I’ve been a loyal Starbucks customer and reward program user for the past five years — so much so that I once received a shiny, personalized reloadable gift card to congratulate my monthly spending status. I’ve been quite a faithful coffee consumer, but that’s all about to change. Due to its watered-down rewards, Starbucks is losing me as a frequent caffeine flier.
Starbucks announced Feb. 22 it’s changing its current reward program – “My Starbucks Rewards” — from one that rewards customers who visit Starbucks frequently to one that rewards those who spend the most money. This shift seems to mimic major airlines’ rewards program changes announced last year.
I don’t favor a specific airline to earn rewards, but I do have a strong affinity for coffee, and if I can easily earn free caffeine, I’m all in. However, the Starbucks reward program changes mean that people like me have to spend twice as much to earn one free drink as before, and I’m not happy about it.
Here’s a summary of the upcoming reward program changes received from Starbucks via email last week:
|1 Star per visit 2 Stars per $1 spent
||2 Stars per $1 spent
|30 Stars to Gold level
||300 Stars to Gold level
|12 Stars for a free reward in Gold level
||125 Stars for a free reward in Gold level
|Welcome, Green, Gold levels
||Green and Gold levels
(plus new Gold benefits like monthly “Double Star Days”)
The old program was pretty simple: Make 12 purchases at Starbucks and get a free drink. There were often special discount days and random coupons that would appear in your mobile app, too, which doubled as a digital wallet for Starbucks gift cards. If you earned 30 stars in a 12-month period, you would be upgraded to “Gold” member status and offered more coupons and weekly deals; in my experience, they were pretty good deals.
These days I buy only regular hot or iced coffee, so my Starbucks purchases are usually around $3. Under the old reward program rules, I’d only have to spend about $36 to earn a free drink and would get there in about three months, assuming I make one purchase once a week, which tends to be the norm for me.
This program worked well when I basically needed a coffee IV drip in college and it still works for me now, even though I’ve reined in my caffeine addiction and just pick up an iced coffee before running weekend errands. The old program was easy to understand and rewarded me for my loyalty — two qualities that are very important in deciding to use a reward program.
That’s why I have a problem with the new “Starbucks Rewards” program. It makes it harder for low spenders to earn rewards and regular customers aren’t regularly rewarded.
Under the new program structure – assuming I make the same types of purchases – it will cost me about $62 to earn ONE free drink and take me approximately five months to get there, based on my one purchase a week. In essence, my reward program value has been cut in half.
Yes, it will work great for people who spend $5-$6 on a fancy latte or frosty Frappuccino multiple times a week, but not for folks like me who order lower-priced drinks. And no, I won’t buy pricier drinks just to earn more stars and free drinks and won’t be increasing the frequency of my visits either. According to a company call with analysts last week, Starbucks’ Chief Strategy Officer Matthew Ryan said this type of change was one of the most customer-requested updates, the LA Times reported. So, Starbucks evaluated the new program and believes only “a small minority” of rewards customers will earn free drinks at a slower rate. “We are not using this reconfiguration to reduce rewards. The vast majority of our customers will earn rewards just as fast or faster than they do today,” Ryan said.
Now, I know there are two sides to every story, but because Starbucks revenue will likely increase from this program shift, I have a hard time believing this is a totally authentic response. With a whopping 11.1 million consumers currently enrolled in the Starbucks reward program, according to Eater.com, there has to be a fairly significant segment that is getting ripped off like me. Big spenders are getting a pat on the back and budget-conscious, black-coffee lovers are being snubbed. The numbers make that pretty clear.
What’s a caffeine-lover to do? Well, there’s a local coffee shop that’s not as conveniently located, but looks more appealing these days. They just give customers an old school paper punch card that earns you a free drink after you purchase 12 drinks.
Are you a loyal Starbucks consumer who’s feeling a bit roasted by the reward program changes? Share your thoughts in the comments below. Meanwhile, I’m going to go refill my mug with some homemade java.