Starbucks' president reveals why the chain rolled out its controversial new rewards program

Business Insider | Apr 26, 2019, 08.31PM IST


Scott Olson/Getty Images

Starbucks' new rewards program has been controversial among some of the chain's biggest fans.

  • Starbucks faced backlash when it launched its new rewards program earlier in April, with some of its most loyal customers complaining about changes.
  • Roz Brewer, the president of Starbucks' US business, said that that the changes aim to make the rewards program more accessible, as Starbucks tries to win over less frequent customers.
  • Brewer also said that the volume of calls Starbucks has received regarding the changes is lower than the company expected.
  • Visit Business Insider's homepage for more stories.

Starbucks' new rewards program has been controversial among some of the chain's biggest fans.

In mid-April, Starbucks debuted a new program in which members no longer had to reach a certain benchmark to become a "gold" member, eligible to earn rewards. Under the new tiered rewards system, customers can get rewards more quickly, with the option to make minor customizations for free in exchange for 25 stars.

However, some of the most popular rewards - such as Starbucks' lattes, macchiatos, and other handcrafted drinks - now require 150 stars, an increase from the old program. The change has sparked backlash with claims of stars being "devalued."

Read more: Starbucks infuriates customers by changing its rewards program, making it more expensive to get some of the most popular rewards

In response to an analyst's question about customers' response to the new rewards program on Thursday, Starbucks' US President Roz Brewer said that the chain wanted to make its rewards program more accessible.

"The first rewards comes at 25 starts after two to three visits," Brewer said. "In the past, your first free reward would have come after 30 to 40 ... visits. And so, this is an opportunity for us to start our customers out and earning and redeeming stars right away."

Brewer also said that the company has been closely monitoring member calls to call centers. While she acknowledged there have been calls about the new program, she said that as of Thursday, the volume of calls was "well below our forecast."

"We've also been monitoring social media as well. And, if you are comparing this to times in the past when we made these transitions, these are significantly lower responses from our customers," Brewer continued.

Starbucks' rewards program is a crucial part of the company's business. On Thursday, the company reported that the program had 16.8 million active members, an increase of 13% year-over-year.

Read more: Starbucks still needs to solve a massive problem, as analysts worry about 'anemic' traffic

With the revamped program, Starbucks aims to better engage casual, less frequent customers.

"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," Mizuho analyst Jeremy Scott wrote in a note earlier in April.

Scott continued: "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."

NOW WATCH: Method Soap's factory runs entirely on renewable energy and houses a rooftop greenhouse that produces 1 million pounds of food a year

Add Comment
Keep scrolling for next story

The growth rate of Amazon's ad business is plunging but revenue is still up

Loading next story
Copyright © 2015 Bennett, Coleman & Co. Ltd.
All rights reserved.