Discovering Starbucks New Blockchain Rewards Program

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We discuss Starbucks' new rewards program that uses blockchain technology to offer digital collectibles and points to customers. Learn about how the program works and how it compares to Starbucks' traditional rewards program. Explore the potential of using smart contracts and blockchain in the world of loyalty rewards.

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Mary Daphne: Hello, Advanced English learners. Welcome back to another wonderful episode. I'm joined by the one and only Greg. Thank you for joining me. 

Greg: Oh, of course. 

Mary Daphne: So today we're going to talk about something pretty cool, but I just want to give you a general reminder about why we do these conversations. , we do them first and foremost to help you improve your English fluency, your listening comprehension skills, help you work on being able to follow a native English speaker conversation.

And also the topics we choose are to help you get a sense of what's going on in the world, as well as to use them in your own conversations. They make for great dinner table conversation. Great small talk. Great conversations in general. So that's a little bit about that. And now we can launch into our topic.

So Greg, do you know what we're going to talk about today? 

Greg: Rumor has it that we're going to be discussing Starbucks and specifically a new rewards program that they're offering on a blockchain. 

Mary Daphne: Exactly. Super amazing. Very interesting. So I'm going to pick your brain about this and we're going to get right into it.

All right, so as Greg said, this is a new Starbucks reward program. Now, they already have a reward program in place, meaning you sign up, you become a member, it's free to become a member, and as you purchase items at Starbucks, typically coffee, you would start to collect rewards points, and at the end of a certain period of time, they give you a reward or some type of prize.

So that could be like a free coffee or a beverage of your choice, or you get, you know, a free Starbucks memorabilia mug, something like that. 

Greg: Yeah, that's, that's exactly right. And so in this case, they've taken that same concept. And they've moved it onto a blockchain. 

Mary Daphne: Okay, so blockchain, which you might have recalled, we spoke about a couple of episodes ago. We also mentioned NFTs. 

Greg: Yes. So if you've heard of NFTs, this new rewards program is going to be a type of nft. Now, of course, NFTs have gotten a bit of a bad rap over the last year or so because there was a lot of speculation and there was a lot of fraud and the whole space just got sort of tainted. Web three NFTs got a bad rap because people are like, oh, aren't those scams like, isn't that, you know, crazy money, blah, blah, blah.

Well, the reality is, as we discuss on another conversation of ours, NFTs themselves are just a standard. It's just code. And it doesn't have to be a scam. It doesn't have to be art even. And in this case the Starbucks rewards program is not art. It is going to be in the form of digital collectibles and even sort of Starbucks points, right? So little points that you can earn when you buy a coffee. 

Mary Daphne: So what are the Starbucks collectibles? What does that look like? I'm trying to envision, so since it's not an image of an N F T, it's a smart contract, but could you maybe talk a little bit about what that looks like? 

Greg: Yeah, so, okay, so the smart contract is just the code that you deploy on a blockchain.

And so the rewards program will be a smart contract or probably a couple different smart contracts altogether working with each other. And so let's say the easiest way to talk about it is an example, right? So let's say that you go and buy a coffee this week at Starbucks and you've signed up for their rewards program.

You will get, let's say, per coffee, 10 Starbucks points, right? And let's say over the course of a month, you've accrued a hundred Starbucks points. So you've bought 10 coffees. With these points, you can then purchase these digital collectibles. Right. And by the way, I'm making this up. I don't know the specifics of their program.

I'm not even sure if they know the full specifics of their program, but I'm giving you an idea of how this works. 

Mary Daphne: You're also giving Starbucks an idea of how it might work. 

Greg: Yes. I've actually, in some of my previous jobs, I've actually done exactly this. So I have a sense of how these things do work. And I've helped companies sort of developed these types of programs.

So okay, you've bought 10 coffees, you now have a hundred Starbucks. , what do you do with it? Well, Starbucks could have a variety of different N F T collectibles on their website, in their program that you can purchase using these points. Now, of course you could do this without a blockchain. You could just buy those and, you know, whatever you have them in your, you know, Starbucks portfolio.

The difference is when you buy it on a blockchain, you actually own the item you buy. That's the whole point of these art NFTs or these collectibles is that it's on the blockchain and the record that you purchased it is public to everyone and no one can take it from you. And so that now that Starbucks is hosting this on the blockchain, when I get that collectible, for 100 points I can take it and move it somewhere else.

I could sell it to someone depending on the parameters of the NFT. You can have these NFTs do whatever you want. But the point is, there is now some sense of ownership, real ownership over the rewards that I've accrued from Starbucks. And Starbucks likes that because it makes me a more passionate customer, right?

I know that when I buy my Starbucks coffee, I get not only the coffee, but an opportunity to really own something that could potentially have value. 

Mary Daphne: And they could also incentivize someone to be sort of an ambassador for Starbucks. Somebody who speaks highly of Starbucks, gets their friends to join, you know, increases revenue for Starbucks.

And of course there might be some perks involved for the person who is acting as the ambassador of that company, of that program. So it's called The Odyssey it's called Starbucks Odyssey and that's separate from the Starbucks reward program and they're issuing specific stamps. 

Greg: Okay.

Mary Daphne: So it's something like that where it's like a collectible with a stamp.

And what in your mind would incentivize someone to be part of this program as opposed to just the regular rewards program? 

Greg: So it could be, let's just talk about collectibles that Starbucks has had in the past. Right. A big thing is people like to collect Starbucks mugs, right? So you can collect a bunch of mugs.

And so if people are willing to collect physical mugs that take up space in their home right, on their shelves, why wouldn't they also be willing to collect digital mugs or digital stamps, any kind of sort of representation of their loyalty to that brand and, and the op opportunity to display that.

If it's an N F T, guess what? You can go onto Twitter and make your Twitter profile an NFT right? And so you, if you really love Starbucks and you're one of their top, top 1% loyal customers, you could make your Twitter profile, the NFT that you got from them .So there's some cool ways to sort of flex your, you know, show off your loyalty to the brand.

Mary Daphne: Yeah. And it sounds like what they're also going to be doing is another way of incentivizing people is getting them, you know, free coffee prizes. I'm sure especially they'll roll out some real cool perks in the beginning of, you know, when they're launching the early phases of launch because that way they get more people signed up and the ones that were potentially on the fence about, oh, do I sign up? Do I not sign up? If you tell them they're going to get a, you know, a free month of coffee, that might change their tune and they might get excited about signing up. 

Greg: Yeah, I mean, so , they have to be careful cause they don't want to lose money on the program. And you'd be surprised sometimes the intangible stuff is just as valued or sometimes even more valuable than the tangible stuff.

So, okay, let's say you get a, a free month of coffee. You can then quantify the value of that. You can say, well, each coffee is $5 and I'm going to buy 10 coffees over the year, over the month. And so that's $50 of value. Cool. Instead, if you get this stamp that says You're awesome, you love Starbucks, how much is that worth?

We don't know. Is it $50? Is it a hundred dollars? You know, it could be worth more. It's, it's as worth as much as you attribute value to it and as much as the rest of the world attributes value to it. And so from that perspective, these intangible sort of What do, what would you call it? Sort of non-specific valued items can actually have more value in the bigger picture. So that could be exciting. 

Mary Daphne: It's really interesting. I mean, I would wonder how their marketing team is sort of grappling with this idea of this loyalty program, especially since not a lot of people still are using NFTs, know what crypto is, that kind of thing. Particularly with all of the negativity in the news these days.

So I wonder how they're going to be, getting someone excited about the prospects that this kind of technology has to offer. The intangible items that are potentially going to be available to people who contribute to this program or are a part of this program. 

Greg: Yeah, exactly. So that's a really good point right? Crypto is scary. Crypto is unfamiliar. It's hard to use. It has all these reputations. And so if it were to be offered as a crypto program, I think it would turn a lot of people off, but that's not what they're doing. The only people who are talking about this being offered on the blockchain are people who care about crypto, but to the general public, they're not even going to know that it's on the blockchain.

So the beauty of what they're doing here is they're making all the blockchain sort of components of it happen in the background. So you don't know unless you care. If you care, you can dig deeper and sort of take advantage of the, the sort of aspects of blockchain that make this even cooler. But for the average user, they're not going to know that they're using the blockchain.

It's actually hosted on Polygon , which is a side chain of Ethereum. And no one knows that, or very few people know that and they don't care. And that's great because the whole point of blockchain ultimately is for it to function kind of like the internet where it does what it's supposed to do. You don't know how it works.

You don't care how it works, it's just doing what it's supposed to do. And then there's people like me who actually do care and are really happy because it enables a much more decentralized and you know, self-owned experience in the, the internet that we're building. 

Mary Daphne: Very interesting. Yeah, I mean, this is definitely something that we're going to see more of in the future.

I have a little thing here where it kind of talks about Starbucks, Odyssey, NFTs. So they say that, you know, the people that have joined and who have signed up for the wait list in September are now being given the opportunity to sign up for the program as of last week, and they have all these steps to join the program.

And then what's really interesting, so I love the term the Odyssey, right? Because it's all about the journey and going through this epic. Story of yours, right? Based on the Odyssey by Homer. And so they say participants will be rewarded for completing journeys. Which Starbucks described as, quote, a series of entertaining interactive activities to earn collectible journey stamps.

Greg: Yes. So this idea of journeys or quests is a big draw for these types of programs. And it's actually not unique to NFTs or to crypto, but crypto lends itself well to it because when you some, again, what I said before, when something is issued on the blockchain, there's irrefutable evidence, there's a stamp, a timestamp, right?

A transaction that shows that you indeed did earn that. And so it lends itself really well to these quests. So yeah, you go and do something maybe. You buy a Starbucks coffee at a certain store or you, you buy, you know, five different Starbucks coffees at five different locations, right?

Any kind of sort of hoops that they can jump through. It kind of gamifies the experience and you get to earn something from it. And you get proof that you did that, and that's really cool and fun for some people. 

Mary Daphne: Definitely. I think that's also part of what's going to incentivize people this gamification aspect of this kind of rewards program. So let's now jump back into a more bird's eye view of this. This is just one company, Starbucks. How do you see other companies starting to adopt this type of technology and create rewards programs or any other sort of perks as someone who is showing their loyalty for this brand?

Greg: Yeah, I mean, that's a terrific question, right? A lot of companies, B2C companies, business to consumer companies they love loyalty programs, right? Obviously airlines is, is an example. Grocery stores Amazon has reward points, right? Hotels, all of these different sort of B2C love to implement these reward programs.

And these quests, I think are a great way to do it. Also media brands. So maybe Disney wants to offer something to its fans, right? Where you can earn little rewards for exploring the different parts of Disney's vast empire. Right. The other thing I was thinking is it can actually be used for business purposes too.

So going back to the Starbucks, let's say that they're opening up a new store, they want to drive traffic to it quickly. They can offer some of these, you know, different types of rewards for going to that new store. Or let's say a certain store is underutilized relative to one nearby, they can drive traffic to the one that's less used by offering more of these rewards, right?

And the same could be said for, you know, a clothing brand or anything else you can sort of help shape the flow of traffic of your consumer. By you know, adjusting the levers of the rewards at those various locations. 

Mary Daphne: It's just fascinating, really. I mean, the direction that this is all headed. And then not to mention the implications of this in the metaverse.

Greg: Totally. Yeah, exactly. I mean, that's another big promise of these NFTs, right, is the opportunity to take some of these things that you've earned and show them off in the Metaverse. And the metaverse today is sort of more abstract, right? The metaverse is Twitter, it's your Instagram profile, your TikTok, whatever you're using.

That's all sort of that digital representation of you. As that becomes more concrete in the world of VR and AR these digital collectibles will start to really carry meaningful value to people. 

Mary Daphne: 100%. So really interesting things going on now. I think it's really cool that Starbucks is starting to do this, and I'm really curious to see what other companies start to adopt this kind of technology and the way they shape it, and how that's going to in turn also shape the way people themselves conduct their own business.

Just the way the world is going to start to transform in a positive way, hopefully. 

Greg: Yeah. Yeah. I, I see a lot of really cool sort of opportunities that this opens up, and I'm excited to watch the whole space develop. 

Mary Daphne: I think that's a really great attitude to have, because change can be, you know, a little bit scary for some people, and just the unpredictability of change itself and transformation can be startling and jarring.

So I think having this kind of mindset of, wow, this is cool. We'll work through it. We'll make it as best we can to fit our needs, and just having that curiosity mindset as well can be super helpful as we navigate this transition. 

Greg: Totally. 

Mary Daphne: Amazing. So we hope that you enjoyed this episode. If you did, let us know.

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