Starbucks Rewards is Going Revenue-Based in April. Here’s How Stars Will Work.

Via Doctor of Credit, a brochure for the new Starbucks Rewards program going into effect in April was leaked on twitter.

The program will be going revenue-based.

  • The ‘Welcome’ level goes away. Everyone starts at Green, so no waiting for 5 stars before earning free in-store refills for coffee and tea.

  • There will be ‘double Star days’ for Gold members each month.

  • Existing star balances in your account will be multiplied so you don’t lose out with the new inflated currency.

Here’s the comparison of earning and redemption between the current and new systems:

Break-even for status-earning in the new program is an average of $5 per Starbucks transaction. If you spend more than $5 per Star you earn now, you’ll earn status faster. If you spend less than $5 you’ll take more transactions to earn status.

Let’s illustrate:

  • Now 30 transactions earns Gold, and 2.5 free drinks.

  • Under the new system, 30 transactions of $5 each would earn 300 Stars (at 2 Stars per dollar) for Gold, and 2.4 free drinks.

The Starbucks Rewards program, like so many others, has developed a history of devaluation. Now they’re inflating their currency, going revenue based, and even shaving free drinks ever so slightly. And they claim in their brochure this is the number one requested change by members. That’s like saying it’s an enhancement.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I guess this was inevitable. People like me who just drink black coffee there, except when using a free drink reward to get a much more pricey coffee or sandwich, will be the losers. And it’s likely some of us will drift away as we have from airline rewards programs that became less generous. But since I see nearly everyone in line ahead of me at Starbucks buying something exotic and over $5 the change is probably smart and those who drop out are not the target anyway.

    Wonder if they will drop the star code stickers on Starbucks coffee bought in bags at supermarkets.

  2. Oh man. Packaged coffee from the supermarket currently earns 1 star per pack. If these don’t also change proportionally, it’ll kill my earnings and my Gold status. I wonder if Caribou or Dunkin will start offering status matches?

  3. I know I’m probably the extreme here, but I would buy $2 Grande Pike on my way to work each day and “treat” my wife to $6 venti soy latte after 12 x $2 = $24. That’s 25% return. Now, it will take me 32 coffees for a free latte! That’s now a 9% return. This was worse than upcoming devAAluations! But like all things, it was good while it lasted and we will find something to like about it. (Cue nostalgic music. Scene: walking around Pikes Place with free $6 latte. End scene)

  4. Funny how I would use the Starbucks example with Airline people showing how people will overpay for coffee to earn stars/free drinks.

    Starbucks punch card system worked, people would pay $2.50 for a small cup of coffee to earn a star so they could get a free drink after 12 drinks, however, they could have just saved $0.50 a cup or more elsewhere and gotten a free $5 drink after 10 drinks.

    Now, you have to buy 25 small coffees to get a free drink. Imagine if you went to Dunkin Donuts etc. and saved $0.50 each time, that’s $12.50 that you can spend on anything in the same time Starbucks gives you a free drink.

    I imagine this will put off many star seekers. I already disliked starbucks coffee, so this was the nail in the coffin for me.

  5. This is great! I usually order 2-4 things at a time and the per transaction counting was terrible. Under this new program I will rack up the rewards quickly.

  6. This also gets rid of the ridiculous 1 star/transaction rule. So for those that buy multiple items per transaction regularly this will be an increase in value.

  7. “Packaged coffee from the supermarket currently earns 1 star per pack. If these don’t also change proportionally, it’ll kill my earnings and my Gold status. I wonder if Caribou or Dunkin will start offering status matches?”

    Had me rolling, that’s awesome.

    I don’t care much for Starbucks but occasionally do huge runs to be the office nice guy and joined the program a few months back. Was completely shocked when my $40 order got me exactly 1 credit in their reward system. I guess I’m the Paid First big whale in the hot beverage retail world? Will Starbucks offer up a pre-arrival beverage or hang my coat for me?

  8. I’ll say it: Starbucks employees should be working in record stores, not serving coffee. But thanks to people like the CEO of Starbucks, there are no record stores (and only his book is sold in Starbucks stores). Caffeine induced socialism (like Vodka in the USSR) isn’t good.

  9. For someone who buys regular coffee once a day Starbucks is no longer worth it. I wait in the long line and go out of my way for their rewards program. One word Byyyeeeeee

    There are too many other better coffee options now

  10. Dang. I usually just get a brewed coffee, a bit over $2 each. One each morning and evening gives me 60 stars and 5 rewards per month (roughly). Now it’ll give me 240 stars, or 256 with a double star day each week…just enough for 2 rewards.

    I’ll still go there, the other options are less palatable and/or far less convenient to get to, but, dang.

  11. “This April we are making our rewards program even better.” hmmm. Ok! No matter how I do the math, I just cant get my head around that. I admit, I was a sucker for the Stars, especially when they offered bonus stars. They just complicated and diluted one of the best loyalty programs there is. The good part is, that Keurig on my desk at the office looks a lot more attractive now.

  12. The question is: will they still require you to pay using a Starbucks account/card, or can you use any payment method you want? To me, that was always the downside of the program. By requiring you to put money in an account in advance, they were inducing more spending at Starbucks, which to me more than offset any value in free drinks or refills I’d be likely to get.

  13. All good things must come to an end. As a drip coffee drinker, come April Starbucks won’t give me much bang for my buck. Toodles!

  14. I’m not so certain they are lying when they say it’s one of the biggest demands they hear about. Those who buy $2 coffees and redeem for $8 coffees aren’t promoting that fact (and certainly not to Starbucks), while those of us who universally visit with someone else have been widely annoyed for years that buying multiple items only resulted in 1 star.

  15. Umm, who spends $5 per transaction at Starbucks? Poor example, as you can see most of your readers buy $2 coffees. Currently the return is $2×12=$24 spend for a free drink. Under the new systems it will be $2×62= $125 for a free drink. That’s even worse than the worst Hilton, UA and other devaluations that you frequently criticize here.

    The only good news to come out of this is that we won’t have to hold up the line by making the cashier ring every drink separately (quite a pain when you bring the family). But I will definitely be visiting Peets more often. The Peets cards are often 20% off at Costco, a much better discount. Not to mention better java and better scones.

  16. I’m very excited about this. More times then not I am using a drive threw and purchasing multiple items for multiple passengers at a cost of 15.00 – 20.00. Right now I get 1 star for that transaction but with the new program I’ll earn 30 – 40 stars. For me this new formula is much more equitable.
    Thank You Starbucks !

  17. @Ryan, its your own dumb fault if you weren’t asking for multiple transactions. The program never required “only one star per visit” and many people request multiple transactions. So do some math: Look over you’re recent transaction history, and calculate the number of stars by items, then compare that to how it would add up in the new program. See if you come out ahead or behind.

    The fact that I could buy $2-$3 coffee and reward with a $7 drink was one of the things that brought me in more often than I really needed to go. (We have Keurig with Starbucks House Blend in the office for less than $1) And the mobile app just made it easier to go even more. There were also times when I bought expensive drinks as well. But the beauty of this program is that it earned loyalty because the rewards were perceived as easily achievable. And when they had bonus star offers, I am sure I spent way more than I would have without the bonus incentive.

    Starbucks has demonstrated a high level of business savvy in most of what they do. Having had the rewards program in place for many years, they have all the data they need to know if this change made sense. Im guessing it makes good business sense, although many people won’t like it.

  18. Makes me glad that I work out of a home office and brew Starbucks at home. I drink only black coffee, so my earning in store will be slow. I get most of my stars from bonuses for buying packaged coffee (save the star stickers until there’s a bonus offer) and the occasional star dash. And I take advantage of groupon bonus reloads. So for me, it’s been small spend for stars. Going forward it doesn’t look very enticing.

  19. I buy a grande, skinny mocha six or seven days a week. It’s normally between $4 and $4.80, depending on the Starbucks (the price changes base on whether it’s a corporate-owned store or Target/Kroger licensee, an airport store, or in a locale with a higher local minimum wage law). Sometimes I order an extra-shot, increasing the price by 50 or 80 cents. This means I get, under the current system, a free drink every 12 days. My quick math says I now need 14 days, on average, to get a free drink. That’s enough for me to consider not caring whether I continue frequenting Starbucks or not.

    By the way, until recently, for about three years, McDonald’s in Michigan were giving a free coffee or espresso drink for every five purchases, working off a sticker system. I really like the McDonald’s coffee. I consume two cups of the medium or espresso roasts every morning. And when there’s no Starbucks nearby, a medium latte with non-fat milk and sugar-free French vanilla at McDonald’s works for me.

  20. I too, like poster “swag”, am very interested in what is going to happen on the grocery store purchased bags of coffee and the stars currently associated with them.

  21. The more I thought about this, I neglected to account for the fact that you now earn stars for EVERY dollar you spend. Those of us that buy sandwiches, wraps, other non-drink items have not been earning any rewards. Although my example of 1 free $6 drink every 12 x $2 drinks holds true today, since I also get a breakfast sandwich each day, I do not earn rewards on that spend. My new formula is 12 x $6 spent (grande coffee and sandwich/wrap) = 144 stars = more than I got yesterday! I understand my earning is very specific and it is not common to order a wrap and grande coffee each day, but for me, it is actually a win!

  22. I think when Starbucks says this is the biggest request they get, they mean changing the fact that it is one star per transaction. But from a business standpoint, it doesn’t make sense to give one star per item. It has to be win-win.
    Yes, people who drink black coffee are the ones losing the most, but up until this point, they were the ones gaining the most. So the tables have turned.
    The good news is, that this will most likely mean faster lines (people aren’t separating transactions) more bonuses for people spending $5 or more on drinks, and people who buy mugs or pounds of coffee, they get more than 1 star for their $17-$50 item.
    Nobody can please everybody, and lets be honest, Starbucks was never known for being the cheapest coffee. They never advertised that, and nobody believes that.
    I like what they are changing, and I like that it benefits the people who spend the most. They’ve been getting the short end for a long time.

  23. This is definitely a bonus for me. I always felt ripped off that I would only get 1 star for buying a $18 package of coffee!

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