Starbucks announced its new rewards program designed to perk up (pun intended) its worst sales slump in 7 years. This program is designed to give consumers instant gratification – refills, complimentary flavor shots, free drinks with the purchase of coffee beans, and even two hours of free wi-fi (at their Starbucks cafes) so long as they have registered on line and received a Starbucks card. This strategy is reported to be a key lynchpin in their overall effort to boost affinity to their brand, and therefore, their core product by driving more traffic into their 7,000 U.S. based stores. This newly announced rewards strategy is designed to append to existing rewards cards and extend offers to users who have registered for a new one.

Most reports that I have read describe this as an attempt to build store foot traffic in the hopes that these perks lure long lost Starbucks customers back into their store and attract new ones. It’s not a bad idea and will certainly lift sales, but the key question is whether that short term foot traffic will translate into real long term brand affinity.

Starbucks built its business by recognizing the importance of building a relationship with a customer that wanted not only a great product but a great experience to go along with it. People didn’t go quite as far as to tattoo the Starbucks logo on their arms, but it became de rigour to be seen walking with the recognizable Starbucks logo’d cup and to hang out at the local Starbucks. How many times have you asked people to meet you at a Starbucks? I even know people who base their hotel choices on how close it is to a Starbucks. That’s brand loyalty that most companies would pay dearly to have.

Starbucks also has a history of being an early innovator of rewards and loyalty with their launch six years ago of their Duetto card –a first of its kind dual payment/rewards card. About $1 billion was loaded onto these stored value cards last year alone. So, that’s why I was a little bit surprised and even slightly disappointed to read the details of this new rewards program. This rewards strategy, that basically is sort of glorified price discounting, may help get people back into the store to try the product, but I doubt will deliver the long term traction they seek.

Starbucks now has a chance to again be a loyalty innovator and use technology and creative social networking strategies to tap into the relationships that already loyal users have and to strengthen those held by the more occasional user. I read that roughly 14% of all purchases made at Starbucks last year were made using an existing Starbucks rewards cards. That means 86% of their sales were coming from people who bought the product regardless of whether they were getting rewarded another way for their business. What these data don’t tell us is how much of their profits were derived from those 14%. That said, being tuned into the customer turned Starbucks into a powerful global brand from its single store roots in Seattle. Being connected with them will drive continued long term brand loyalty.