In late March, coffee giant Starbucks announced upcoming changes to the company’s Rewards Program. The changes include offering more redemption options. Analysts, however, are unsure whether Starbucks clients will like the updates to the rewards program.

Starbucks Is Working to Boost Regular Customers

Since the coffee market has become increasingly competitive, Starbucks has found itself dealing with reduced foot traffic in North America. The changes to the rewards program are one of several ways that the coffee chain is trying to get clients to return daily. Another method is investing in the various cold beverages on offer. Starbucks feels that changes to the rewards program, when done right, can help with this goal, as around 40 percent of daily transactions are from rewards accounts.

The Changes

The Starbucks rewards program continues to give members two stars for each dollar spent. There are no longer, however, two tiers of rewards. Additionally, members now have more options for redemptions. These can be something small like customizing a drink with 25 stars to using 400 stars to get at-home coffee or select merchandise.

Before the changes, members could get free drinks or food items for 125 points. Although this is the same set fee for all products, it is more affordable than the updated version. Now, members will need to spend 150 stars to get a hot breakfast, parfait, or handcrafted drink. This effectively means they must have spent $75 instead of the previous $62.50. Salads and lunch sandwiches now cost even more stars, up to 200.

Expert Criticism

Experts in the industry feel that Starbucks customers are savvy and will notice that they must now spend more to get similar rewards. They expect a repeat of 2016 when Starbucks changed its program for rewards and faced backlash on social media.

Even so, Starbucks continued to indicate confidence in their program changes. It expects the increase in choices as well as value levels to compensate for the slightly worse discounts. The changes officially went into effect on April 16.

The Goal

The goal of the changes to the rewards program is to appeal to more customers. The Starbucks Chief Marketing Director, Matthew Ryan, indicated that they want to engage more members immediately.

Source:

https://www.cnbc.com/2019/03/29/starbucks-rewards-program-changes-could-alienate-customers-bernstein.html

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