Starbucks has announced plans to revamp its North American loyalty program in order to continue its rapid membership growth. The American coffeehouse chain announced this ahead of its’ annual shareholder's meeting slated Wednesday, March 20, 2019.
Coffee markets in the U.S. and Canada have become more competitive than that it has ever being, giving room to rivals such as McDonald’s and Dunkin’ Brands to invest in their own java offerings. Restaurant Brands International’s Burger King announced last week that if customers order for coffee through their app, they will be paying just $5 for a whole month of coffee. Meanwhile, $5 happens to be the cost of a Starbucks cappuccino. Also, Craft coffee shops with their high-end beverages have not ceased from implementing new strategies to lure coffee consumers.
Aside from the above-mentioned competitors, other restaurant companies have also invested in their app-based rewards programs, just to keep their consumer’s loyalty.
In an interview with CNBC, Starbucks chief marketing officer Matthew Ryan said the company has established the definitive loyalty program in their space. Regarding its competitors, “they’re trying to be the best” Matthew said, adding that “It’s a little hard for them [Starbucks competitors] to catch up to where we are right now.”
Starbucks has had some kind of difficulties in making customers come back. Even its latest drink innovations did not quite go down well with consumers. During Starbucks first quarter, same-store sales recorded a 4% growth in sales, with 3% coming from average check size increase. For now, coffee chains have focused on drinks that drive brand affinity such as the Nitro Cold Brew.
However, Starbucks has succeeded in convincing customers to come back through its app. The app helps customers to order and as well as pay ahead of time, thereby skipping long queues. It also helps the company in fine-tuning promotions and new products by providing access to customers’ data and in providing required awareness for the program. Currently, Starbucks is preparing to unveil delivery service to a quarter of the company’s stores by the spring with UberEats. Alongside this preparation, the company is making plans to add delivery orders to the rewards app.
Three years ago, Starbucks started a value-based program that gifts customers’ two stars as they spend $1. However, after several iterations to the program, members can now receive free foods or drink items for an accumulated 125 points. Starbucks said the points can now be redeemed by members once it’s up to 25 points starting from April 16.
New Starbucks redemption options taking effect from April 16 are listed below
|25 stars||dairy substitute, additional flavor or an espresso shot|
|50 stars||hot tea, bakery item or brewed hot coffee|
|150 stars||Hot breakfast, parfait or handcrafted drink|
|200 stars||Lunch sandwich, salad or protein box|
|400 stars||At-home coffee or select merchandise|
Another change taking effect from April 16 is to take points hoarders into account. Those members whose loyalty program membership is attached to their prepaid card or Starbucks Rewards Visa credit card won’t have to worry again about their points expiring. The current rule implies that all gold level points will expire six months after the month they are earned.