Starbucks Rewards: There’s A Storm Coming

New Starbucks Rewards

Recently I posted about how to get a Starbucks Gold Card for under $50 which was a pretty good deal considering you’ll receive a free drink (any size and type) after receiving 12 stars.  After posting the article, I followed my own advice and reached Gold Status last week.  My fancy Gold Card will arrive in the mail in 3-5 weeks and I’ll be eligible for pretty cool perks.  My excitement lasted for less than a week due to an email from Starbucks–they’re switching to a revenue-based model!  I’ll describe why this is bad for most consumers and what important questions still remain.

Old Program

Stars are earned when you make a purchase at Starbucks or buy certain Starbucks products at the grocery store and enter the code online.  This system allows you to acquire multiple stars if you only pay for one item per order–e.g., if you’re buying a coffee and a sandwich you only get one star if you buy them together but you get two stars if you buy them separately.  It’s not efficient but it’s a pretty cool trick.  Assuming you made 36 purchases per year, you would receive 3 free drinks of any size (worth worth up to $19.50).  If you used the tricks I described in my previous article, then this amounts to about a 33% reward per dollar spent ($19.50 in rewards for $58.34 spent, for those who want to double check).

Starbucks old

New Program

The new program reflects a fundamental shift in how stars are awarded.  In April, stars will be awarded 2 per $1 spent as opposed to 1 per order.  You’ll need to acquire 300 stars per year to maintain Gold Status and you’ll receive a free drink for every 125 stars that you earn.  Quick math reveals that you’ll need to spend $150 per year to maintain Gold Status.  Even buying Starbucks gift cards for 15% off would still require $127.50 to reach Gold Status.  This is a far cry from the $50 deal I described just last month.

Starbucks new

Some folks will actually benefit from the new program.  If you spend over $5 per order, then you’ll benefit from the new program ($5.01 x 30 > $150).  Maybe you’ll start volunteering to make the Starbucks run for your co-workers or classmates?

Remaining Questions

As I figure out how to best take advantage of this new program, I need two remaining questions answered.

First, when the switch occurs in April, will my stars be multiplied by 10 (the number of stars needed to reach Gold Status increases from 30 to 300) or will the stars be recalculated based on the amount I spent at Starbucks so far this year?  Starbucks says “Any Stars in your account will multiply to reflect the change once we launch the new program in April” which I hopes means 10x.  If this is the case, I can continue to buy my small coffee with no worries until April.  If this is not the case (and they’ll multiply based on the amount spent), then I’ll need to rethink my strategy sooner rather than later.

Second, will you receive a star for a purchase that’s under $1?  Hypothetically, will I receive 2 or 3 stars if my small coffee costs $2.05?  If this were a prepaid calling card, you would be charged for 3 minutes of time even though you barely talked on the phone for over two minutes.  Starbucks could also award stars in the aggregate as opposed to a per order basis–two $0.50 purchases would earn you one star after the second purchase.  Until Starbucks clarifies this policy, I will not be able to come up with the best strategy moving forward.

Conclusion

The new program that starts in April is revenue-based so you’ll acquire stars per dollar spend as opposed to per purchase.  Airlines are also switching to revenue-based models and it’s unfortunate for the same reason, it disproportionately hurts those of us who spend the minimum amount possible to reach elite status while simultaneously rewarding those who spend the most money.  From a business perspective this makes perfect sense (particularly for Starbucks who has no viable loyalty program competitors) but it is unfortunate for those of us searching for a deal.

I’ll report back when I learn more information.  Please post below if you’re able to answer any of my ‘remaining questions.’

 

2 Comments on "Starbucks Rewards: There’s A Storm Coming"

  1. I received an email from Starbuck’s explaining program changes in which they explained that my current stars would be multiplied by 11.

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