Starbucks released a statement (‘Starbucks Announces Strategic Priorities to Accelerate Growth and Create Long-Term Shareholder Value‘) announcing a number of things, but the most relevant to us is the following:
In FY19, the company expects newer digital initiatives to contribute one to two points of comp growth in the U.S., supported by a redesigned Starbucks Rewards program that provides customers more choice around redemptions and payment, as well as expanded personalization capabilities for customers that have a digital relationship with the company.
Unfortunately that doesn’t really tell us that much and Starbucks has declined to comment further. Even though Starbucks is positioning this as an improvement my bet is that it will be a devaluation. In 2016 Starbucks moved to a rewards program where you earn stars based on how much you spend (2 stars per $1 spent), but on the redemption side a flat 125 Stars could be redeemed for a free reward. There is no cap on the free reward so users are better off redeeming rewards for high value items such as food or expensive custom coffees. I suspect Starbucks will move to a system where the redemption side will be tied in to how much the item costs. For example a Sandwich might cost 250 stars where a coffee might only cost 100 Stars.
When they talk about expanded personalization I suspect we are already seeing this with custom offers on the Hopscotch game for example. Obviously this is just speculation at this point though and it’s impossible to determine if this will be good or bad for consumers until we know the full details and even then if they move to dynamic redemptions it will probably depend on what you want to redeem rewards for.
Spot on: the new plan is a devaluation. While they’ve added some low-star and high-star possibilities, the key change is that their main drinks will be 150 stars. So you’ll get 20% fewer drinks under the new program.
This program will just get worse and worse. Time to switch to Dunkin Donuts.
“The company has added 5 million new digitally registered customers since April 2018…” I wonder how many of those drop off and don’t show up to buy anymore. (really, 5 million in two months, can someone tell me if that is that possibly true?)
I’ve grown weary of their constant errors on my orders, getting drinks that are only 2/3 full, and waiting for eons because they are serving the driver thru customers first.
Yeah it’s easily true, especially with the number of promotions they are churning out.
I stopped going to Starbucks for anything other than a doppio espresso, which is one of the least expensive things on their menu. The place is just not worth it, it’s glory days are well behind it, and no rewards program is going to change that, especially if there is devaluation.Starbucks will be flat or declining in the long term.
They should do something straightforward like DD Perks. I get free drinks all the time with it and I don’t have to go through any loops.
Might just be me, but I don’t think their intent is to give you free drinks all the time.
I’m sure how they plan on devaluing the program, but, if they do, I hope they realize that very few people will be inclined to use their credit cards. I don’t know if they care though about that market though. Thoughts?
There is a current promotion to get 325 stars by loading money through Chase Pay. Not sure if it is targeted. FYI.
I enjoy SB. I’ve had their loyalty program even before getting into churning. But if they keep nerfing this, they’re just going to lose more of my business. Dunkin is already cheaper; and quality local coffee shops keep popping up. Why would I go for something pricey without good rewards?
Why would you anyway if you have “quality local coffe shops popping up”? Starbucks is more expensive but indeed they are more tasty than their counterpart in a dollar coffee shop. That is true for any luxury item. You definitely pay a premium for it and it definitely can not compete with the “per $ value” of cheaper, mainstream item, but you can get everything just a little bit better. That little better is exactly what makes an iphone an iphone and people seem not against the idea of paying a grand on it.
I got to agree with Kaung. He hit all the points exactly with me. Exact same scenario.
I think you forgot to include the word “Rewards” in the title of the article.
Sure did, let me update.
Their personaliazation currently leaves a lot to be desired, definitely an area they can improve. A decent offer on stuff I like will serve to drive me into the store but I get so many lousy just for you ones that have nothing to do with what I purchase. (ie I won’t buy 3 breakfast sandwiches for 125 stars because I don’t like them).
One thing I’m counting on is losing value with any new program.