Dive Brief:
- Starbucks saw its brand perception score fall more than 50% after announcing a change to its loyalty program two weeks ago.
- Starting in April, the coffee chain will reward members of its loyalty program based on the amount of money spent, rather than the number of visits to stores.
- Dunkin' Donuts responded later in the week by offering a $5 gift card and a free drink for signing up with its DDPerks program.
Dive Insight:
Starbucks is reeling from consumers’ response to the announcement of changes to its popular loyalty program. The company says it will soon base rewards on the amount of money spent instead of on the number of visits, more than doubling the minimum dollar amount required to take advantage of a free item to $62.50.
Starbucks’ brand perception, as measured a tracking tool from the research firm YouGov, dropped precipitously as a result. Asking a range of consumers whether they had heard anything positive or negative about Starbucks recently, the brand’s Buzz score went from 60 to 29 in the week after the announcement. YouGov’s measure of purchase consideration also decreased.
Experts note that members of a loyalty program are usually the most habituated to a company’s offerings and therefore among the most resistant to a change. Airlines, for example, change their loyalty programs often in search of ROI or added simplicity, inevitably leaving a few customers feeling like they’ve been betrayed or swindled.
For retailers wishing to learn from Starbucks' move, it seems that communication is key. Maintaining customer goodwill though such changes may be a matter of communicating that the changes are improvements intended to help customers—not just an effort to boost profits. And to placate their best customers through such a change, companies can offer to “grandfather” current members in to current terms, or offer an added reward to help them cope with the changes and thank them—again—for their business.
