Starbucks revealed an adjustment to its loyalty rewards system this week.
And customers erupted.
Actually, to be precise: the cheapest customers erupted.
Thanks @Starbucks for punishing those of us who enjoy regular black coffee. #rewards #stars #customerservice— Tim Petersen (@TPete316) February 22, 2016
Contrary to widespread belief, for most shoppers who buy more than plain black coffee, the overall value of the program will remain the same — and for many, it will actually improve.
Before you storm Twitter with indignation, pause to look at the actual figures (and a touch of business sense).
What’s Different?
Beginning in April, the updated rewards program will give members two stars per $1 spent.
Customers must accumulate 300 stars to reach “Gold” status, after which they’ll receive a complimentary drink or food item for every extra 125 points earned.
The existing program grants one point per visit, regardless of how much you spend.
Under the current setup it takes 30 stars to reach Gold, plus 12 more stars to claim a free food or beverage.
Under the new structure, everyone needs to spend $62.50 to get a freebie.
To Keep Things the Same, Average $5.20 Per Visit
If you typically spend just over $5 each trip, your rewards won’t change.
You’d earn your free reward after 12 visits if you average $5.20 per visit.
That could be achieved with a Grande Fresh Brewed Coffee ($2.10) and a Turkey Bacon Breakfast Sandwich ($3.45).
Frequent Customers May Get Twice as Many Freebies Monthly
Starbucks says the new plan “reflects the number one request [heard] from members: more Stars awarded based on what you buy, no matter how often you visit.”
Under the revamped program, the typical loyal customer will receive the same perks in fewer trips.
To see net improvement under the change, you need to spend at least $5.60 per visit.
A study across five large cities found the average Starbucks transaction is $7.67, according to research.
The average customer drops by six times a month, while the most devoted 20% visit about 16 times monthly, Business Insider reports.
Using those numbers, the average loyal customer will earn two complimentary drinks a month, rather than 1.3 under the current program.
Here’s the math…
At one star per visit, the average loyal shopper would collect 16 stars a month under the present program.
At two stars per dollar, given the average ticket size, the updated plan would net that customer 245.44 stars each month.
If one of those visits is the new monthly Double Star Day, you’d rake in 260.78 stars monthly — equal to two free items.
If You Spend Under $5 Each Visit
Some patrons will see less value from the rewards system.
If your average visit is under $5, expect to come more frequently to get the same freebies.
For instance, a customer who always orders a Grande Skinny Vanilla Latte would need about 15.8 visits to nab a free drink — versus 12 visits before.
If you were getting a Grande Fresh Brewed Coffee and earning one star per visit, you’d previously have spent only $25.20 to get a free drink.
Now you’ll be required to spend $62.50.
But keep in mind: you’re spending roughly one-quarter of what an average Starbucks customer does.
Those spending four times more are, from the company’s perspective, more “loyal” to the brand, so they receive richer loyalty benefits (that’s the business logic referenced earlier).
How to Win If You Mainly Buy Brewed Coffee
If you’re a brewed-coffee regular and upset by the modification, here’s a tactic to stretch your dollars.
Purchase Starbucks beans from the grocery store oronline, then brew at home.
By coffee-shop standards, a one-pound bag of Starbucks beans makes about 64 five-ounce cups — roughly 21 Grande (16-ounce) servings.
This 1-pound bag of coffeepriced at $14.95 can replace $44.10 worth of shop-bought coffee — saving you $29.15.
Also consider ways to reduce your in-store spending while still getting value, like bulk purchasing and brewing at home — or learning how to get the most out of a K-cup by reusing k cups.
Extra Ways to Save on Starbucks
Beyond earning stars for purchases, you can snag bonus stars for referring friends to the program.
You can also stretch your budget by buying discounted Starbucks gift cards online and loading the balance to your account.
Use these strategies to increase value at Starbucks, but be aware that tactics that cut costs often mean you’ll rack up fewer points.
Your Turn: Are you a Gold member? How will the revamped Starbucks rewards plan change your coffee routine?
