Starbucks Boosts “Rewards” With Revamped Loyalty Program

Posted by Stephanie Startz on November 3, 2009 01:34 PM

After home and work, there’s Starbucks: the “third place.” At least it used to be.

As sales decline, and consumers brew at home or visit competitors, Starbucks is struggling to rebound profits. Hoping to court customers back to the brand, Starbucks has retooled their loyalty program, discontinuing the year-old “Gold” in favor of “My Starbucks Rewards.” The program will go into effect December 26.

The new loyalty card cuts the 10% discount offered by the “Gold” program, and instead offers the equivalent of a local coffee shop punch card. Where “Gold” customers had to purchase a special card for $25, the “My Starbucks Reward” program is free. Consumers can load any denomination onto a gift card, register the card to protect the balance and begin accruing “stars.” For every purchase a customer makes using the card they earn a star. As customers accrue more stars they move onto better benefit levels.

The basic benefit level entitles customers to a free birthday drink. After earning five points, customers receive free in-store wi-fi (2 hours per day), free beverage customization, free brewed coffee refills, and a free tall beverage with purchase of whole beans. After accruing 30 stars customers receive a personalized card and a free drink after every 15 stars.

“My Starbucks Rewards” is a well-executed effort to better integrate the “third place” into consumer’s lives, creating stealth brand loyalty. (And to some extent, it's an antidote to Starbucks' off-brand campaign for its Via instant coffee.) As previously reported, consumers in test markets have been able to pay and participate using the “My Starbucks Rewards” iPhone app. The physical reward card and iPhone version remove the customer from the tangible concept of spending money. Starbucks is hoping that consumers will fall prey to the concept that having already loaded cash on the card, the drink is owed to them and practically free. Starbucks is expecting the card will not only encourage repeat visits, but will result in customers adopting a routine including Starbucks so to earn additional “stars” towards more free drinks.

The challenge to the success of the “My Starbucks Rewards” program is customer education. Undoubtedly, baristas will be expected to upsell the program to consumers coming in for their morning caffeine jolt. The rewards program may be too detail-intensive to consolidate into an elevator pitch. Will Starbucks sacrifice customer service and efficiency in exchange for a lengthy sales pitch from baristas?

More about: Starbucks, My Starbucks Rewards, iPhone, App, Loyalty Program, Via

Lance Winslow says:

Indeed, I completely concur with the challenges that Starbucks faces with this new program. In fact, it is some what of a turn off to me, as I recently got a generic email with all the details, and it was "Way Too Complicated" and somehow I feel like I will end up losing in the deal, or have to pay more and get fewer benefits in doing so. I don't like it as a customer, and as a branding consulting, I am thinking to myself; WTH?

November 4, 2009 05:22 AM #

Daryl Forkell says:

I'm not a Starbucks customer (although I used to be), but I am a marketing strategist and my current focus is a loyalty/rewards program for a rather large brand. So I'm always checking out other loyalty programs to see what kind of benefits they offer, what kind of purchase hurdles they require of consumers, and how they entice them to aspire to higher levels of rewards. It's unfortunate that Starbucks has made the communication of their new rewards program so complicated. But I'm happy to see they finally figured out that consumers shouldn't have to PAY to join a shopping rewards program. I mean, duh!

On a side note, I'm happy to see they retained the design direction of their "Gold" program. Even though the program structure was weak, it sure did look cool.

November 4, 2009 05:14 PM #

loyalty card says:

hai
Sounds like an awesome, creative way to better implement the loyalty card concept in store. The variety of rewards will be one of the keys to its success, I think - a blanket discount isn’t always appealing to people, and other freebies can 'sound' much more valuable. Go Starbucks!

December 10, 2009 05:47 AM #

Graham says:

Maybe I am one of the few who still take hats off to SBUX for the supply chain and store work, but no doubt, the brand has taken a beating. I would like the next version of Grande Expectations to have a solid chapter on a comeback story.

Any decent loyalty program needs t be simple, but also global - so I am intrigued to see how this plays out. As someone who spends about as many nights in my own bed than in a hotel/pension/airplane/airport as Clooney's character in "up in the air", whatever SBUX does much match it's "global neighbourhood" brand also in say, Switzerland, HK or UK. I'll check in after 26Dec...

December 16, 2009 08:16 AM #

kevin voccia says:

Branding people must live in a bubble.....this program has sent me and many others away from Starbucks. I gladly paid $25 for the 10% discount on every item. I always carried my Gold Card with me and last year spent thousands at Starbucks. Now Starbucks is asking me to loan it money with no real payoff except some card I may or may not receive in the mail. We are in the great recession and Starbucks rewards makes the consumer feel cheated.

February 23, 2010 04:50 AM #

replica bags says:

3333This model looks amazing..... when every new model launched by the companies..... the people get exited for few days.... in the same sense I was exited when this car was launched.......

Thanks for the article......

April 12, 2010 10:58 PM #