The Starbucks Reward Program and the Importance of Messaging
Several years ago when I was working at Target, I joined the Starbucks Rewards program to take advantage of their ubiquity even though I've never been a devotee.* It was common at Target to have 1:1 meetings at a coffee shop or to take a short walk to one for the sake of getting out of the office for a few minutes. I found myself there more often than ever before in my life, so joining was a pretty straightforward mathematical calculation and a case of there being no reason not to. Here's how the program works currently. Make 30 purchases in a year, and you reach "Gold" status. After that, for every 12 purchases you're rewarded with a freebie–whether food or drink. What's more, at that time our employee discount applied to gift cards purchased at Target stores, further driving down the cost of the company's otherwise overpriced offerings. Not bad, right?
It really was a pretty good deal, especially so for a low margin customer like me. All I ever really get is black coffee (which tastes kind of like dirt brewed in gasoline–seriously, it's only for the convenience) or black iced tea (which I actually quite like). For roughly every $30 I spent, I'd get a reward where it would take someone who gets orange mocha frappuccinos a lot more. Earning rewards on a per transaction basis is arguably too generous for customers like me or at least you can make a case that it's less fair to more lucrative customers.
I Do Not Think It Means What You Think It Means
It seems Starbucks caught on to this racket. The company announced on Monday that it is revamping its rewards program such that how much you spend will affect the rate at which you earn rewards and not the number of purchases made. This is fine and basically fair, and the company says it reflects customers' number one request for the rewards program–to be rewarded more for spending more.
— Starbucks Coffee (@Starbucks) February 22, 2016
There is, however, a pretty big catch, one about which people are not happy.
The changes to Starbucks Rewards not only makes it so that higher spenders earn more rewards; they simultaneously increase the cost to obtain them such that lower spenders like me will earn them much more slowly or not at all. Under the current system, someone who buys a $2.50 black coffee will spend $75 on 30 trips to get to Gold and begin earning the coveted freebies. From there, for every $30 spent a freebie could be earned. Under the new program, it'll take about $150 of spending to reach Gold and an additional $62.50 for rewards. For customers like me, it's about 100% cost increase for a reward, and that's assuming I spend enough to qualify for Gold in the first place (not that likely).
While many customers will complain, there are others who recognize that this is a good business strategy in that it encourages people to spend more. That's probably true, but it runs the risk of overestimating Starbucks' value as a premium product when for many customers, myself included, it may well be more of a fungible commodity product. This rewards program was the only deciding factor for me when generic chain coffee shops are the only option, and the devaluation considerably increases the likelihood I'll choose differently.
All of this is basically fine, but how they shared the message reallllly left something to be desired.
Starbucks to Customers: "Isn't This What You Wanted?"
I've been thinking about this change as someone who works in communication and writing, who worries about how a message is both shaped and received. On one hand, as a private company they can do whatever they want in this situation. They don't have to offer a rewards program at all!
But on the other, I think Starbucks is making a strange mistake in insisting that this is what customers wanted, the worst part of which is that framing it this way is half-true. The request to earn by the dollar was indeed the top customer request for the rewards program, but I think you'll be hard-pressed to find anyone who said they simultaneously wanted it to cost more to get rewards as well.
— Noah Lomax (@NoahLomax) February 22, 2016
In other words, give me the whole truth or a whole lie. If the company had said they thought it was simply fairer to reward high spenders more but that to do so it was necessary to raise the costs for others, people would have still hated it but they might have at least understood. I would have, at minimum. If they said the cost of the rewards program was too expensive for the company as structured, that would have been better regardless of whether it's even true. But don't tell me something that costs more is in my best interest, and definitely don't insist it's something I asked for. As it stands now, the company has treated some portion of its customer base like idiots, which seems a strange approach for a loyalty program.
If there's a lesson in this, here it is. Sometimes you'll have to give people bad news, but maybe don't make it sound like it was their idea.
*In fact, that ubiquity led me to write most of this post in Starbucks because it was the closest thing around. Here I am trash talking their rewards program right inside their walls. This is because I am obviously a brave and fearless rebel against authority.