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Giving Starbucks customers opportunities for discounts with its prepaid card continues to be a strategy for the coffee giant despite a flailing economy, CEO Howard Schultz told analysts during the company's fiscal first-quarter conference call with analysts last week. Starbucks sold more than 26 million Starbucks Cardsand customers loaded nearly $560 million of value onto them, an 8% increase the same period last year, Schultz said. "This performance demonstrated for us the broad appeal of the Starbucks card as a gift, especially in contrast to the performance of the overall gift card business, which had been forecasted to be down as much as 10% heading into the final week of the holiday shopping season," he said. "We are confident that the Starbucks Card brings incremental business into our stores." The company believes it will bring in even more incremental business through its card-distribution deal with food-warehouse club Costco, which activated more than 5 million cards during the holiday season, he said. The company also reports that the Starbucks Gold card, a premium loyalty program for which customers pay $25 per year to get free WiFi access, 10% off on all purchases and other exclusive offers, has more than 500,000 accounts. Those customers average 15 visits per month and spend 10% more than nonmembers, says Schultz. "All of this should bode well for calendar 2009 and beyond, " said Schultz. "And [it] underscores the powerful asset we have in our card programs, which affords us the opportunity to deepen our customers' connection with the brand and drive our business even in tough times."
