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Starbucks: Loyalty Program Misfire


Starbucks SBUX -1.24% is a firm with brilliant marketing… they have built an amazing global brand. They understand sensory branding, and have tailored their store aroma for maximum benefit. Their rewards program, which features an “elite” level, the Starbucks Gold Card, goes far beyond the typical coffee shop punch card. Instead of merely handing out free coffee in return for a set number of cups, they add an element of prestige and layer on extra benefits for their best customers. Why, then, does Starbucks continue to maintain one aspect of its rewards program that is sure to disappoint some of its customers?

You’re Demoted!
Like the airline loyalty programs it resembles, the Starbucks Gold Card program has to deal with customers whose consumption habits change. When one flies less, or drinks coffee less frequently, one is no longer as attractive a customer. When this happens, it may be necessary to curtail the benefits for individual customers. How one does this is critical – ideally, you want to encourage your customer to return to higher consumption levels. And, if you must cut benefits, you’d like to do it in the most sensitive way possible. This is where Starbucks misfires.

A Starbucks Gold Card member I know was surprised to get an email from Starbucks with the innocuous title, “Your My Starbucks Rewards™ level has changed.” The body of the message, though, lets the recipient know that her elite status has been revoked with a big graphic.

The text strikes a breezy tone, starting off with a little “oops” message:

You got your shiny My Starbucks Rewards™ Gold Card by earning 30 Stars in one year. To stay Gold for another year you needed 30 more Stars. Looks like time flew before you got all 30…

That’s a fairly gentle letdown, since it’s so “easy” to get your status back. But the email continues with, “So you’re back to Green for now, and your Star count has been reset.”

So, not only are you demoted, you have to start all over. This produced a highly negative reaction, since my friend had no idea that the deadline was approaching or that she hadn’t met the threshold for staying golden. Even more galling: she had just reloaded her gold card from her credit card, and was so infuriated that was trying to figure out if she could unload it and get her money back. Read more…