Starbucks has been giving out gold cards to their customers for a long time now. I myself have been a member since 2010 and tell a lot of people about the program. I love Starbucks' brand and am an avid tea drinker. Starbucks has positioned itself as the least exclusive exclusive club out there, there are branches in every major city, there's a secret language of special drinks that only the insiders know, they use dark colors, hard wood and leather sofas and arm chairs in their stores and put up vivid and exotic photos on the walls. All of this comes together to create an almost speakeasy-like environment, but one of their biggest strengths is that everyone feels included on every level of membership. Now I am a little upset at the decisions that Starbucks has made with their reward system, but I will do my best to look at it objectively from both sides to see what is really going on.
Previously, you would receive a mark or star for each purchase you make, like almost every other store punch card. You needed 12 stars to receive a free drink, 30 to maintain gold status for another year. There are other rewards like a free drink on your birthday, and free refills on simple drinks, but for the most part, the star system will be the biggest change. This approach rewarded everyone, whether they spent $1 or $50, with one star per purchase. This feeds directly into their no barrier of entry "exclusive club". Now, however, the tables have turned. Starting in April customers will receive 2 stars for each dollar they spend. This may sound great, but with the new ease of star earning comes an increase in price. Now a free drink will require 150 stars; that's 1 free drink for almost $75 spent. To maintain "gold status" you must earn 300 stars per year or $150 in one year. To those that spend $50 per week at Starbucks, this is excellent news! But to everyone else this is a major let down.
Being objective, it's clear that Starbucks is trying to reward their big spending customers, and that's a great business move. It's no secret that the big spenders thought it was unfair that the low spenders got the same rewards after the same amount of transactions. Whoever spends more should get more. But when you take branding into business decisions, this becomes a much more complicated situation. Starbucks even said "For most members, this means earning rewards just as fast or faster than they do today, but for some, it might mean taking a little longer to get that free treat." If Starbucks is looking to grow to be a national or international brand, appealing to the people who don't have enough to spend almost $75 for a free drink might be turned away valuable business. What about the elderly or young, that saw this buy 12 get one free as just enough added value to choose Starbucks (an arguably premium brand) over Dunkin Donuts? Maybe the executives at Starbucks noticed the 80/20 principle in their finances and wanted to reward the 20% of their customers that provided 80% of their revenue, but I doubt it. In order to encourage people to buy more, it's usually helpful to dangle an achievable prize in front of all your customers, not just the ones that need it the least, which seems to be the wealthy city dwellers who get the same $7 drink every day.
What do you think? Weigh in below.