Starbucks is dropping its year-old “Gold” loyalty program, which provided members a 10% across-the-board in-store discount. Its replacement: A new program that pays out less and requires participants to pay for purchases with their Starbucks card.
Unlike the Gold program, which carried a $25 membership fee — and allowed members to pay however they liked — the new “My Starbucks Rewards” program will be free when it launches on Dec. 26. Participants will earn a “star” each time they use their Starbucks card to pay for a drink. (As we understand, that means purchases made with cash or a credit card would not qualify.)
What do you get?
- After five stars — “green” level — participants will earn free wi-fi (2 hours per day), free beverage customisation (syrup, milk), a free tall drink with whole bean purchase, and free refills on brewed coffee. (Starbucks already offered most, if not all, of these discounts to people with registered cards.)
- After 30 stars — “gold” level — you’ll start earning a free drink after each 15 stars. So that’s 45 purchases before you can start earning a free drink every 15 drinks (after that, it’s a roughly 7% discount, assuming you’re consistent).
Current Starbucks Gold members will be grandfathered in to the “gold” level of the new system, and will get their 10% discount extended to Jan. 5, 2010. In an email to Gold subscribers, Starbucks says “we think you’ll like [the new system] even better.”
After perfoming some back-of-the-envelope maths, the savings are about the same for someone who orders a $4 drink about three days a week and doesn’t buy anything else. (Assuming “Gold” status to begin with. If not, add 15 weeks before the rewards kick in.)
But as soon as you started ordering food, drinks for companions, and gifts, the old 10%-off discount really started to add up. Add to that the convenience and efficiency of paying with cash or a credit card — not stockpiling money on a Starbucks card — and we’re personally going to be sad to see the old Starbucks Gold program go.
In short, probably a way for Starbucks to maintain some sort of loyalty program and improve margins by killing the 10%-off discounts. And, of course, a way to drive more payments via Starbucks card — which are probably higher-margin payments than dealing with credit card transaction fees or processing cash.
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