Starbucks and Lyft teach retailers a lesson

A unique arrangement between Starbucks and ride-sharing service Lyft should serve as a blueprint for the rest of the retail industry when it comes to developing unconventional partnerships that lead to new growth possibilities.

Starbucks is creating what it calls a “digital loyalty ecosystem” and recently brought Lyft into the fold. The multi-year deal between the companies is designed to increase the value of the Starbuck Rewards program for current customers, attract new customers, reward Lyft drivers and explore a transportation benefit for Starbucks employees.

For example, all Lyft drivers will have the option of becoming My Starbucks Rewards loyalty program members at the gold level – an elite status level which typically requires completing 30 transactions annually - which entitles them to earn free drinks, food and other Starbucks stuff at an accelerated pace. In addition, Lyft drivers will be able to receive Starbucks eGifts from customers using the Lyft app and looking to thank their driver in a more personal way. Later this year, the companies plan to explore the possibilities of bringing a convenient and cost effective transportation benefit to Starbucks employees in one test market to explore employees’ interest level and long term viability.

“With Lyft’s presence in 65 cities across the U.S., where we also have Starbucks serving the same communities, we knew this relationship would benefit our partners, Lyft’s drivers as well as our mutual customers that are already coming to Starbucks and using Lyft services,” said Adam Brotman, Starbucks chief digital officer. “This is a great win win. Our digital loyalty ecosystem will strengthen Lyft’s ability to attract and retain customers in a highly profitable way, while at the same time accelerating the incrementality of redemption of rewards.”

From Lyft’s perspective, co-founder and president of the three year old company, John Zimmer, believes the arrangement with Starbucks is a way to make getting a cup of coffee and commuting to work a friendlier and more enjoyable experience.

“Lyft and Starbucks share a lot of the same customers and importantly we share a commitment to doing right by our customers and our people,” Zimmer said. “In the days, months and years ahead, we will launch exciting programs for loyal community members, and new products that will change the way we move around our cities.”

As for Starbucks view that it is creating a digital ecosystem, the company also recently announced deals with Spotify and The New York Times, that allow members of its loyalty program to earn stars, attain status and receive discounts through purchases made with other companies.