The New Starbucks Rewards loyalty program isn't such a Star
Everyone who has ever met me probably knows how much of a Starbuck's fanatic that I am or rather they are aware of my addiction to my favorite cup of Joe (except in my case, it's not Joe, it's Chai). My order is just weird enough that people who haven't seen me in years can still recite my recipe whenever they see me. I can honestly say that I've purchased a venti chai latte, 7 pumps, no water and no foam at least 5 times a week for more than ten years until last year, when I switched to a Grande chai, 6 pumps, no water & no foam. See, it's all in the pumps. Some baristas don't put enough muscle into priming the pump and some are a bit heavy handed. Then, there are those unicorn of a barista that can make the pump magic happen and my day is completely made.
I've been so consistent with this habit that baristas all over the world from where I travel frequently remember me and my order. I used to say that you know you travel too much when the baristas at the airport know your order. So, you could say that I would be a Starbucks brand loyalist. In fact, I don't frequent any other coffee shop equivalent because nobody does my beloved Chai like Starbucks, so I don't even try.
When Starbucks first launched their loyalty card back in 2010, it didn't take me a month to hit the magic 30 visits to get to gold card, a status I have maintained for the last six years. (Yay Me!) It even has one of the coveted card slots in my wallet.
The Starbucks Reward loyalty program was fairly simplistic as far as programs go. It was a frequency based program designed to encourage repeat traffic. It didn't care what you spent or how many items you purchased or even what those items were, it was simply one check = one visit and you were rewarded with one Star. There was even a clever visual on the website that animated the accumulation of your stars into a graphic cup. For awhile, there was even a direct mail piece celebrating the achievement of your 12 stars that you had to bring in and redeem at the store for the free drink. The time frames on the free drink offer started out at three months and over time, collapsed into a 30 day window. This is a loyalty program tactic that's called a "bounce back" used to drive that repeat visit faster and also to manage the discounts line item budget on the company's P/L. Starbuck's eventually figured out the internal mechanisms to "load" the free drink into the card member's account and the direct mail piece vanished (and there was probably much internal rejoicing at the reduced expense). The problem at the time was that they weren't too savvy with their email communications to let you know you received a free drink but they soon figured that out too. And over the course of time, they have continued to evolve the program and their mobile app to be the communication and payment tool for all things Starbucks.
It's been a program I have longed followed & have tried to emulate. I've always said that someday I will write a book called "Chasing Starbucks" as I have admired how they have continued to innovate in the digital and mobile space. Except that today, though they think they are innovating and moving forward, I think they may have taken a major step backwards to accomplish their ends.
Today, they have rolled out the New Starbuck's Rewards program with an email heralding that it's here.
Now, I've actually been following the communications leading up to the most auspicious event. It's just so exciting! (not) Now, instead of getting one Star based on your visits, you can get TWO stars for every dollar you spend. They've transition the program from a frequency based system to a points based currency program except that points are stars. Let's do the math on my grande chai latte with six pumps, no water & no foam. Since they raised the prices, my delicious daily chai costs $4.21 at my local Starbucks (your actual price may vary around your city, state & country). Now, for me to get a free $4.21 grande chai or even something slightly more expensive like a Venti chai at $4.53, I would have to visit 12 times.
Simple math for Kim's daily visit for one chai latte
12 (visits) x $4.21 (grande chai latte) = $50.52 (Kim's out of pocket expense for free drink < $5)
the magic number is 125 stars for free drink
Kim's daily spend of $4.21 (grande chai latte) = 8 stars
125 stars / 8 stars = 15.62 visits
15 (visits) x $4.21 (grande chai latte) = $63.52 (Kim's New out of pocket expense for free drink < $5)
This is a classic problem that all loyalty programs face when they change their programs: they tend to piss off their most loyal members. I'm sure that my buying behavior was in the vast minority of their member population. Nor do I spend enough annually for the company to even care about my possible defection. I get it. I had to do it myself when implementing other loyalty programs. It is an absolute fact that people who are in a programmatic engagement with a brand will spend more and visit more often. In a competitive marketplace, where less and less people are loyal to brands, businesses have to appeal to a broader segment of their base to increase revenues. That is what is the saddest part of most corporate loyalty programs, by pandering to the masses, you kill the loyalty of those who are most loyal.
Good for you Starbucks, you killed mine today.