Is Starbucks’s Odyssey changing retail loyalty forever?

The new program is gamifying rewards on the blockchain.
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Illustration: Dianna “Mick” McDougall, Photo: Starbucks

· 4 min read

In the months since Starbucks first announced its Web3 loyalty program, Odyssey, the project has been hailed as evidence that major brands are recognizing the mainstream value and potential for mass adoption of Web3 technology.

Both the retail industry and Web3 enthusiasts are watching to see whether Starbucks is building a blueprint that other retailers will follow. And the answer to that question depends on what additional value a Web3 element brings to both brands and consumers that Web2 loyalty offerings can’t.

Lee Barnes, chief data officer at customer experience platform Paytronix, told Retail Brew that while exploring new ways to recognize high-value consumers is always valuable, the key consideration will be whether Odyssey creates a return that is ultimately worth the time and effort for Starbucks.

“It’s the operative question…Is Starbucks leading [the industry] here?” explained Phil Ranta, COO of digital talent management agency We Are Verified. “[Or] are they falling flat on their face?”

Breaking the mold

Ranta said overall, he thinks Starbucks is fulfilling its role as an industry leader.

“The Trojan horse that they’re doing with this is they’re getting a lot of people to connect and authenticate their blockchain wallets, so you’re getting the Web3 addresses of coffee enthusiasts,” Ranta said. “And in the future, that could be super valuable.”

From a Web3 perspective, Starbucks has created the “killer app,” (an app that ensures the success of the technology it’s associated with) by onboarding new users to Web3 while obfuscating the technology, said Jeff MacDonald, social strategy director at ad agency Mekanism. “It’s larger for Web3 as a whole than it may be for Starbucks,” MacDonald told Retail Brew.

That’s not to say that Web3 experts haven’t spotted some problems with Starbucks’s approach. Justin Bannon, CEO and founder of Web3 commerce network Boson Protocol, said that while Odyssey is a step in the right direction, it runs somewhat contrary to some of the core principles of Web3.

“With Starbucks, you’re doing these things you do with normal loyalty programs: incentivizing certain customer behaviors, repeat purchases,” Bannon told Retail Brew. “The whole principle of Web3, etc. is, if you get given something, it’s yours, and you don’t have to trust that someone else is going to redeem [it]…[With Odyssey,] you’re still having to trust this Starbucks issuer, who has complete control over the program.”

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Loyalty landscape: Web3 might seem like an unnecessary addition to traditional rewards offerings whose primary goal is to increase repeat purchases. But loyalty is also about building up consumers’ affinity for a brand, which drives purchases, said Barnes.

“At a high level, what loyalty programs are about is driving people to choose one brand over another,” he explained. “On the margin, you can drive some extra trips…certainly in the coffee world, a well-timed free cup of coffee or free pastries or something could definitely get you to make a stop.”

Adding a Web3 layer to loyalty fundamentally changes the relationship between consumer and retailer in loyalty programs, said Lin Dai, co-founder and CEO of Web3 agency OneOf. “Web2 commerce is really a one-way street,” Dai explained.

But a program like Odyssey gives consumers the ability to interact with each other, connecting over products or experiences, and having a better experience overall, he said.

“We think that [the Odyssey] model is the right model that really is going to be the future blueprint for many other brands,” Dai told Retail Brew.

Move over, Salesforce: Armed with the blockchain identities of coffee drinkers, Starbucks can personalize its rewards program, making drops and offers to the holders of certain NFTs, said Ranta. But that new relationship with consumers may also help to address consumer data challenges that retailers are grappling with.

“This feels like a larger story about how brands…keep losing access to data and one-on-one connections with customers,” said MacDonald. “[Web3-enabled loyalty] allows for a better one-to-one messaging experience.”

  • That’s the approach brands should be taking when it comes to adding a Web3 layer to their loyalty offerings, said Dai. “It’s essentially a CRM…for a brand to understand the consumer,” he said.

At this point though, like any other loyalty program, Odyssey is likely focused on customer engagement, said Barnes.

“The holy grail at the top is this idea of attention and recognition: ‘How do I make those top customers really feel like they’re special?’” he said, adding that he thinks that’s probably what Odyssey is all about: “trying to…form a deeper relationship with them with the goal of keeping them around.”

Retail news that keeps industry pros in the know

Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.