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Hello and welcome to today’s episode of Let’s Talk Loyalty and Loyalty TV. And today finally, it’s Starbucks. It is another one of the world’s greatest brands and also our audience’s favorite loyalty program, according to how many times it’s been mentioned as the answer to our opening question with our guests. And of course, I want to say huge thank you to our friends in Truth in South Africa for counting all of those entries over the last couple of years episodes for us.
As a global brand, Starbucks operates in 84 markets around the world, and today we are here to hear about the incredibly successful launch of the Starbucks Rewards program here in the Middle East, where there are over 1,900 stores in 11 Middle Eastern and North African countries.
In this region, the Starbucks brand has partnered with one of the leading family-owned operators of international franchise brands, the Alshaya Group, and their portfolio also includes over 60 retail and restaurant brands like Victoria’s Secret, H&M, Mothercare, and The Cheesecake Factory. The Alshaya Group now has over 20 years of success operating the Starbucks business in this region.
So we are delighted to be joined today by Elisabetta Aiello, the Vice President of Marketing and Digital for Starbucks in the Middle East, North Africa, and Turkey. Starbucks Rewards launched in the UAE in February 2022 followed by the Kingdom of Saudi Arabia and Kuwait in October 2022. And to date, they’ve registered more than 3 million members. I hope you enjoy our conversation all about this world-class brand as it builds customer loyalty in the Middle East and North Africa.
Elisabetta, welcome to Let’s Talk Loyalty.
Elisabetta: Thank you. Very happy to be here.
Paula: It’s been a very long time coming. I think we first met about two years ago.
Elisabetta: Indeed.
Paula: Yes. When you were pretty new in this region and starting work on this extraordinary project. So very excited to share the Starbucks reward story from Middle East and North Africa.
First of all, as you know, we always start our conversations trying to get a sense of what do you as a loyalty professional really admire. What would you say is your favorite loyalty program?
Elisabetta: This is not an easy question because there are so many. I have two, which are top of my list. One is Hilton. And the other is Aura.
Hilton works for me and I like it because when you get to a significant tier level, it gives me what I need. It gives me the comfort of an executive laundry gives me the late checkout. So the benefits are very relevant to me.
Paula: Amazing.
Elisabetta: Make my life easier. So tick the box for that. If you’re not a high tier, not that fulfilling my needs.
Aura comes in because I love the immediacy of how you can get rewarded there. So it’s a program across multiple brands. So you can easily collect your points. Fortunately brand cover quite a large spectrum of categories. So fits for me, it’s for the family, so it’s easy to earn. But it’s also easy to redeem the immediacy of spending in any of the brands and redeeming from three dirhams to 3000 dirhams.
Paula: Yes.
Elisabetta: Immediately on your bill is quite a thing. So this is why I love the immediacy so easy. And so flexible.
Paula: Okay. So that’s a key success principle I’m thinking for a loyalty program.
Elisabetta: Yes, my mind it is.
Paula: Amazing. Okay. And we will make sure, of course, to link to Aura because we do have a global audience. So we have people listening in the United States, the United Kingdom, Australia, and everywhere else, as you can imagine. So Aura is very much a local program here in UAE.
Elisabetta: It is the loyalty program of the Alshaya retail platform. So it covers all Alshaya brands.
Paula: Incredible.
Elisabetta: Most of them. Starbucks not yet. Because we run our own program for the time being, but yes.
Paula: I’m sure there’s a further discussion to be had about that one.
Elisabetta: Absolutely. Big discussion. Always on.
Paula: Indeed. Yes. And I’ve often said on the show actually, particularly in the UAE, there are incredible brands like Alshaya that do operate just these extraordinary number of different operations, whether it’s fashion brands or restaurant brands. So the need to create a new loyalty brand can be quite complicated for consumers. So I know there’s a big education job to be done, but Aura is doing incredible work. So hopefully we’ll do a separate show talking about that.
But let’s get into Starbucks Rewards. First and foremost, tell us a bit about your background, Elisabetta. How did you end up with this dream job?
Elisabetta: Well, I can’t tell you that I am a professional in loyalty since I’ve done loyalty as well, but my career is a bit of a zigzag across industries. And different areas of marketing and customer management. So I started interestingly in a space of loyalty for Deutsche Bank by then dealing with loyalty in credit cards, with attached the personal loan you would say, what is loyalty? There is nothing more of a commodity than borrowing money.
Paula: Totally.
Elisabetta: And this is why the big lessons I learned by then is you don’t talk about the product, the financial product with your customers through the power of data already by then more 20 years ago, knowing where the customer were spending their money.
Paula: Yes.
Elisabetta: The borrowed money. You can then inspire them for the next purchase, the next family gift, the next renovation piece that you can afford if you renew your loan. So it was quite early time. But the lesson was fundamental, resonating with customer needs to tell a story, which sometime is not about the technicalities of the product.
Paula: Absolutely.
Elisabetta: And this is how you nurture loyalty.
Paula: Okay. So it sounds like a baptism of fire.
Elisabetta: Was absolutely, from them. Then was Ferrero, so nothing to do with loyalty.
Paula: Beautiful. Chocolate?
Elisabetta: Learning brand.
Paula: Yes.
Elisabetta: Learning chocolate for sure. Learning brand and product marketing. From there, I move it into retail. Was Metro, Metro is 30 billion, roughly 30 countries retail, or B2B business, depending on the country. I launched the loyalty program in Italy and I learned my second lesson, which is there is plenty of retail program and other me, too, really no need.
Paula: So that’s very true. Yes.
Elisabetta: The data were not powerful behind. So nothing distinctive in terms of performance, but a lot of learnings for me. From there I moved it to Metro, global headquarters, and that was digital transformation. I started a journey on leading different waves of digital transformation.
The learning there, which is still relevant in my role now in leading loyalty here is how important is when you operate on a global brand to appreciate the counter nuances. So, leading a center of excellence and implementing a, rolling out a global platform would’ve not been possible with that in terms of success and speed, if we wouldn’t have really focused on appreciating local nuances, exporting best practices from a market to another. But co-creating with the markets because you can’t just spread one blanket across all of them.
Paula: Totally. Yeah. Yeah.
Elisabetta: So that has been my digital transformation journey. From there I move it to another retailer in the UK, and from there I landed three years ago in Dubai on a job where the main task was launched the Starbucks loyalty program and build marketing capabilities.
Paula: Okay.
Elisabetta: And here I am.
Paula: Okay. Yes. And I think at the time you had quite a tight deadline. I think Covid and a few other things changed that deadline. And I think that was a blessing actually, in disguise. So the program is live.
Tell me, first of all, Elisabetta, you’ve talked about a couple of the reasons that people might do a loyalty program, such as data, of course, CRM, there’s lots of different reasons that a business might decide. Okay. It’s time now in this region to launch our loyalty program. So for Starbucks in the Middle East, North Africa, and Turkey it’s a big region. What was your primary business driver for? Taking what is of course a superbly successful global program and launching it in this region in just 2022?
Elisabetta: Was in 2022. And the primary reason was definitely if you want to support life for life growth in a business of that size. And you don’t wanna do it through promotions because you know it’s detrimental to brand. And Starbucks is not a heavily promoted brand in terms of the discounts.
Paula: Of course. Yeah.
Elisabetta: Then you need loyalty as a means to gather data and personalize and drive that incrementality in customer behavior, which ultimately is the goal of any loyalty program.
Paula: Of course. Of course. Yeah. And how is it going?
Elisabetta: It’s going very well. Yeah, very well. We launched a year ago, a year and a half ago in UAE and subsequently in Saudi and Kuwait. It has been growing super fast. Essentially we have today 3 million and a half members. But the penetration on sales and transaction is over 50%.
Paula: Wow.
Elisabetta: Which is at the same level as US Canada programs, which have
Paula: Wow.
Elisabetta: Dozens of years of longevity. Not a couple of year, one year. And there are of course reason behind that I would say is also doing well in terms of driving incrementality. Penetration is super high. General customer feedback is good, although the proposition at the moment is still very basic.
Paula: Yes.
Elisabetta: So we don’t have exactly the same rich proposition as US. It’s a different program, different technology. And it’s gonna be a different proposition. Not in principle, but in the application. What do I mean with that? That of course implementing that loyalty program required to look into our customer base and what the customer expects. So not only the economics, but also what is the right level of VIP experience you want to give to your customers.
So we are gonna implement some of the US ones. But also enrich with peculiar experience tailored to the needs of this market? Our customers in the market are very wealthy, so the transactional value of a reward is always appreciated, but it’s not the main driver. What they are looking for is the appreciation of their loyalty in the shape of a VIP treatment. In the shape of status. So we are learning that this is what they’re really after. I’ll tell you something, anecdotal. Customers compete, friendly, compete for who has more stars? They tend not to redeem because they like to see 10,000 stars on their wallet.
Paula: Oh my goodness. That’s amazing.
Elisabetta: But this tends you, this is a status element.
Paula: Yes.
Elisabetta: So the transaction reward in for the top customer, the VIP customer is ultimately secondary.
Paula: Wow.
Elisabetta: And this confirms what is the first lessons I learned many years ago. Loyalty, ultimately in my understanding, it’s a behavior that is behind feelings and emotions. Not a rationale, not a transactional rationale.
Paula: A hundred percent.
Elisabetta: And this applies to people and applies to loyalty too. So this is why any loyalty program needs to look into which are the needs, behavior, the attitudes, the social needs of your customer base to land any proposition locally adjusted that resonates.
So we took it step by step. We implemented the basics with them an objective of learning. How it would grow. What the customer would show us in terms of behavior. And now we are ready to launch a set of more tailored benefit to the so called gold customers, evolve the proposition and so on.
Paula: Amazing. So you did launch just with the green tier, if I’m not mistaken?
Elisabetta: We have a green tier.
Paula: Yes.
Elisabetta: And we have a gold tier. But in reality, stated benefits apply only to the green tier. Very simple. You collect a number of stars, you get your free drink. There is a gold tier. But the reward for gold customer is on a surprise and delight base.
Paula: Oh, I see.
Elisabetta: Means stated benefit is only a birthday drink. In reality, we constantly reward them through a tailored CRM that multiplies the benefits for the loyal customer the top loyal customer.
But this is not meant to be forever, it’s a moment you wanna give stated benefits. Status benefits. And we do. But now that we have enough insights to understand what matters to them.
Paula: Amazing. I’m really reflecting on what you I suppose shared and taught me just now about this idea that they still want to keep collecting because of the status. Like when I think about people listening to this show, we always talk about the importance of the redemption, like closing the loop, making sure they earn that reward. It sounds like you’re gonna have to deal with almost the opposite, but that’s not the driver.
Elisabetta: It’s not, that is true for our top customers. I do believe, and I mentioned that when I was saying Aura is fantastic because of the immediacy of rewards, right? For any loyalty program, today is exactly about that balanced combination between immediate easy reward nearly any time you step through the door, versus the more aspirational one, the big prices. The combination between the transactional rewards and the emotional ones. The experiences side of things. So we know that different customer and different tiers behave differently, but for our top customer, well ultimately they don’t really need a free drink.
Understanding where they are positioned in terms of social demographic in this region. We love to offer something which makes them feel special. Today we do it through our partners. And this is the other, let’s say, key success factor of this loyalty program. It’s not a program that lends. It belongs to a brand with a strong DNA and that DNA of the brand, which is all about coffee and connections, was absolutely perfectly interpreted by our partners in store we call partners, our colleagues in store. So they bring to life every day. That connection with customer and they know very well our loyal customer by name. So the loyalty program builds on that. Integrates with that. Give them a few information more to serve the customer in one-to-one. So the loyalty program, per se, is not the loyalty driver. It complements. It integrates the loyalty which exists and you nurture every day through your brand expression and through your experience in store.
Paula: Yeah. Yeah. Starbucks always strikes me as one where the brand is so beautiful and really takes its customers, of course, very seriously. And so ambitious. But goes back to, I think its very origins as a place. I think the third place was always?
Elisabetta: The third place. Hundred percent.
Paula: This concept. Yeah. Would you mind explaining that Elisabetta? Just for people who were not familiar with it, because the first time I was like, what do you mean the third place? But I know it’s the very DNA actually is what you said.
Elisabetta: It is for Starbucks. Starbucks brand is about coffee at the core and connection is about connecting people over a cup of coffee. And if you think about the first two places in your life is typically home and work. There is a third place where you have your me time, where you meet your friends.
Paula: Yes.
Elisabetta: Where you have your chill out time. It’s a coffee shop. It’s Starbucks. Starbucks was designed to be the third place. Today we are expanding that third place, potentially digitally, but fundamentally. And especially in this region where coffee is a 24 hours deal. It’s not only the morning break of the afternoon.
Paula: That’s true. Yeah.
Elisabetta: It is the place for your recharge moment. Is the place for your social time more than ever in terms of location. The third place makes sense.
Paula: Yeah, for sure. And again, because it goes back to I think 1972 was the very first Starbucks in Seattle. So to have that vision very early on, maybe not in the first year, but certainly I know when Howard Schultz got involved, it was something that he articulated, brought to life and it’s just very impressive and we do all feel it. So yes, I think it has changed all of our culture.
And having said that as well though, I guess. For me, this region is very much actually a culture that’s centered around coffee. Would that be something that you experience when you talk to your Starbucks colleagues around the world as a, maybe a nuance, because you talked about regional differences, for example, already, so I’m guessing we do already have a, maybe a predisposition to coffee and tea in this region. So I’d just love to get your perspective on that.
Elisabetta: There is, this region is definitely about coffee and tea. You know, this is not an alcohol free region.
Paula: Of course. Yeah.
Elisabetta: So of course people revert to coffee shop for their social time, as I said before. And this is quite an interesting concept because the global brand is sometime as strong as its identity is consistent country to country. We are pretty a special place compared to the western world, west Starbucks group probably as Asia plays the same role. A different culture, different environment. So this is why a lot of the work with our colleagues from global or the MENA region is exactly about how do we keep the global dimension of the brand? How do we keep the fascinating power of the American brand? But we root it locally. We root it locally means from the communication into what a coffee shop decoration looks like.
So there are a number of elements that can root the coffee shop. Although recognizable is a Starbucks. Wherever you are, of course, still talks about is a Starbucks in Saudi or is a Starbucks in UAE. And this goes back to this element of the brand expression from communication into store design Into the loyalty program. We are gonna develop very likely element of experiences, which make very much sense only for this region, special VIP exclusive moments. Tasting coffee, which for our customers so keen on their status. So keen on their being treated specially make much more sense than another bigger discount or something. So, and this is where still in the frame of a global program with clear principle. Some of the rewarding experience have to be tailored to the markets.
Paula: Of course. Yeah. I will be looking forward to hearing exactly how you execute on that.
Elisabetta: I’m conscious, I’m trying to tell without tell.
Paula: I can hear there’s something coming, but it’s too soon.
Elisabetta: There is a lot coming. It is, yes.
Paula: Yeah. So it’s one year in. Yeah. You’ve shared some amazing statistics. I think the penetration of sales is something that is incredible for such a young program. The number of people have signed up. What would you say you’re most proud of Elisabetta in terms of everything that’s been done as we talked about, you know, you were building this program in the middle of of course the global pandemic. So you had a lot to deal with and you chose to go with a relatively simple execution and proposition for now. So tell us, you know, what are you most proud of?
Elisabetta: I think there are two or three elements. Number one, it was quite a decision to say people might expect the same program as in US.
Paula: Of course.
Elisabetta: We are because yeah, it’s one digital world, right? But we are not going with the same. We are going with something very basic. And we believe that the genuine love for the brand will let our customers still being inspired and choose to join the program. It was a sort of a big bet. And it works. So I’m very proud that we decided to take that decision and go ahead. And it pays back because today we have a lot of learning without having burnt offering experiences more complex, which might have not been resonating. Number one.
Number two, of course, as anyone who builds capabilities, I’m proud of the team is an amazing team. When a basic program like that flies because there is behind a powerful CRM all not technology. Rich. But in terms of expertise, smartness of understanding how to segment and target. So whatever our customer gets every week is designed for them.
And this is fantastic. So makes proud everyone to say. The simplest technology, the simplest proposition, still customer engagement every week is there. And this is, thank you to the nature of the brand. The love for the brand. And the CRM engagement.
And the third is how we could make Starbucks rewards not a task and a deal of the loyalty team but a company, a division thing. Starbucks is a division within Alshayah, and this has been also one of the launch success factor. The whole company firmly believed in the potential of loyalty. And when we launched it with a set of choices of how to communicate, which were targeting nearly with the same power our colleagues in store, and the customer. Knowing that if our colleagues in store are behind it. They’re excited about it. They believe in it. They’re gonna be the first ambassador. And this I think, is valid for any loyalty program in the world. If your colleagues on the front line, don’t engage with that, don’t believe in that. Yeah, it’s not gonna fly.
Paula: Totally. You know, I’ve often said it on this show, you know, when I do go into stores and people say, are you a member of a particular program? I often say, no, just to test them. And then if they don’t, you know, articulate just a simple, you know, reason to join, I get so upset and frustrated for the loyalty manager like you and I, who’s sitting behind, doing all of the thinking, loving the customer, and hoping that the ambassador does the job at the point of sale. So sounds like you’re very proud of what your team are doing.
Elisabetta: Absolutely. I’m proud of all our partners in the store, in the three market where we launched. Because we don’t have huge variance in terms of the participation to the program in terms of how in each store we have a certain number of members and penetration, which means all of them embraced it. And this is usually quite a challenge or an opportunity to cascade so powerfully from the center to everyone in every corner of Saudi Arabia or the Emirates. That loyalty program is worth to be reminded to customers.
Paula: Absolutely. Yeah.
Elisabetta: So that engagement has been key to launch to grow fast. And is key to keep the engagement live.
Paula: Absolutely. And three countries so far.
Elisabetta: Yes.
Paula: Are there others, I’m guessing in the pipeline, anything you can share or too soon?
Elisabetta: Not yet, but of course the plan. The plan is to expand. If the learning, the time will allow us to do it, but definitely the plan is to expand.
Paula: Okay. Okay. So you’re gonna be keeping super busy with all of that.
Elisabetta: Yes. Yes. But I do believe that before going for spreading it into multiple country, it’s about making it work, deliver perfectly in your biggest market.
Paula: Got it.
Elisabetta: Once you get the recipe, once you get all the lessons, the learning you need, Then a fast roll out is more than welcome.
Paula: Absolutely. And I think something that people around the world might not appreciate particularly would be Saudi Arabia, you know? I mean, it’s a vast country. It’s also a very youthful market and it is embracing change hugely. So I’m guessing that Starbucks is just super delighted in getting a great reception there. So as you said, if you can nail it there, then everything else will be actually quite easy.
Elisabetta: Indeed. And it’s true. It is very, it’s a 35 million population. 60% below 30.
Paula: Amazing.
Elisabetta: So it’s totally inverted proportion compared to the western world. And you know that the driver of your growth is gonna be Gen Z, so our mission was how do we engage Gen Z in general with the brand? How do we talk to them? How do we make them play with the brand. And today we have clearly a stronger component of our base built on Gen, Z, dominant one, I would say.
Paula: Amazing. Yeah.
Elisabetta: And this means that somehow the brand has found the language and the way to interact with them.
Paula: Yeah. Yeah. That they’re comfortable with. And I was thinking they’re just about language actually, because sometimes you know, Arabic, for example, can be quite complicated from a technical point of view. And here in the UAE, we’re so lucky. I’m from Ireland. You’re from Italy. We all speak English. But of course, in other countries, Arabic is of course the natural language.
Elisabetta: It’s Arabic first actually.
Paula: Of course. Yeah.
Elisabetta: Which technically means you need to take your accent and go totally the other way round. So it comes with some complexity.
Paula: I’m sure.
Elisabetta: Absolutely. Possible to address,
Paula: Of course.
Elisabetta: But definitely is about tuning in. So the problem cannot speak English language. It could, most people might understand. But if you want to resonate. And you wanna be perceived as, yeah, the community brand, you have to speak the local language. So this is enough.
Paula: Of course. Absolutely. Yeah. And just on the technology piece, we never get into talking about the specifics, but just in general, are you use an external platform or is it all internal for Starbucks?
Elisabetta: It’s built by through the collaboration of multiple vendors. And is designed and delivered by Starbucks Corporation through a specific unit called Starbucks Digital Solutions. So in here comes the effort to take a global product and localize we are in a constant collaborative time-challenging, but constructive dialogue about how that technology can serve us in the region. Understanding what we need in terms of simply UX, what we need in terms of capabilities. So it’s a Starbucks global product building up.
It’s not the US technology as you can imagine. I think everyone would guess it’s the same. No, this is a different one built for the rest of the world. The international Starbucks. And we are adopting it and in a constant dialogue of influencing how that technology evolves in terms of roadmap and how meets our local needs.
Paula: Amazing. So it sounds like there’s a global loyalty team for Starbucks rewards and you get to input and they of course will support you. So what I always admire about roles like that is there’s always these amazing global learning. So, I have a lot of role envy actually, because I can imagine those conversations are super inspiring for you.
Elisabetta: I’m inspiring and challenging at the same time, but having been on both side global role, country role, I can sense which are the, you know, the goals, the intent of both parties. So this is what happen when you move zigzag across industries and markets. You learn how the different side of the table might think.
Paula: Exactly.
Elisabetta: So this dynamic is very known, the global to local.
Paula: Yes, absolutely.
Elisabetta: And when this healthy is a healthy challenge, it’s productive.
Paula: Indeed. Absolutely. Yeah. I love the fact that you’ve worked in so many different parts of the world. I think I saw China as well on your profile, so.
Elisabetta: Yes.
Paula: Yeah. There’s something about that I think just opens up the mindset to, as you said earlier, picking up on the cultural nuances, recognizing when something might not be appropriate, learning from the local teams, because of course they have the expertise.
Elisabetta: Absolutely.
Paula: Particularly the partners and stuff. So what does the future hold, Elisabetta, is there anything that you can say, or is it all top secret at the moment?
Elisabetta: Concerning words. There is a lot coming. A lot coming in terms of evolution of the proposition. A lot coming in terms of evolution of the user experience. Looking at the app.
We, this has been a relatively quiet year, so the program grew fast. From a performance, fantastic. In terms of offering to markets updates, relatively slow for a number of reason. We went through this journey of learning, understanding, aligning of what’s next for the platform, what’s next for us adopting that. Next year, I expect a much rapid pace of offering to our customers. Evolution of the proposition, reach a proposition, VIP proposition, And so on. So I’m really looking forward for the first six months of the year.
Paula: Amazing. Yeah. So I’m going to extend the invitation right now that you come back to us again. Certainly, you know, by this time next year, update us on how the proposition has evolved. Of course, we’re very excited to be using it, but to hear from you exactly why you’re doing all of these things is just immensely inspiring. So hopefully we can count on you coming back on the show.
Elisabetta: I’d be more than happy to. Hopefully in this case it’s not gonna be another year and a half.
Paula: Exactly.
Elisabetta: Hopefully in six months I’ll be back here telling you how all the updates.
Paula: Absolutely. Well, every six months. You’re welcome. So, as we said, you’re the most popular program with our audience.
Elisabetta: Oh, fantastic.
Paula: So anything Starbucks does we’re super excited and interested to hear about. So listen, I’ll leave it there for today, Elisabetta. That’s all of the questions I have. Is there anything else that you wanted to mention before we wrap up?
Elisabetta: Nothing special, just that sometimes we think loyalty, we think technology. Loyalty is fundamentally an expression of the brand DNA. And it’s all about making your customer feeling treated nicely, which is feelings. It’s not currency.
Paula: Totally.
Elisabetta: And this is, this was the learning 23 years ago. And this is still today on such a global program. So it’s what I would leave everyone to reflect upon.
Paula: Beautiful. Beautiful. Well said. So Elisabetta Aiello, Vice President of Marketing and digital for Starbucks, Middle East, North Africa, and Turkey, thank you so much from Let’s Talk Loyalty and Loyalty TV.
Elisabetta: You’re very welcome.
Paula: This show is sponsored by Wise Marketer Group, publisher of the Wise Marketer, the premier digital customer loyalty marketing resource for industry relevant news, insights, and research wise. Marketer Group also offers loyalty, education and training globally through its Loyalty Academy which has certified nearly 900 marketeers and executives in 49 countries as certified loyalty marketing professionals.
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