Starbucks’ New Loyalty Program Causes Uproar on Social Media

by | Feb 26, 2016 | News

Did you hear that? The sound of upset Starbucks customers roaring on Twitter?

Earlier this week Starbucks announced a major overhaul to their current Loyalty Program and addressed their number one request from its gold status members. Unfortunately, this change seems to anger a good bunch of them and they’re speaking out on social media.

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Starbucks has a lot of customers, loyal customers that is, and one way the coffee company keeps them coming back is with their rewards program. Their program currently rewards (gold) members with a free treat or beverage of their choice after collecting 12 stars. Members are given 1 star per visit, so the points can add up if you visit often, but many customers who spend a lot of money in one visit often feel ripped off as they’re just given the 1 star.

Their new Loyalty Program, effective in April, will correct that, offering gold members 2 stars per dollar spent with Starbucks. That also includes their packaged coffee, merchandise and their Teavanna stores. This means that when you spend $10 on a latte and muffin on your morning run you get 20 stars. Seems fair right? You’ll have to earn 125 stars to get your free reward though, which may seem daunting for those who purchase a $2 brewed coffee or tea on every visit. In fact, the negative feedback on social media are mainly from those particular members who just want to share their disappointment back to the company.

But before we dive into it, let us set the record straight. This new program is nothing inventive. Roger Dooley (Forbes) says in his article that “Starbucks is borrowing an idea from the airlines, who have been switching from miles-based loyalty schemes to dollar-based ones. Their new plan is based on the amount spent rather than the number of purchases. An airline’s most profitable customers are usually the ones who spend the most money, not the ones who fly lots of miles using heavily discounted tickets.” So they’re saying there’s business logic in rewarding spending more directly, of course.

I’m putting it out there. I’m a Starbucks gold member and frequent the coffee shop once a week (at most) as a treat, and because no other coffee shop in my area supplies lactose-free milk. There have been times I bought for two of us, times where I have bought for a group of us. All of those times, whether its a brewed coffee for one or snacks for all, I only got one star. I spent a fortune and got one star?! In the end, how much did I spend to get that reward?Save

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A few things to point out from a business perspective:

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  1. Those who spend a lot of money at Starbucks per year reach “gold” status and therefore are eligible to get those rewards. Then they can start collecting stars to reach the 12-star goal to get a free snack or beverage. So in perspective, the gold member has spent a lot of money and are rewarded for doing so. My point is…the company makes money, you’re valued and rewarded for that dedication, and marketing is doing their job.
  2. Those who sign up for their emails get special offers – like their new monthly double star days – which can help you achieve your goal that much faster. Kudos to the marketing team for making us come in to buy on the days they decide.
  3. Those who just buy a regular brewed coffee or tea will take a little longer to get to that goal, I get that, but that’s the corporate way to persuade you to spend more each visit. Take advantage of their special deals to get to that level faster. Just understand, like the reference (made above) to the airlines, they’re rewarding those who spend more with the company and that doesn’t necessarily mean everyone.
  4. To put into perspective: Right now, on the current plan, if some of you were always buying $2 coffees every visit then you’re being rewarded with an expensive treat just like the person who spends $10 or $20 per visit. That doesn’t sound fair at all and the main reason why Starbucks wants to initiate this change.
  5. Sometimes the barista will ring up your purchases separately to help you earn more stars – yes they did that – but that means the system is being cheated on and Starbucks loses money. Not good if you want to keep buying from your favourite coffee shop.
  6. People requested a few years ago that the program offered that 1 star per item idea (with the 12-star reward plan) – just like how I mentioned in point #4 – and that too means Starbucks would have to reward so often that they will lose money.
  7. Less we forget, that with your gold status, you get free refills on your brewed drink. Another reward for regular coffee/tea goers.

How about offering an old school 12 stamp card idea for only brewed coffee and tea drinks? I’m aware of the costs involved to build such a plan, but last week I got a printed card from them with a sticker for the drink I bought and, if filled with 5 or 6 more stickers within the week, I could get a free coffee or tea. That sounded like a great additional perk for members and seems like this old school idea can still be popular and easily implemented into their current campaign. They wouldn’t want to lose customers to the other coffee shops that do offer those promotions…right? After all, that’s what the angry customers are saying on Twitter.

As a marketer I get their mission for this year. I know they’re listening to our demands and trying hard to please us. We just have to do the math and know that we’re getting more stars per visit then ever before. I understand this will be an adjustment to some Starbucks fans, and although I may seem a bit worried trying to achieve 125 stars, I’m able to see the bigger picture and wanted this fair right from the start. Personally, I think its about time they did this.

For more information on the Starbucks Loyalty Program change click here

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Cheers!

Jennifer Boyce Richardson

Content Source: Roger Dooley – Forbes
Image Source: Ben Pruchnie/Getty Images

What do you think? Tell us your thoughts – is this a hit or miss?

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