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Once Twitter backlash subsides, do changes to Starbucks rewards program matter?

A man sits inside a New York Starbucks, which is changing the terms of its rewards program so that people who just get a regular cup of coffee will have to spend significantly more to earn a freebie. The Seattle-based coffee chain says its loyalty program will award stars based on the dollars spent starting in April. [AP Photo]
A man sits inside a New York Starbucks, which is changing the terms of its rewards program so that people who just get a regular cup of coffee will have to spend significantly more to earn a freebie. The Seattle-based coffee chain says its loyalty program will award stars based on the dollars spent starting in April. [AP Photo]
Published Feb. 25, 2016

Days ago, coffee giant Starbucks announced a change to its customer loyalty program that instantly angered the very base the company claimed it was trying to benefit.

Disgruntled mocha drinkers took to social media, complaining that the new rewards system, which emphasizes dollars spent instead of visits made, would punish customers who shop regularly but purchase less expensive items.

Currently, Gold members receive one star on their card each time they make a purchase at Starbucks. It takes 12 stars to win a free reward. Starting in April, a member will receive two stars for every $1 spent, and it will take 125 stars to earn a free reward.

Starbucks told members the change was the No. 1 requested update.

Fans of the $4.75 iced caramel macchiato rejoiced. Those used to sipping from the under $2 menu did not.

The new #starbucksrewards is what happens when your company is greedy & desperate. @Starbucks

But in a consumer climate saturated with customer loyalty programs, such changes and the inevitable backlashes they ignite may matter little once the Twitter temper tantrums subside.

Now, companies are tapping into strategies that some retail analysts argue are more effective than free giveaways, especially considering the average household keeps as many as 18 loyalty cards but only actively uses eight.

"They're not really loyal, they're just trying to game the system for the best deal they can get," said Steve Kirn, executive director of the David F. Miller Retailing Education and Research Center at the University of Florida.

Now more than ever, customer loyalty is being developed through community consciousness. Consumers want to support companies that feel personal and have missions beyond turning a profit.

"You not only have to give a service, but you have to act like you care," said New York based retail analyst Faith Hope Consolo.

Kirn agreed.

"What I see is that people are doing more to create an emotional connection with their customers," he said.

And they're using social media to do it.

Take Publix for example. The grocery store doesn't offer a loyalty card like competitor Winn Dixie, but focuses on high-quality customer service and has launched a whole campaign encouraging customers to think about the chain in an intimate way. Online, customers can share heartwarming tales using the hashtag #MyPublixStory.

"Publix doesn't use a loyalty card, but people feel pretty fiercely connected to them," Kirn said.

And companies that have attached their brand to a specific cause, like climate change, are seeing even more loyalty, especially among younger consumers.

A 2014 Nielsen study showed that 55 percent of global online consumers were willing to pay more for products and services from companies committed to positive social and environmental change. Among that group, more than half were millennials, age 21-34.

"Consumers around the world are saying loud and clear that a brand's social purpose is among the factors that influence purchase decisions," Amy Fenton, Nielsen global leader of public development and sustainability, said in a news release about the study. "This behavior is on the rise and it provides opportunities for meaningful impact in our communities, in addition to helping to grow share for brands."

Outdoor clothing and gear company Patagonia has made environmental responsibility a central mission, Kirn said. Vermont-based ice cream company Ben and Jerry's has long advocated for a litany of social issues, including climate change action, LGBT rights, fair trade and campaign finance reform.

"It nevertheless shows that retailers and national chains are really looking at how to appeal to that sense of community," said retail consultant Jerry Hoffman, president of Hoffman Strategy Group.

Yet loyalty programs still have their place, most importantly as a way to track customer habits and collect data. Decades ago, these tracking methods were often limited to a little black book with a list customer names. Now, loyalty cards that provide companies real-time information that they can use to adjust to customer needs.

"Everyone is doing something to bring the customers back or keep them," Consolo said. "Give backs, bargains, discounts, loyalty programs, they're kind of all in one big basket. It just says that the consumer today, no matter if they're shopping luxury or discounts, they're expecting something."

Starbucks was reminded of that this week.

Well @Starbucks you just removed the only reason this gold member chose you over competitors. @starbucksgold #StarbucksRewards #badcall

Dear @Starbucks: time to say, "good-bye." Your new #StarbucksRewards program doesn't work for me. It is you, not me. pic.twitter.com/VsORJOHia2

Some customers even threatened to try Dunkin' Donuts.

"(Loyalty programs) are very hard to change because people have an expectation for what they're going to get," Kirn said. "It's a fundamental issue, not just for Starbucks, but for everybody else. It's one of the reasons companies are reluctant to even start them."

Contact Katie Mettler at kmettler@tampabay.com or (813) 226-3446. Follow @kemettler.