If Starbucks customers are lucky, the revamp of its loyalty program that has some up in arms will be the only cue it takes from the airline industry.
Undeterred by the complaints Delta, United and American heard when they overhauled their frequent flier programs to reward dollars spent over miles flown, Starbucks has announced it plans to pay back customers on the basis of how much they spend rather than how often they visit.
Starbucks said this is a change that customers in the Starbucks Rewards program requested.
Just betting those are customers who order fancy drinks and/or something food, not people who tend to order a simple coffee.
Also, it’s a fair guess they didn’t anticipate the company’s new math en route to free food or drink.
In April, customers in the United States, Canada and Puerto Rico will no longer reach gold status with 30 stars or 30 transactions, and then score free food with 12 stars.
Instead, with two stars awarded for each dollar spent, it will take 300 stars to get to gold and 125 stars for gold members to get freebies.
Accepting the company’s estimate that the typical customer spends about $5 per visit, that’s still about 30 visits to get gold but roughly 12.5 visits to get a bonus.
For those who spend closer to $3 or $4 per visit, it’s a lot worse, and they have roundly complained about it on social media.
If it means anything, Starbucks is helping customers hit their benchmarks faster. The company has managed to up its prices a little here and there despite the commodity price of coffee slipping around 45 percent from a peak in October 2014.
Coffee is just a small part of the overall Starbucks experience and the beans account for only about 10 percent to 20 percent of its overall costs, depending on who you ask. Real estate, equipment, wages, benefits, marketing aren’t cheap.
For shareholders, margins and revenue matter more than volume, and the bottom line is that Starbucks can define and reward its best customers any way it wishes. After all, the point of this loyalty exercise is to increase sales.
So it’s going to dangle special offers to lure visitors when business might otherwise be a bit slow.
It’s also streamlining its membership levels from three to two, giving some benefits for customers who simply download the loyalty app, letting the company mine their data and pitch them on stopping by when near a store.
But if thriftier loyalists who expected to reach the gold level with 30 visits now find it takes 40 or more, they have every right to reconsider their dedication, as Starbucks clearly has reconsidered its dedication to them.
In the eyes of the number crunchers at Starbucks, you are what you spend, and they have already doubtlessly accounted for the possibility some of those less lucrative regulars will take flight elsewhere. Just like the airlines.