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What the Starbucks Card Teaches Us About the Future of Transactions

by Guest Blogger  |  
October 7, 2011

A guest post by Bob Knorpp of The Cool Beans Group.

I was among the skeptics. Why would I want a Starbucks Card? After all, it was an extra, meaningless step in the coffee-purchasing process. Why would I use my credit card to put money on a card to buy my coffee, when I could have just as easily used my credit card right from the beginning?

But oh, how wrong I was!

Today, the Starbucks Card has become a social phenomenon. Advocates willingly fill them up with credit for the status it brings at the POS. Good-natured friends readily recharge the cards of friends through Facebook to spread goodwill. Starbucks proactively rewards cardholders with perks and special treatment in stores, online, and elsewhere. And all of this has me wondering whether businesses are aware of how much of a threat this is to existing card-based transactional models.

Two ideas have been circulating around the financial services industry for some time now---social currency and alternative currency. They represent intriguing possibilities about the future of banking. And yet none of the theories or studies I’ve seen so elegantly express both of these ideas as well as the Starbucks Card.

For many financial institutions and the business community as a whole, social currency is nothing more than the social connectedness of the business to its customers. For others, it’s become another name for a rewards programs. But social currency is something much deeper. Social currency is the connectedness between customers as much as with a business. It’s about the community being created as much as the transactions.

Which is why the Starbucks Card shines. The card is facilitating and enhancing existing social interactions, rather than forcing the customer into some preconceived mold. It turns the card into a means of buying a friend a cup of coffee or being known by the employees of their favorite store. It creates connections, not just transactions.

And out of this community naturally springs an adherence to this alternative currency it represents. These cards are not just being charged with “credit.” The money being used to fund these cards is literally being “converted”---as surely as you convert dollars to euros when you travel---into a currency that creates a better value exchange for the customer. This “Starbuck” represents not just a purchase, but trust in a monetary system that more closely aligns with the customer’s point of view and desires.

Starbucks is not the only one creating alternative, socially based currencies either. Zynga has been doing it for their social game properties for some time now. World of Warcraft has created an entire, in-game economy. And with near-field communication (NFC) coming to smart phones, there is the potential for services like iTunes to become the real power players in brokered transactions and monetary exchange, with the banks merely playing a secondary, commodity role to the more vibrant relationships being created within these mobile-based communities.

Many of the banks are trying to get ahead of this curve by brokering deals to position themselves as the financial institutions funding these efforts. But like the British crown who funded the American colonies, there’s a tendency for the old economic system to eventually be eclipsed by the newer one. And then what?

Whether you are in banking or are simply a retail-based business looking for new ways to entice customers, it may be time to re-imagine what financial transactions look like. Now we must consider:

  • How can I make every transaction an instant social connection?

  • How can I turn transactions into communal events among customers?

  • How can I create enhanced value exchanges for customers at POS?

  • How can I even turn my B2B transactions into social relevant events?

It’s not entirely ludicrous to think that, one day, monetary markets may be based on the much more complex valuation of socially based, electronic currencies, rather than just the dollar, euro or yen. And without communities of our own to build this type of connected value, we run the risk of being left behind.

Bob Knorpp is the host of The BeanCast Marketing Podcast at and is president of The Cool Beans Group, a marketing strategy consultancy based in New York City. He likes laughing even more than breathing. You can follow the madness on Twitter at

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  • by Paul Barsch Fri Oct 7, 2011 via blog

    Bob, nice article. How is SBUX getting the word out about how customers are/should be using these cards? Specifically, have you seen any ads/articles/communications that these cards should be used in a different way than traditional "load once" and go gift cards?

  • by Chris Baldwin Fri Oct 7, 2011 via blog


    Could not agree with you more about the genius that is the Starbucks card. They have created a new currency that holds more meaning to a Starbucks' customer than dollars and cents. What started as a way to get you to not think about paying $2.50 for a cup of coffee has become far more valuable to them and to their customer interactions. Nice blog post. And I agree, watch for other brands to figure out how to build on what Starbucks has created.


  • by Guy Trudeau Fri Oct 7, 2011 via blog

    'How can I make every transaction an instant social connection?'

  • by Jen from LIME Fri Oct 7, 2011 via blog

    Sweet article! I was not even fully aware of the social currency movement/model. Thank you for the case study.

  • by Michael A Goodman Fri Oct 7, 2011 via blog

    Very interesting and thought-provoking. Thanks, Bob. This is going to be like a tune I can't get out of my head. Very clever idea with lots of implications.

  • by Jim Nichols Fri Oct 7, 2011 via blog

    "Social transaction"? That's over-intellectualizing. The social transaction occurs when you and the barista SPEAK to one another. Everyone I know who has a gold Stbx card has it for one reason: Free refills.

  • by Bob Knorpp Fri Oct 7, 2011 via blog

    Paul, I am not aware of their promotional efforts, but I do know they have a lot of active communication with members via social channels and email. And one of the prime ways to charge your card is via their site which does a lot of education along the way. I like the organic route they've taken toward growth. It prevents expansion from outpacing engagement for the effort, and allows users to advocate and feel empowered.


  • by Evan Fri Oct 7, 2011 via blog

    You don't even touch on the Starbucks Card mobile app, which means you have one less piece of plastic to carry around. I'm just waiting for Starbucks to figure out how to let me "check in" (via Yelp or Foursquare or Facebook) from the app. Can you imagine? ("Can someone 'gift' me $5 right now? I need another cinnamon dolce latte!")

  • by Doug Strahm Fri Oct 7, 2011 via blog

    The benefits to Starbucks and their customers go beyond the "social" aspect. Charging each cup of joe to a credit card costs Starbucks, and eventually the customer, significantly more than one single recharge to a card. The Starbucks card is cutting out the transaction processing fees for credit card purchases. Another thing that reduces the cost per transaction is that Starbucks Card funds are not guaranteed for loss or fraud. Starbucks found a way to build brand loyalty and reduce transaction costs. What a deal!

  • by Romana Rojas Sat Oct 8, 2011 via blog

    Hi Guy, Yes I would like to know this also, let me know when you find out.

  • by May Sun Oct 9, 2011 via blog

    Great article - very good insight to the Starbucks strategy and approach in creating social currency and brand awareness. And the longer it takes the consumer to use the funds, the bigger the benefit to Starbucks.

  • by C.B. Whittemore Mon Oct 10, 2011 via blog


    I felt the same way you did before getting my Starbucks card and have been so surprised with the experience of having one. It represents that Zen feeling that Starbucks creates when I visit a store and order my latte. It creates conversation and gives new meaning to conversion. And the app is wonderful. Talk about reinventing credit and currency. Great post and fascinating train of thought...


  • by Jeff Molander Mon Oct 10, 2011 via blog

    I disagree. Social currency is not the connectedness between customers as much as with a business. The connectedness between customers is not new and doesn't need a new name. Customers have always been connected-- before the Starbucks card or Facebook.

    I disagree again: Social currency isn't about "The community being created as much as the transactions" because the community is not being created. Ever said to someone, "it's on me today" and bought them a cup of coffee?

    It is important to not "lose ourselves in the newness" of social media. These constructs are NOT new.

  • by Carolyn Rissanen Thu Oct 13, 2011 via blog

    And it doesn't work at my local coffee shop. Starbucks = the evil empire!

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