7 Reasons Starbucks Launched a Subscription Service

By Erika Malzberg February 27, 2017

Excerpts from an article by John Warrillow on Forbes.com

The transaction economy is fast being replaced by the subscription economy. Instead of buying one song at a time, many music fans are subscribing to sites like Rdio and Spotify to get their tunes.

Instead of buying movies, couch potatoes are subscribing to Netflix.

It is estimated that Amazon Prime now has 40 million subscribers worldwide.

And in 2015 coffee giant Starbucks entered the subscription economy by launching Starbucks Reserve Roastery Subscription program. In doing the research for my book, The Automatic Customer: Creating a Subscription Business in Any Industry, I discovered many reasons why subscribers are better than customers. Here are seven ways Starbucks can benefit from turning customers into subscribers:

1. Free Market Research – Discerning customers will become a sounding board for Starbucks as they consider which of their reserve beans deserve shelf space in the retail stores.
2. Data – With a subscription service, Starbucks can start to build a direct relationship with its customers and starrt tracking their purchase decisions over time.
3. Stem the Competition – Starbucks has reacted to the subscription companies like Craft Coffee who have been nipping at their heels by creating its own premium offering for its most discriminating coffee drinkers.
4. Recurring Revenue – With a subscription service, Starbucks can forecast its future revenue more accurately because it knows how many subscribers it has for months into the future.
5. Planning – Starbucks can accurately forecast how many pounds of beans to buy to satisfy their numbers of subscribers with a subscription offering.
6. Cash – Starbucks is a profitable company but getting cash from subscribers who pay up front helps boost their coffers even further.
7. Cross Selling – Once Starbucks has the personal information of its subscribers, they will have a built-in platform to start cross-selling them.

Read the full article here.

For more from John Warrilow, download the free guide: 7 Ways to Sell Subscriptions.