Category: Loyalty Program Review

A Closer Look at Starbucks Rewards Program Redesign

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Changes are coming to Starbucks Rewards. On April 16, Starbucks Rewards will be expanding its reward structure to five levels. A few other changes will be made to the program too. Will these changes make this leading loyalty program even better? What might be motivating these changes? How will the changes affect the program and its members? In this post, I attempt to dissect these changes and offer my assessment of the new Starbucks Rewards program design.

What Changes Exactly?

The biggest change to the program is the addition of more reward thresholds. Instead of a single reward threshold of 125 stars, it will feature five levels of rewards ranging from 25 to 400 stars. The new program will also erase the current difference between a Gold member and a base member, allowing both to enjoy the same set of benefits. The table below compares the current vs. the new program structure.

Starbucks Rewards Logo
Current
From April 16, 2019
Earning Stars2 stars per $ spent2 stars per $ spent (unchanged)
Reward LevelsA single level, at 125 starsFive levels, at 25, 50, 150, 200, and 400 stars
Reward ItemsA free food or drink item, excluding alcoholic beverages and multi-serve food and beverage items25 stars: free drink customization (e.g., extra shot, flavor, etc.);
50 stars: a free hot brewed coffee or tea, or a free bakery item;
150 stars: a free handcrafted drink, hot breakfast, or parfait;
200 stars: a free lunch sandwich, protein box, or salad;
400 stars: a free select merchandise (e.g., gift) or at-home coffee.
Membership Tier StructureGreen and gold. Gold is qualified by earning 300 stars in a 12-month period.Single tier
Base Tier Benefits
  • A birthday reward
  • Free in-store refills of hot or iced brewed coffee and tea
  • Early or extended access to some promotions and offers
  • Personalized offers and coupons
  • Can NOT redeem stars for free rewards until after reaching Gold level
Same as before, but now everyone has the same ability to redeem their earned stars for rewards. All members now also receive a monthly double-star day that used to be reserved for Gold members.
Gold Tier Benefits
  • All Green benefits
  • The ability to redeem every 125 stars earned for a free reward
  • A double-star day as selected by Starbucks
  • A personalized gold card
Not applicable, as there will no longer be a premium tier. Gold members do not lose any benefits. They just have to share them with everyone else.
Star Expiration6 months after the star is earned6 months after the star is earned (unchanged)

More Complex Reward Thresholds

The new design significantly expands the reward structure of the program from one to five levels. What could be driving this change?

Continue reading “A Closer Look at Starbucks Rewards Program Redesign”

Loyalty Program Review: Chipotle Rewards

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Chipotle, the fast-casual restaurant chain specializing in Mexican food, has launched a new loyalty program called Chipotle Rewards. The company is currently beta testing the program in three markets: Phoenix, AZ; Kansas City, MO/KS; and Columbus, OH, and plans to roll out nationwide in 2019. For this week’s blog, I thought it would be fun to do a professional review of the new program using the five criteria for assessing loyalty program value I wrote about previously.

First, a few details about Chipotle Rewards. The program is free to join. Members earn 10 points per $1 spent at its restaurants or through catering orders, and 15 points per $1 for orders placed via its website or mobile app. There will be bonus actions consumers can complete to earn additional points. Once a member accumulates 1250 points, those points can be redeemed for a free regular-priced entrée item. Rewards expire after 60 days. Till Nov. 21, 2018, the program is offering a joining incentive of a free order of Chips & Guac after the new member makes the first purchase under the program. Let’s take a look at how this design stacks up against the five value criteria.

Criterion #1: Cash Value

In my geographic area, a typical entrée on the Chipotle menu costs about $7~$8. Together with the point earning ratio of 10 points per $1 and a reward threshold of 1250 points, we can calculate the reward ratio to be ($7~$8/1250)*10 = $0.056~$0.064 per dollar spent (or 5.6%~6.4%). This reward ratio is pretty high compared with a typical credit card reward program, but how does it compare with other restaurant loyalty programs? Chipotle’s direct competitor, QDOBA, also runs a loyalty program called QDOBA Rewards. The program requires 3000 points for a free entrée priced at the $8 range, with lower thresholds for cheaper items. The earning ratio for QDOBA Rewards is the same 10 points per $1 at the two lower tiers (Recruit and Apprentice), and goes up to 15 points per $1 for the Pro tier and 20 points per $1 for the highest Champ tier. Putting these numbers together, it appears QDOBA Rewards has a base reward ratio of about 2.67% for the two lower tiers, and 4% and 5.33% for the two higher tiers. Comparatively speaking, Chipotle Rewards offers a higher cash value. However, considering the bonus points per visit offered to higher-tier members of QDOBA Rewards, the two programs are more comparable in cash value at the higher tiers. Continue reading “Loyalty Program Review: Chipotle Rewards”