The company told press and investors on a conference call this morning that the changes to its loyalty rewards plan for U.S., Canada, and Puerto Rico will start in April, again, as predicted, based on feedback from members.
“The move will provide opportunities for our customers to earn more rewards each time they visit,” chief strategy officer Matt Ryan said.
It’ll also serve to speed things up, which will make customers and baristas alike happy, he explained. As the system stands now, about 1% of customers were pulling a move called “transaction splitting,” which works exactly how it sounds — rewards members would ask to purchase items in separate transactions, so they could earn a reward point for each one.
That leads to some dissatisfaction in the process, Ryan noted, as it can extend the transaction time, which can be “challenging to other customers and baristas.”
This new system will remove that distraction, he says.
Another aspect of the program that we reported on last week was also confirmed: Starbucks will remove the “Welcome” member status tier, and instead, any new member will automatically achieve Green level status.
This is a win-win for customers and for Starbucks, Ryan says, because customers still have to spend about the same amount of real money to reach a reward. Currently, program customers get a star for every transaction, which at Gold Level averages about $5 per star. They then earn a reward at 12 stars, or after spending around $60.
Under the new system, the threshold to earn a reward is raised to 125 stars, so you’ll earn enough to reach that level by spending $62.50.
This means that if you’re usually spending less than that average $5 a visit for a Gold member, this new system won’t benefit you. For example: if you buy a $3 coffee on your way to work every day under the current system, you’d reach 12 stars after spending about $36 on 12 visits. With the new system, it’ll take you a bit longer: racking up six stars per $3 daily coffee, it will take you 20.8 visits or 20.8 of those daily coffees to collect 125 stars, spending $62.40 to trigger that reward.
Ryan says that while these changes in other companies are used as a way to reduce the value of the reward, Starbucks is not using the change to weaken its reward system.
As an added incentive, in mid-April, any customer making a transaction at the first level will reach Gold member status for a full year. And anyone making a transaction at the Gold level will get it extended for a year, so that “anyone on the way to Gold will get there,” Ryan notes.
Members won’t lose any value when the program switches over in April, Starbucks confirms: each individual star in your account will convert to 11 stars, a slight adjustment up in the customer’s favor, Ryan said.
Customers with questions can visit Starbucks.com/morestars, which, unlike last Friday, is now a working site.
Since the news hit, many customers are displeased that they’ll have to visit more often or spend more money to trigger those free rewards.
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