Starbucks Rewards Gets Diluted: Awesome for Shareholders, Not So Much for You

I just got an email from Starbucks this morning informing me in their hilarious corpo-propo-speak that they are making changes to the Starbucks Rewards program for the betterment of me. Get this, they are launching a new Starbucks Rewards program “to reflect the #1 request” from Starbucks consumers: MOAR star awarded based on every dollar spent, no matter how often you visit. This is terrible news for someone cheap, like me, who games the Starbucks Rewards points system. From my perspective, Starbucks Rewards gets diluted to the point where it no longer makes sense for me to even go every once in awhile to collect those little stars. Let me fill you in on how Starbucks is screwing you over with the changes to their rewards system.


When I got the email this morning and I saw the words “We’re launching the new Starbucks Rewards” in the header, my bullshit detector went of immediately. Listen, changes rarely happen to serve you better, especially from a corporate standpoint. Here is the email:

Wow, moar points… err stars! What’s the problem? We be getting moar stars baby!

Starbucks Rewards Gets Diluted for Modest Visitors

So, the problem is, that if you enjoy drinking a modest amount of coffee from Starbucks every now and then – and by coffee, I mean coffee, not some mocha-whipped-skinny-god-damn-latte – you could very easily calculate what the value of a star was.

For example, I never stray from my tall, black, dark roast coffee from Starbucks. That costs $2. Every time I spent $24 at Starbucks, I would hit that free reward, which I would promptly use to get the most expensive thing they sell: a sandwich for $6, something I would never shell out with actual money to purchase.

This meant that every star I received was worth $0.25 – it was like I was getting 12.5% off every coffee I bought to “save” towards an expensive, tiny sandwich from Starbucks.

But now, with the change to the point system, where I once only had to spend $24 to get a $6 sandwich, spending $24 will only get me to 48 stars, which means I am still 77 stars away from that free, delicious, tiny sandwich. With the new point system, I have to spend $62.50 on coffee before they shell out a sandwich for me. This means that each star under the revised point system is worth $0.10 to me now, a whopping 60% dilution in the value!

Small Dilution for the Heavy Users

Let’s say you were a more “normal” Starbucks connoisseur and spent an average of $5 per visit to Starbucks. Well good for you: you get minimal dilution (at the expense of spending an ungodly amount of money at Starbucks)! In the old system, you would have spent $60 before receiving your free reward, and if you were smart, you would spend it on the most expensive thing available: a $6 sandwich. This worked out to your stars being “worth” $0.10 each.

Now, under the new system, you have to spend $62.50 more to get that reward: only $2.50 more to get that same reward. I applaud you if you are spending more than $60 a month at Starbucks. Here, have a star *

Old vs New

Here is a chart that breaks down the differences between the old and new points system:

Under the old points system, people who spent less than $5 per visit got the most bang for their buck in terms of value per star.

Under the new points system, people who spend $5 or more per visit get the most bang for their buck in terms of value per star, relative to the old points system.

Conclusion

I guess no one really wins with the new points system, except the shareholders do. I’d be ecstatic as a shareholder as this is clearly a move designed to incentivize customers to dish out more money at Starbucks.

The new points system is designed to weed out the cheap weirdos like me who only buy the occasional tall coffee and get me to spend moar money chasing those shiny little stars. I must say, I have always been impressed with Starbucks and the way they run their loyalty rewards program. The way they advertise and give you the points, it reminds me of gambling. You get that same sort of rush when you are collecting those little stars. You want to collect moar and moar, especially if they offer you 2 for 1 deals or other specials. It can get highly addictive. Starbucks has done their homework on hooking consumers up not only with caffeine, but with psychological tricks and tools akin to what you see in gaming and gambling.

At the end of the day, Starbucks Rewards gets diluted and everyone loses, except people who spend an unholy amount of money at Starbucks, in which case, they probably lose in a different sort of way in life.

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