Starbucks Hates the Average Joe: A better solution for all parties involved.
And just like that, they sacrificed the many to appease the few.
This morning while drinking my grande Pike Place coffee and marking company emails as ‘read’, I came across something that changed the course on-the-go coffee drinking future. Starbucks’ mid-morning revelation of the new Starbucks Rewards program is dropped on us like the January stock market. Gone is the star per visit to the chain and the Lucky Dozen loyalty reward that allows you redeem it for any item on the menu. In its place is a 2 Stars for every $1 spent on its various items. Sounds great right? Starbucks’ patron far and wide would love nothing more than to have more stars to name. Bring on the rewards! Well, not exactly. Now, in order to redeem your loyalty reward you earn 125 Stars, as a gold member, to receive your precious free skinny latte or in case of many others — just a free coffee.
This program does solve an issue for many when it comes to the loyalty program. That issue being that someone purchased three items for $13 getting the same measly star as another who spend $3 on a single item. No longer do I have to stand in line and after I purchase my coffee I say, “Wait, you know what? I think I would like a turkey bacon sandwich too.” Just to get my 2 stars instead 1 star for my $7 spent (don’t judge me). And I think that’s great. The problem is that the majority of the time I am just ordering my grande Pike and going about my business. This new program hurt me, and many others like me, in the worst way possible. I could go about my work days knowing that special drink was never too far away. Doing the math: 12 days x $2.25 for a grande pike with with tax is $27. Every $27 or so I spent with the company I was rewarded with a free drink. Now, doing the math with the new loyalty program: 125 stars / 4.5 stars = 28 trips (rounded). This takes into account partial star accumulation but still means I have to spend $62.50 before I get my free reward assuming they count taxes (or $63 since I can’t take a partial trip). That’s more than double what I had to spend before! Not to mention that I have to achieve this before I get my 125 star rewards!
As you can see, this new rewards program is terrible for average Joe who just want a cup of the same while being able to feel appreciated for the patronage. Not to mention that now it takes 300 stars to achieve gold status which will take me 67 trips and cost $150+ compared to $67.50 in my personal example — again, more than double what I use to spend.
To be fair, there is something to be said about the free in-store refills on brewed coffee and tea now being available at the green level. But this only benefits those who have the time to sit in the store while the rest of gain no substantive benefit.
If Starbucks had any sense and really want all of their customers, there was an approach available to them hiding in plain sight:
Just give a star per regular item and credit your account the average amount spent per item after each dozen.
Crediting the average of the last dozen would solve the problems of small and large purchasers. Those who purchase the more expensive items get to redeem an expensive item. Those who spend small with tall coffees will redeem a small coffee and may even be encouraged to spend more per item every now and again to get a better reward. Everybody wins.
Starbucks is taking a serious gamble here. Fewer big spenders will be rewarded while many small ones will be forced to consider their options. Let's, be honest here, the rewards was the only thing the justified the price paid for many of us. There are tons of smaller, local cafés, many of which with better tasting coffee, that are vying for our business. Which begs the question if you’re spending a substantial amount for a small reward, is it really even a reward?
At a time where wages are stagnant and people still question the state of our economy it just seems in bad taste to ask more and give less. Time will only tell if this strategy will work out in your favor. Until then, Starbucks, you really ruined a good thing.