Members of airline or hotel loyalty programs might see something familiar in the reconfigured Starbucks Rewards program the company revealed on Thursday.
The coffee shop giant is bringing tiers back to its loyalty program on March 10, with three separate levels designed to give customers more rewards based on their overall level of spending.
The three tiers are Green, Gold and Reserve. Most members will be in the Green tier, but customers who earn 500 loyalty points, which the company calls “stars,” will earn Gold member status. Those who earn 2,500 stars will be Reserve members. The higher the level, the more benefits and the faster customers earn stars.
“This creates powerful incentives to drive frequency and fuel growth,” Starbucks Global Chief Brand Officer Tressie Lieberman told analysts on Thursday at the company’s Investor Day presentation. “And with the scale of the program, small changes in behavior can compound quickly. For example, if half of our active rewards members transact just one additional time each year, we will deliver an additional $150 million in revenue.”
Starbucks last had a tiered reward program in 2019, when customers could earn a Gold status. It eliminated that tier as part of a simplification effort.
Yet there’s a sense that Starbucks, along with many other restaurant chains, need to take its loyalty program to a new level.
Airline companies like Delta or hotel brands such as Hilton and Marriott typically have tiered loyalty programs that often drive behavior. Yet few brands have done so successfully.
Starbucks has long been thought of as a company that could take that step, given the popularity of the company’s program and the frequency with which customers visit.
Starbucks Rewards is considered one of the industry’s most advanced and popular loyalty programs, with more than 35 million members in the U.S. alone, accounting for 60% of the revenue generated by company stores.
The chain’s best customers visit 19 times per month and 200 times per year, Lieberman said. Yet those customers are treated the same as anybody else.
“Our current program has a one-size-fits-all approach, regardless of whether you transact once a year or once a day,” Lieberman said. “We saw a huge opportunity to make the experience more personal and more engaging. We also saw the opportunity to drive spend and frequency through tailored benefits and focused discount dollars on what our members value most.”
Like most changes in loyalty programs, the devil is in the details. Most notably, customers under the new program will earn one star for every dollar spent. Gold members earn 1.2 stars for every $1 and Reserve members earn 1.7 stars.
Currently, the program allows customers to earn one star for every $1 spent, but customers earn two stars for every $1 spent through funds preloaded on the chain’s mobile app.
At the same time, the program does have benefits that aren’t available now, such as free customizations on Mondays and bonus stars for those who load $30 or more onto their Starbucks cards. Gold and Reserve members’ stars also do not expire, while Green members’ stars remain active beyond six months so long as the user is active enough.
The changes are all designed to convince more of those loyalty members to come in more often to reach the highest tier, while making those most loyal customers feel more special.
Reserve members in particular will be given special treatment, with access to a merch shop and global coffee experiences. Those customers will also receive a free personalized Reserve card. Some could even win trips to places like Tokyo, Milan or Costa Rica.
Customers will see their levels on the Starbucks app and via email, and status is based on stars accumulated from January through December. The company did add a new redemption tier, enabling customers to get up to $2 off any item with 60 stars.
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