Why Starbucks Is Pairing With Lyft In a Loyalty Program

Uber may be the dominant on-demand service, but it doesnt play well with others: apparently not just governments - other businesses as well.

Starbucks' decision to partner with Lyft rather than Uber - and the number of investors' also placing their faith in Lyft suggests that many savvy businesses see taking on Uber as a smart value - and a good long term prospect - raising questions about both its strategy and current valuation. JL

Mike Isaac reports in the New York Times:

Executives at Starbucks said that it was Lyft’s company values and brand that made the partnership more enticing. “We have respect for Uber, but in this case we believe that Lyft is the company for us,” Howard Schultz, chairman and chief executive of Starbucks, said

Starbucks said  that it would team up with Lyft, the ride-hailing start-up, in an arrangement that would give Lyft customers incentives to earn perks through Starbucks’ loyalty program.

The deal, which the companies described as a multiyear agreement, is centered on the My Starbucks Rewards loyalty program. Under the arrangement, customers can earn points toward coffee and food every time they use Lyft. Lyft drivers, too, can enroll in the reward program and earn loyalty points through the partnership. Passengers can also tip their drivers Starbucks points, or “stars,” from inside the Lyft app.

“Our digital loyalty ecosystem will strengthen Lyft’s ability to attract and retain customers in a highly profitable way, while at the same time accelerating the incrementality of redemption of rewards,” Adam Brotman, chief digital officer of Starbucks, said in a statement.

The pairing is the latest corporate match-up from Starbucks. In recent years, Starbucks has worked with tech companies like Square to accept payments, as well as Spotify, the streaming music company, to create playlists for any number of the more than 7,000 coffee shops it operates in the United States.

Starbucks announced a deal with The New York Times in which some articles would appear free within the Starbucks mobile app.

The arrangement may be a much bigger deal for Lyft, the three-year-old company based in San Francisco that to date has had fewer corporate tie-ups than Uber, its largest competitor. Uber, which operates in more than 300 cities around the world, has worked to create loyalty programs with companies like Capital One and Starwood Hotels.

Executives at Lyft and Starbucks said that it was Lyft’s company values and brand that made the partnership more enticing.

“We have respect for Uber, but in this case we believe that Lyft is the company for us,” Howard Schultz, chairman and chief executive of Starbucks, said in a conference call with reporters on Wednesday. ​”We want to make these decisions based on the long term​,​ and based on b​usiness​ practices​.”

“One of the ways we came together is agreeing on how close our company cultures were and how aligned our values were,” said John Zimmer, co-founder and president of Lyft.

The partnership will go into effect later this year. The companies said they would use the agreement to explore ways in which Lyft could help Starbucks employees get to work, though it will start as a small test in one city — they did not disclose which — later this year. The companies also did not specify financial details of the agreement, but Mr. Schultz said that Lyft has purchased points from Starbucks that they will award to Lyft customers and drivers as part of the program.