Starbucks changes its rewards program. Are you steaming?

Inspired by its number one customer request, Starbucks recently announced its new rewards program (Coming, 2016). Some customers took their ire to social media to vent their frustration, threatening to abandon their loyalty to Starbucks. After all, they have been devoted customers for many years, why are they being punished?

Should Starbucks be concerned about this backlash? Well, not really. It appears that those who are complaining are actually small spenders — those who spend $2 for regular coffee (King, 2016). According to eater.com, the average Starbucks transaction amounts to $7.67 per visit (Shah, 2015). So both Starbucks and the big spenders win in the new system.

What has changed in the rewards program? Instead of one star per transaction, members will earn two stars per dollar spent (Coming, 2016). The change, which will start in April, can be viewed as a logical move. The most profitable customers will be rewarded. According to Starbucks, the change also prevents unnecessary work for its baristas when customers split their transactions in one visit to earn more stars (Barro, 2016).

For those of us who are addicted to Starbucks coffee, the change does not really matter. We will still be ordering our favorite coffee. And there is even an extra bonus that we will be rewarded for everything that we purchase.

Are you a loyal Starbucks customer? Are you raving or ranting about this change?

References:

Barro, J. (2016, February 25). Free coffee? Starbucks saves its loyalty for big spenders. Retrieved from http://www.nytimes.com/2016/02/25/upshot/free-coffee-starbucks-saves-its-loyalty-for-big-spenders.html

Coming Soon: More stars through Starbucks rewards. (2016, February 22). Retrieved from https://news.starbucks.com/news/starbucks-rewards

King, H. (2016, February 23). Starbucks customers furious about the new rewards program. Retrieved from http://money.cnn.com/2016/02/22/news/companies/starbucks-rewards/

Shah, K. (2015, January 15). Starbucks or Dunkin’ Donuts? Where America’s coffee loyalty lies. Retrieved from http://www.eater.com/2015/1/15/7551497/starbucks-dunkin-donuts-peets-coffee-spending-percent

 

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14 Responses to Starbucks changes its rewards program. Are you steaming?

  1. James says:

    Hi Marily —

    As somebody who isn’t particularly brand-loyal when it comes to coffee (In Seattle, we have lots of choices for our over-priced caffeine), I was unaware of this new change. However, it is a model that I have seen — It’s very much akin to what major US airlines airlines have done with their frequent-flyer programs http://money.cnn.com/2015/11/17/news/companies/american-airlines-frequent-flyer-rewards/
    United, Delta, Southwest and now American Airlines have switched how customers accrue frequent-flyer status from just counting the miles a customer has flown to giving status based on the type of fare purchased and the type of money spent. It is a strategy that rewards true high-value customers — business travelers who not only fly a lot, but buy more profitable business and first-class tickets, as well as walk-up fares.

    This change has been met by the same sorts of protests as Starbucks, and the reaction is similar — the airlines’ target markets don’t need to complain, while those who are most bothered are those who rack up miles on cheaper economy tickets.

    • Marily says:

      Hi James,

      I totally agree. It’s so easy to express anger on social media nowadays, and negative comments get more traction than positive ones. I think it makes total business sense for Starbucks and other companies to reward their most loyal and profitable customers.

      Thank you.

  2. Elizabeth says:

    As a very loyal Starbucks consumer (a few people at work worry when they don’t see a Starbucks cup in my hand) I was disappointed in the change for the Rewards program. I definitely fall into the higher paying customer category, so the change does affect me. But, even though I am disappointed, it is still not going to stop me from visiting Starbucks every day. I am sure Starbucks researched the shift heavily before making the change, knowing that loyal consumers will remain loyal…just like me.

    EM

    • Marily says:

      Hi Elizabeth,

      It’s the same for me! As a loyal Starbucks customer, the change does not really affect me. I will still continue to order a cup or so of Starbucks coffee everyday because somehow I convinced myself that it makes me happy!

      Thank you!

  3. Anat says:

    Starbucks is a drug (and it’s one that I love) so no matter what people say about them, they will always have loyal customers. They not only amended their loyalty program to make them more money but they’ve also raised to price of their drinks….and yet, people will still line up for it. It simply reminds me that organizations care first and foremost about the bottom line.

    • Marily says:

      I can totally relate to what you said. As you also mentioned, the truly loyal customers will remain loyal no matter what.

      Thank you!

  4. Christina says:

    Hey Marily,
    Great blog! I am a daily Starbucks junkie and I honestly think this won’t effect me all that much but I think it’s terrible. I think it greatly devalues customers regardless of the amount they frequent Starbucks. I’m curious to see the backslash. If it’s just angry comments or if people will actually stop going to Starbucks. I feel like Starbucks is such a lifestyle brand and so ingrained in people’s lives that this won’t actually effect their bottom line.

    • Marily says:

      Hi Christina,

      I agree that the truly loyal customers will remain loyal. However, I do not share the same view that the change greatly devalues customers regardless of the amount they spend. Research shows that the average loyal customer actually spends around $7 per visit. With the new rewards program, they will get more rewards/stars. So it actually gives them more benefits.

      The following may validate your opinion though: “Within eight days of the announcement, Starbucks customer perception scores dropped significantly, according to brand perception firm YouGov BrandIndex.”

      Thank you!

  5. Catherine says:

    Marily,

    Great post! I have noticed that other business have begun doing a very similar thing – instead of rewarding you per transaction, change it to per dollar spent/particular items purchased and then raise the limit needed to achieve a free reward.

    While I don’t frequent Starbucks enough to be a rewards program member, Which Wich (A Sandwich store that is basically a fancier Subway) made the same change and I was very unhappy – but it has not changed my eating or spending habits at all. I still love their food and it is still right across the street from my office.

    I think Starbucks believes this same thing to be true for them – people love Starbucks, they are still going to order whatever fancy drink they always ordered, and they are still going to go because its convenient to where they work or live.

    • Marily says:

      Hi Catherine,

      With the Starbucks rewards program (or Which Wich), I’m sure the company can track every customer transaction, and it has the data to back up any changes it makes to its rewards program. As you mentioned, loyal customers will not stop going to Starbucks just because of the change in the rewards program.

      Thank you!

  6. Zihui says:

    Hi Marily,

    Great post! I like this topic since I am a frequent Starbucks customer for sure. Firstly, I have to say that I was not aware of this change, probably because it has not made any announcement in the Starbucks app on my phone. After reading you post, I did some calculation and decided the change would not affect my passion for Starbucks coffee :p
    Like you said in the post, people that are the most irritated are the small spenders. I am definitely a big spender – averagely spend at least $4.5 – $5 on a Starbucks beverage. Yeah.. I know their coffee is overpriced. But if I continue my existing spending habit on Starbucks, this change of rewards program did not deduct my chance being rewarded. It is just another way of calculating it. In addition, it actually solves the problem of splitting the order into individual one in order to get 1 star each time. My friend and I used to do it all the time, just to earn 2 stars instead of 1.. So it is definitely more convenient for me lol. I also have frequent flyer rewards with a few major airplanes, hence I am comfortable with this kind of reward system.
    I wonder if Starbucks would have more special offer or discount once they start using this reward system, either to have more variation on its promotion or just to counter the controversies raised by its customers.

    • Marily says:

      Hi Zihui,

      Funny that you mentioned about doing the calculation. I’m guilty of doing that as well simply because I was curious. If it turned out that I was losing stars, it wouldn’t have made a difference. I will still continue drinking my favorite coffee. I buy food items as well so I’ll be gaining more stars with this change. The sad part with this is that sandwiches have recently been recalled in 250 Starbucks stores due to possible listeria contamination. This definitely adds fuel to the fire.

      Starbucks almost always has long lines — whether it’s drive thru or inside the store. Splitting the order probably makes the queues even slower. (lol because you’re guilty of that.)

      As regards the special offer, Starbucks announced that there will monthly double star days. But I don’t think the controversies will die down because of this. The ones venting their anger are the ones who will lose stars with this change. For example, those who get free coffee after spending $24 will now have to spend $62.50 to earn that free coffee.

      Thank you!

  7. ruopianf says:

    Aha so i get it totally, was really affected by those comments on social media and got pissed, but now it’s good to know how the new policy works – it makes more sense, i was always struggling why they insisted one star per transaction, though i might have bought 2 coffees and 2 cakes in one time! now it would benefit me in a better way.

  8. Rhonda says:

    Hi Marily,

    Nice blog on the new Starbucks Rewards program. I am a Starbucks fan but I don’t pay to close attention to my Starbucks Rewards card. You are right Starbucks is loved by many and just because a couple of consumers don’t like the new program, Starbucks feathers won’t be ruffled. I love my “White Chocolate Mocha” and sometime when I go in a Starbucks I forget to use my rewards card especially if I am paying by cash. Well I guess I might have missed out on a free cup of coffee and breakfast sandwich. I will live!