Attention Starbucks customers—you just have until April 15 to use your rewards points based on the soon-to-be changing system. As previously announced, the Seattle barista will transition to a tier-based loyalty program. Most Starbucks customers are viewing this as basically a point devaluation. There will be less points required for something such as an espresso shot or basic coffee, but popular handcrafted beverages and food items such as sandwiches will require more points. Starbucks loyalists value these specialty products and dutifully collected points, or “stars” in Starbucks lingo, for these items. So now it will take more spending to enjoy the higher priced items on the menu. Time will tell how customers will react to the changes, but rest assured that Starbucks will be closely scrutinizing sales results as the new loyalty program takes effect. Suggestion to Starbucks—increase the periodic contest promotions and customized marketing offers. An engaged customer is one who spends more and comes in more frequently, with price being a secondary consideration.
A CNBC article discusses more on this topic which is excerpted below.
Starbucks announced plans to revamp its North American loyalty program in a bid to keep growing its membership as it continues rolling out delivery.
- Starbucks Rewards members will soon be able to redeem their “stars” for a wider range of redemption options.
- New members will also be able to start earning points for redemption right away.
- The changes will go into effect April 16.
In 2016, the company switched to a value-based program that awards customers with two “stars” for every $1 spent. The current iteration lets members receive a free food or drink item in exchange for 125 points. But starting April 16, members more eager to spend their points can start redeeming them at only 25 points.
The updated program will also eliminate the two tiers of Starbucks Rewards: green and gold levels. Before the changes, only gold members, who earned 300 points to ascend to that tier, were able to redeem their stars for free food or drink. The change is a bid to get new members more engaged with the program.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group