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How will the New Starbucks Rewards Program Impact their Brand?

 
March 4, 2016

Starbucks is known for their strong customer-brand connection. With a strong mission statement: To inspire and nurture the human spirit one person, one cup and one neighborhood at a time, and the ability to create an environment of warmth and belonging where everyone is welcome, Starbucks has become one of the most loved and admired brands of all time.

It is no surprise that the Starbucks Loyalty program is recognized as one of the most successful loyalty programs in the market today. The reward program uses a simple point systemone star (point) for every purchase with only 12 stars needed for a free reward.  

Now, all thats about to change! 

                             New-Starbucks-Rewards

On Monday, February 22, Starbucks announced a new rewards program that has left many once-loyal customers feeling very unhappy and upset. Starting April, customers will earn two stars for every dollar spent. With the new system, it will take 125 stars to earn a free treat, versus the 12 stars required in the current program.

Customers wasted no time expressing their displeasure on Twitter.

Starbucks claims the new Rewards Program is in response to the number one request they heard from members.

With the current plan, where customers earn a star for every purchase, some customers asked baristas to ring up multiple item purchases separately so they could earn more stars. This resulted in longer wait times for other customer in line. In addition, Starbucks said that many customers who purchased more expensive items felt that rewarding dollars spent was more fair.

While this may have been the number one request Starbucks heard from members, it is quite clear it does not reflect the views of another large group loyal customers as can be seen by all of the negative tweets on #StarbucksRewards.

The way the news of the new plan was communicated has been critisized too. The new loyalty plan was announced with a cryptic email to frequent customers that made them click through to the Starbucks Rewards website for full details.

One of Starbucks values is: Being present, connecting with transparency, dignity and respect. I have no desire to seem self-righteous and use their values to strike back at them. I am actually a loyal Starbucks customer myself. I am surprised, however, to see all the kerfuffle around this new plan. Did Starbucks do their homework? Is all the reaction on Twitter from a small, vocal minority?

Other food establishments have already replaced programs that offer deals that increase the dollar per order. McDonalds has introduced the McPick 2 menu where the customer can select two items for $2 to replace their dollar menu. Wendys offers a 4 for 4 menu which helped them boost sales.

Is this Starbucks ultimate goal too to increase the amount each customer spends with each order? The more you spend, the faster you will earn rewards under the new system. Could Starbucks have been more transparent about their objectives?

It is difficult to know if the new rewards program will have a significant impact on the Starbucks brand. It is clear, that in the short-term, Starbucks will lose some customers.

It will be interesting to watch how they deal with the current backlash and the impact this controversy has on the Starbucks brand.

Kathleen Holm is Marketing Director of the TCS Digital Software & Solutions (DS&S) Group. She has more than 25 years of experience marketing technology software and services to enterprises worldwide. She leverages her extensive background in enterprise software technology to help organizations develop effective marketing strategies, create targeted messaging and positioning, and implement effective go-to-market plans to improve corporate performance. Prior to joining TCS, Kathleen was a Senior Principal of technical product marketing for Oracle Fusion Middleware where she was responsible for defining the marketing strategy based on industry maturity and customer trends. She also held positions at IBM including Market Manager for WebSphere Developer Programs, Market Manager for Tivoli Integrated Service Management and Tivoli Brand Specialist. Prior to joining IBM, Kathleen worked with four high-tech startups.