How Starbucks Quietly Benefits From Its Most Passionate Customers
When it comes to customer loyalty programs, Starbucks (NASDAQ: SBUX) has one of the best. Its Starbucks Rewards program lets members earn "Stars" (reward points) that they can use to obtain free food and drinks. Another important benefit is that it allows coffee addicts to order ahead and pay with their phones.
Let's find out how this mobile payment method, coupled with the company's branded gift cards, provides Starbucks with attractive financing on extremely favorable terms.
If someone wants to use a smartphone to place a Starbucks order, he or she must first load money onto the company's app. This is basically a digital version of a Starbucks gift card. Similarly, the company offers physical gift cards, which also require a customer to initially load them with an account balance. As of March 29, these customer prepaid balances (which Starbucks calls "Store value card liability and current portion of deferred revenue") totaled just over $1.4 billion.
Source Fool.com
