Dive Brief:

• Starbucks is introducing a prepaid card though Chase by the end of the year where customers can earn rewards points that could be used wherever Visa cards are accepted.

• Starbucks points can also be bought by certain businesses, including the New York Times, Spotify, and ride-hailing service Lyft, which can distribute the “Starbucks stars” to their customers.

• Changes to Starbucks rewards program have been poorly received by its loyal customers. The company now bases points on money spent rather than on the number of visits, more than doubling the minimum dollar amount required to take advantage of a free item.

Dive Insight:

Starbucks is expanding the way its most loyal customers can use their rewards, but making it harder to get there at the same time.

So far, that’s been a problem for the retailer. Starbucks’ brand perception, as measured a tracking tool from the research firm YouGov, dropped precipitously because of the changes. 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. When it becomes harder to earn points, it leaves some customers feeling like they’ve been betrayed or swindled.

For retailers wishing to learn from Starbucks' move, 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 into current terms, or offer an added reward to help them cope with the changes and thank them—again—for their business.

The expansion of the utility of Starbucks “stars” could help ease the grumbling, though it’s unclear whether that will be enough. A lot may depend on whether enough customers have other places to get their caffeine fix, and whether those other places have better or at least similar loyalty programs. 

Dunkin' Donuts, another popular destination for coffee drinks, responded to Starbucks changes earlier this month by offering a $5 gift card and a free drink for signing up with its own DDPerks program.