Starbucks, Draftfcb work for latte loyalty

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Starbucks has tapped Draftfcb to assist with direct marketing, loyalty and CRM efforts as the company enters a cost-saving and retention mode.

Draftfcb's New York office will handle the business. The work will reportedly focus on the card-based CRM program, Starbucks Card Rewards, that the coffee chain launched last spring, and its upgrade, Starbucks Gold Rewards, which launched in October.

According to a company release, “Positive progress has been recorded from customer response to the new Starbucks gold card,” and the rewards program now has more than 500,000 members, averaging 15 visits a month and spending 10% more per visit than non-members.

Starbucks needs these valuable customers more than ever, with same-store sales dropping 9% in the first quarter over the same period last year. The declining economy and an upswing in lower-cost competition from McDonald's and other fast-food chains has taken a bite out of the company's revenues, which in the US fell 6% to $2 billion in the first quarter.

“In the midst of the weakening global consumer environment, Starbucks is following a well-developed plan to strengthen our business through more efficient operations and by preserving the fundamental strengths and values of our brand,” said Howard Schultz, chairman, president and CEO of Starbucks, in a statement.  “We remain focused on driving the discipline and rigor necessary to create long-term shareholder value, and we are taking aggressive steps to excite customers by providing relevant value and innovation, even during this challenging time.”

As a cost-cutting measure, the coffee company is eliminating 6,000 retail jobs and 700 corporate jobs. The higher-ups are feeling the pinch, too: Executives did not receive bonuses in 2008, and base salaries were frozen for 2009.

On top of boosting loyalty efforts, the company also is said to be exploring “value menu” options to lure customers.

A Draftfcb spokesperson confirmed the assignment but declined to comment further. Starbucks could not be reached for comment as of press time. It is unclear whether Draftfcb's work would extend outside the US.


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