Sales boost: Credit cards for big boost at Starbucks

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With more than five million activated this year, Starbucks Corp.'s Starbucks Cards have been given some credit for one of the strongest years in the chain's history.

In the first quarter of 2002, customers bought 2.3 million cards with an average value of $14, netting $32 million in sales. Most customers buy amounts between $10 and $25 at a time.

Because revenue is recorded when the cards are redeemed online or at stores, Starbucks also benefits by reducing its handling costs while pre-empting sales at competing retailers, according to loyalty experts.

Starbucks executives would not comment on the card's performance beyond what has been said publicly during earlier conference calls with analysts.

convenience

While some marketers emphasize material rewards to motivate loyalty, Starbucks loyalty efforts instead rely on convenience and service. The coffee purveyor offered patriotic theme cards over the summer and began adding features like replacing unused balances of lost cards for registered users.

Now the marketer is developing license partners to roll out the card beyond Starbucks' North American company-owned units.

During the third quarter ended June 30, Starbucks logged 1.5 million card activations worth a total value of about $22 million. In that same period, customers made 11 million transactions worth $41 million in net sales. An additional 1 million reload transactions were recorded at an average of $24.

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