Just because a loyalty program is offered doesn’t mean that it’s a good idea to get involved. For example, I don’t recommend joining car rental loyalty programs.
But the coffee titan recently announced a change to its program. So I did my research. After all, I’m a Starbucks fan. I don’t go there frequently, but I do go consistently. So if they had a loyalty program worth joining, I would be all over it.
Read on to hear what I discovered.
The program details
The plan as currently in place works as follows:
- Earn one “Star” for every visit (meaning every time you ring up a sale)
- 5 Stars in a year gets you the Green level, with some types of free refills and other goodies
- 30 Stars get you the Gold Level
- Every 12 Stars when Gold gets you a free drink
(They used to offer a free dairy-free option with the Gold level, which is right up my alley, but they eliminated this benefit a few years ago.)
But now, they are changing to the following:
- 2 stars per $1
- 300 Stars to Gold level
- 125 Stars when Gold gets you a free drink
What Starbucks has done is gone to a “revenue-based” reward system. Whereas before you would benefit based on the number of times that you visited Starbucks, now all that matters is how much you spend.
Going revenue-based performs two functions:
- It reduces the ability for customers to take advantage of the system
- It rewards higher spend customers over lower spend customers
For the first point, it used to be that if you were buying seven items (say, for your office), you could ask a (very patient) barista to ring it up as seven different sales. Voilà! Seven Stars where there once were one.
For the second point, you used to be able to get as many Stars for a cheap drink as an expensive one. So the person who ordered a $2 tea got as much benefit as someone who ordered a $12 triple venti frappumochamericanoccino.
No more. Now it’s all about the Benjamins. (Though thankfully, it’ll be a while yet before Starbucks prices get that high.)
Starbucks and the airlines, BFFs
I get why Starbucks is doing this. The bean counters want to encourage spend, and this seems like a way to do it.
Incidentally, this is exactly what the three major US airlines have done over the past few years. It used to be that you would earn frequent flyer miles based on the distance traveled (you know: “miles”). But these days, Delta, America, and United all give points based on how much you’ve spent (though with bonuses for elite customers).
This means that the exact same things that have happened with coffee and flights: people can no longer fly on cheap tickets to distant places and earn as many miles as an expensive trip. Spend more, earn more. That’s it.
(Pssst. Please don’t tell Alaska Airlines about what all the other airlines are doing. Thanks.)
Why none of this really matters
All of this analysis has conveniently left out one important and damning piece of the puzzle that’s not changing: In order to receive any Stars, you still have to use money stored on your Starbucks Card. There is no other way to earn Stars.
The Starbucks Card is a reloadable gift card-like product. You add money to it, and then you pay for purchases that way.
And this one crucial feature is why I can’t countenance the entire program: When you add money to a gift card, it induces you to spend more.
How a gift card induces you to spend more
If you go to a store and put $50 on a gift card, and then carry the gift card around in your wallet, you have divorced the pain of purchase from the pleasure of spend. And it is the combination of both happening simultaneously that can psychologically put a check on your spending.
But once you have money on a card, it feels like free money! Yay! Make that a venti!
On top of that, this is a gift card that needs to be used at Starbucks. So you are induced to spend money on Starbucks over other places. I get it, but that’s not playing nice.
Even if you hate Starbucks, this is an important lesson to keep in mind. There are situations out there that will induce you to spend money, and they are the situations to be wary of. If we’re not vigilant, we can be tricked into spending more money than we want to, sometimes in large amounts. Over time, these situations can sap your reserves, and keep you from being able to spend on the things that really matter and really benefit you and others.
Make no mistake, there are no sour grapes here. I am a Starbucks customer who would have benefited from these changes. My Starbucks drink of choice is the grande soy chai tea latte, which is usually in the $5 range. That’s a high-ticket item, and I’d earn more rewards now than I would have under the old system.
But until Starbucks opens up its reward system to allow people to pay with whatever method of payment they choose, I will continue to not recommend using the program.
But by all means, keep going to Starbucks if you want to. Especially if you have accounted for it in this category. I know I will.
But enough about me. What do you think about the changes to the Starbucks reward program?
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