business news in context, analysis with attitude

Starbucks said yesterday that it plans to make changes to its mobile app-based loyalty program, making it easier for members to accumulate points and then cash them in for free items.

CNBC writes that while “the number of rewards members increased 14 percent from the first quarter a year earlier,” and now claims “more than 16.3 million people as active members, who account for about 40 percent of Starbucks' transactions,” the coffee retailer “has struggled to keep customers coming back as its latest drink innovations have largely fallen flat with consumers.”

It has, however, “been more successful persuading customers to use its mobile app, which lets them skip the long line by ordering and paying ahead of time. The app also builds awareness for the program by pushing nonmembers to join and gives the company more access to customer data, which can help them fine-tune promotions and new products. And as Starbucks prepares to launch delivery to a quarter of its stores by the spring with UberEats, it's working to add delivery orders as another capability of the Rewards app.”

The revised program will “eliminate the two tiers of Starbucks Rewards: green and gold levels. Before the changes, only gold members, who earned 300 points to ascend to that tier, were able to redeem their stars for free food or drink.”

The cashing-in options will range from the use of 25 stars to get an espresso shot to 400 stars for select merchandise or at-home coffee.

Customers get two stars for every $1 spent.
KC's View:
Simpler is better, I suppose, but this feels a little desperate on Starbucks’ part.

It does seem a bit like heightened competition is having an impact, and this is Starbucks responding to new competitive realities, as opposed to setting the competitive tone.