Starbucks is making some massive changes to its rewards program, sending coffee lovers into a frenzy.
On Tuesday, the coffee giant is rolling out its new rewards program. The new system changes how many stars customers will have to earn to get free food and beverage rewards.
Starbucks is famous for its rewards program, which is seen as one of the best in the restaurant business. In January, the company reported that its rewards program had 16.3 million active members in the US, an increase of 14% year-over-year.
With such a massive customer base, tweaking Starbucks Rewards can be a risky game. And, customers are already worried that they could be ripped off under the new system as Starbucks works to win over more casual coffee drinkers.
Here are the biggest reasons why people are freaking out.
Many people are freaking out about the disappearance of their stars, which Starbucks Rewards members can cash in for food, drinks, and other rewards.
“We’re resetting your Star balance with this change,” Starbucks explained in an email to “green” loyalty program members. “Because tomorrow, every new Star you earn will add up to Rewards, big and small — that means more of your favorites free.”
Previously, customers became “green” members when they first signed up for the loyalty program.
If you have already achieved Starbucks gold status by earning more than 300 stars in the past year, don’t worry — you’ll get to keep the stars you have earned.
However, if you aren’t a Starbucks gold member, it looks like you are going to lose all your stars.
Starbucks did not immediately respond to Business Insider’s request for comment.
While some people are freaking out about losing stars, even more are worried about stars being “devalued.”
Previously, customers could cash in 125 stars for any food or beverage item. Customers typically earned two stars for every $1 they spent.
Under the new program, customers will continue to earn two stars for every dollar spent. However, the chain will now offer a tiered program, with customers being able to cash in stars after spending less money.
When they earn 25 stars, customers can now customize their drink with an extra shot, flavor, or dairy substitute; at 50 stars, they can get a brewed hot coffee or tea or a bakery item; at 150, they can get a handcrafted drink or breakfast; at 200, they can get lunch; and at 400 stars they can get select merchandise and bagged coffee.
Handcrafted drinks and food are some of the most popular rewards. Since these items will now “cost” 150 stars instead of 125, many people are already displeased with the change.
So, is it actually a worse deal?
In the old program, customers would have to spend $62.50 to get a free drink or food item, which Mizuho Securities estimates to be worth roughly $5.50. Strategic customers might get a more expensive food item or beverage, but that’s about a 9% return.
With the new program, customers can get a brewed coffee or bakery item after spending just $25, an 11% yield. But, it is objectively a worse deal for handcrafted drinks and breakfast sandwiches. Under the new program, customers will need to spend $75 to get the roughly $6 item for free, an 8% return on investment.
As of Tuesday, it will no longer matter if you’re a loyalist or using the rewards program for the first time.
“Currently there are two levels to the Starbucks Rewards program,” a representative for Starbucks told INSIDER when the change was announced. “Starting April 16, Starbucks Rewards will move to a single-level program where all members can begin to earn Stars toward free Rewards from the day they join.”
Some analysts are predicting that Starbucks loyalists might feel betrayed, as gold members and new members alike will receive the same rewards. Mizuho analyst Jeremy Scott said he expects “some noise with some of its more loyal members” in response to the change.
“Through a new tiered redemption system, the program will meaningfully increase the rewards yield for ‘entry-level’ customers while reducing the yield for its more premium members,” Scott wrote in a recent note. “The move is a reversal of sorts from the 2016 transition, which benefited larger spenders, but it’s in concert with the company’s strategy to grow frequency among its more casual customers.”
Starbucks customers will likely have to deal with a bit of chaos as employees and coffee lovers transition to the new points system.
“[W]e expect most of the headaches will come from customer confusion with the new system, especially in-store, where it may take an extra beat in the transaction,” Scott wrote in his note.
“Your account information may take a little longer than usual to update or be unavailable while we make these exciting changes,” Starbucks said in an email to customers on Monday. “We thank you in advance for your patience.”
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