In conclusion, the Starbucks Odyssey initiative represents a pioneering leap into the future of customer loyalty programs.

By harnessing the innovative forces of blockchain and NFTs, Starbucks has transcended traditional engagement paradigms to foster a community where loyalty is not only rewarded but also cherished as a form of digital ownership.

The program’s layered points system incentivizes consistent engagement, transforming routine transactions into a compelling game-like experience.

The tiered benefits structure acknowledges and appreciates varying degrees of brand interaction, ensuring that each member’s journey is both personalized and rewarding.

The integration of a seamless marketplace within the Starbucks ecosystem for trading limited edition stamps adds an unprecedented dimension of connectivity and interaction among its members.

This not only amplifies the sense of community but also reinforces the feeling of a shared Starbucks experience.

Starbucks Odyssey’s approach to loyalty is emblematic of the shifts we are witnessing across consumer landscapes: shifts towards transparency, value-driven interactions, and community-centric brand relationships.

The Starbucks Odyssey is not just a loyalty program; it is a testament to the brand's commitment to innovation and customer satisfaction.

As we look to the future, Starbucks Odyssey stands as a beacon for other brands aspiring to cultivate deeper, more meaningful relationships with their customers.

It is a clear signal that the future of customer loyalty lies in creating experiences that resonate on an emotional level, powered by blockchain tech that delivers ownership, community, and programmability.

The Odyssey is still unfolding, and the potential for what loyalty programs can achieve in the web3 world remains vast and untapped.

As this journey continues, it will undoubtedly set new benchmarks for how brands interact with and reward their most dedicated fans.

The fusion of technology, storytelling, and customer empowerment through Starbucks Odyssey is the start of a new model for brand loyalty—one where the value exchanged becomes a shared success story between the brand and its devoted patrons.

Thanks for reading. And remember, you're strong, you’re powerful, you’re alpha! ❤

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ABOUT THE AUTHOR

Jay Hamilton

Founder of Web3 Academy and Impact3
Find him on Twitter

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