People are freaking out over the massive changes Starbucks is making to its rewards program. Here's what you need to know.
- Starbucks is rolling out its new rewards program on Tuesday, with a series of massive changes.
- Customers are freaking out over disappearing stars and concerns that they will have to spend more money to earn certain popular rewards.
- In some cases, customers are right to worry.
Starbucks is making some massive changes to its rewards program, sending coffee lovers into a frenzy.On Tuesday, the coffee giant is rolling out its new rewards program. The new system changes how many stars customers will have to earn to get free food and beverage rewards. Advertisement
Read more: Starbucks is revamping its rewards program so that customers can get free treats faster
Starbucks is famous for its rewards program, which is seen as one of the best in the restaurant business. In January, the company reported that its rewards program had 16.3 million active members in the US, an increase of 14% year-over-year.With such a massive customer base, tweaking Starbucks Rewards can be a risky game. And, customers are already worried that they could be ripped off under the new system as Starbucks works to win over more casual coffee drinkers.
Here are the biggest reasons why people are freaking out.
Disappearing starsMany people are freaking out about the disappearance of their stars, which Starbucks Rewards members can cash in for food, drinks, and other rewards. "We're resetting your Star balance with this change," Starbucks explained in an email to "green" loyalty program members. "Because tomorrow, every new Star you earn will add up to Rewards, big and small - that means more of your favorites free." Advertisement
Previously, customers became "green" members when they first signed up for the loyalty program.
If you have already achieved Starbucks gold status by earning more than 300 stars in the past year, don't worry - you'll get to keep the stars you have earned.However, if you aren't a Starbucks gold member, it looks like you are going to lose all your stars. Advertisement
Starbucks did not immediately respond to Business Insider's request for comment. Advertisement
People have to spend more to get some of their favorite drinksWhile some people are freaking out about losing stars, even more are worried about stars being "devalued."
Previously, customers could cash in 125 stars for any food or beverage item. Customers typically earned two stars for every $1 they spent.Under the new program, customers will continue to earn two stars for every dollar spent. However, the chain will now offer a tiered program, with customers being able to cash in stars after spending less money.Advertisement
When they earn 25 stars, customers can now customize their drink with an extra shot, flavor, or dairy substitute; at 50 stars, they can get a brewed hot coffee or tea or a bakery item; at 150, they can get a handcrafted drink or breakfast; at 200, they can get lunch; and at 400 stars they can get select merchandise and bagged coffee.Handcrafted drinks and food are some of the most popular rewards. Since these items will now "cost" 150 stars instead of 125, many people are already displeased with the change. Advertisement
So, is it actually a worse deal?
In the old program, customers would have to spend $62.50 to get a free drink or food item, which Mizuho Securities estimates to be worth roughly $5.50. Strategic customers might get a more expensive food item or beverage, but that's about a 9% return.With the new program, customers can get a brewed coffee or bakery item after spending just $25, an 11% yield. But, it is objectively a worse deal for handcrafted drinks and breakfast sandwiches. Under the new program, customers will need to spend $75 to get the roughly $6 item for free, an 8% return on investment. Advertisement
Starbucks super-fans are losing their advantage
As of Tuesday, it will no longer matter if you're a loyalist or using the rewards program for the first time."Currently there are two levels to the Starbucks Rewards program," a representative for Starbucks told INSIDER when the change was announced. "Starting April 16, Starbucks Rewards will move to a single-level program where all members can begin to earn Stars toward free Rewards from the day they join."Advertisement
Some analysts are predicting that Starbucks loyalists might feel betrayed, as gold members and new members alike will receive the same rewards. Mizuho analyst Jeremy Scott said he expects "some noise with some of its more loyal members" in response to the change.
"Through a new tiered redemption system, the program will meaningfully increase the rewards yield for 'entry-level' customers while reducing the yield for its more premium members," Scott wrote in a recent note. "The move is a reversal of sorts from the 2016 transition, which benefited larger spenders, but it's in concert with the company's strategy to grow frequency among its more casual customers."
Stores could be more chaoticStarbucks customers will likely have to deal with a bit of chaos as employees and coffee lovers transition to the new points system. Advertisement
"[W]e expect most of the headaches will come from customer confusion with the new system, especially in-store, where it may take an extra beat in the transaction," Scott wrote in his note."Your account information may take a little longer than usual to update or be unavailable while we make these exciting changes," Starbucks said in an email to customers on Monday. "We thank you in advance for your patience." Advertisement
Hey @Starbucks I'm 20 stars away from reaching Gold Status and getting my gold card but now you're about to restart my star balance. I WANTED MY GOLD CARD!- Jenni Mares (@jen_mares) April 15, 2019
@Starbucks is resetting stars tomorrow really necessary? It's still two stars for every dollar. So, why do you have to take all stars already earned away? You're using this new reward tier change as an illogical excuse to reset our stars. Really frustrating.- Nicholas James (@nicholas_james1) April 15, 2019
Dear @Starbucks, are you KIDDING ME?!?! I've spent enough money to get to almost gold status and I get an email today telling me TOMORROW YOU'RE RESETTING ME BACK TO ZERO? Done. Never buying @StarbucksCanada again. pic.twitter.com/L4srUK3936- Shannon Tatlock (@shannontatlock) April 15, 2019
It's outrageous. What a rip! So now you have to spend $75 dollars to get a free drink? It used to be sound $36. What a rip! I'm done playing the stupid stars collection game.- mommytaps (@fatcat8250) April 15, 2019
The original #starbucks program was 12 stars (or 12 drinks). If you estimate $3 to $4 per, it was $36-48. Then, it moved to 125 - $62.5. Same with the birthday rewards. It used to be a free drink in your birthday month. Then, it was same week. Now, it needs to be same day. https://t.co/hItf5aX8Tg- ashleigh (@AshDee04) April 15, 2019
PSA: final day before Starbucks rewards devaluation - last chance to get whatever you want from the menu for only 125 stars- Lawrence Valverde (@LVTravelWiz) April 15, 2019
Just got @Starbucks email about "exciting changes" to Star Rewards. Free drink now costs 150 Stars instead of 125. I guess that's exciting for THEM. The rest of us view it as a poor way to treat loyal customers.- Andy Collins (@AndyNY2) April 15, 2019
- How music has become the real social connector, and technology has helped democratize music in today’s digitally connected world
- EXCLUSIVE: Trump versus Biden — Here’s what the result of the US election could mean for India
- EXCLUSIVE: Why Tata Motors CEO is not worried about Musk's Tesla coming to India
- Chinese soldier strays across the border — detained by India , to be released soon
- FM Nirmala Sitharaman asks central PSUs to scale up capex in the current and next financial year