Starbucks To Change Rewards, Focus On Merchandise To Make Money
It was a frenzy at Starbucks’ investor day last week — and it wasn’t just from all the caffeinated beverages available for attendees to sample. The coffee giant pointed to its latest quarterly results as evidence that the turnaround plan it launched in 2024 is starting to show results.
Although Starbucks missed first-quarter earnings estimates, sales grew for the first time in two years. The company said the increase came from both loyalty members and non-members for the first time since 2022. More seasonal and limited-edition products – like the “bearista” cup that went viral last holiday season – and a revamped customer loyalty program were two key aspects of its turnaround.
In other words, the brand that invented PSL (that’s pumpkin spice latte, for those who don’t know) more than two decades ago plans to tap into customers’ sense of urgency about limited-edition and seasonal collections.
At the event, global chief product officer Tressie Lieberman said “limited assets, bad times and relationships” are “critical” to driving repeat business, the brand’s focus after revenue fell 3% to $9.1 billion in the last quarter before current CEO Brian Niccol took over.
Lieberman’s comments suggest that get-’em-before-they-gone promotions — and viral crazes — will become more common.
Starbucks rewards are changing back
Along with seasonal tchotchkes and promotions, company executives have proposed a “reimagined” Starbucks Rewards program, saying its three categories – Green, Gold and Reserve – will bring better rewards to its more than 35 million active members in the US when it launches next month.
Some users beg to differ.
On social media, customers criticized changes such as the number of free drinks that can be earned with stars and limited access to the new online store’s branded merchandise in the Gold and Reserve categories of its loyalty program.
The revised awards benefits structure proved to be an even bigger flashpoint. Topping the list of complaints: the accumulated “stars” rewards for the brand’s most loyal customers. Across multiple platforms, long-time Starbucks customers are complaining that the top rate of earnings will drop from 2 stars to 1.7 per dollar spent. (And in some cases, those dollars may not go the way they used to: Starbucks CFO Cathy Smith said the company plans to use “targeted” price increases.)
“I did the math: the new system is basic depreciation,” one Redditor wrote above a screenshot of a spreadsheet that breaks down the statistics behind the new categories.
For Starbucks fans, it’s sure to be an eye-opener — no caffeine required.
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