The coffee giant announced it was revamping its rewards program in a push to attract new customers, in the midst of slowing traffic in its North American stores.
The company’s loyalty program makes up about 40 percent of its daily transactions. With the new version of the program, members still get two stars for every dollar spent, but the company is getting rid of the tiers and offering a wider range of items to redeem.
“We want to make the program more appealing to more people,” said Matthew Ryan, chief marketing officer at Starbucks. “We want members more engaged out of the gate.”
When the new changes go into effect on April 16, customers will have to spend $75 to redeem certain items at 150 points. A salad or a sandwich will cost even more: $100 for 200 points.
“We think the new rewards plan runs the risk of alienating the core customers,” Bernstein Analyst Sara Senatore wrote in the research note.
“With lower discounts on higher-value items, the program should be margin accretive – assuming no change to customer habits. But customers are savvy, and higher spenders are likely to recognize that the effect reward rate is lower (as much as 50 percent lower on some items).”
“We are confident the upcoming enhancements to Starbucks rewards will lead to the continued growth and customer enjoyment of the program,” Starbucks spokeswoman Maggie Jantzen said. “These changes will bring immediate value and increased choice to our members, and we’re looking forward to introducing them on April 16.”