Starbucks Knows How to Keep Its Customers Coming Back
Most workers understand the importance of having their usual morning cup of coffee before heading off to the office. The caffeine helps to boost their alertness and gets them through tedious workloads and meetings. Starbucks (NASDAQ: SBUX) is the ubiquitous coffee joint that has a presence on almost every street corner. Not only does this beverage giant serve up fresh coffee to its burgeoning customer base, but it has also developed an effective strategy to both grow and retain that base. This fact alone makes it one of the most attractive restaurant stocks to own.
Known as the Starbucks digital flywheel strategy, it was developed five years ago as part of the company's foray into artificial intelligence (AI). A flywheel is a device that is able to store rotational energy, and Starbucks has coined the term "digital flywheel" to represent the momentum it obtains when the strategy is effective and in full swing.
By combining AI with marketing, Starbucks has managed to grow and expand its Starbucks Rewards program. In its Q3 2019 earnings call, management announced that the program now has 17.2 million active members, and the growth of 90-day active rewards members was 14% year over year. The company is an expert at generating customer loyalty. Here's a look at how the digital flywheel strategy creates such sticky customers.
Source Fool.com