As of today, Starbucks has retooled their loyalty program.
In the past, gold card members could get free soy and syrups, saving them 50
cents a pop. Now, that perk has gone away. In an attempt to placate loyal
customers, Starbucks has reduced the star count for a free drink card from 15
to 12, getting you a free drink 20% faster. The drink card will now be
accessible immediately via your mobile app, so you don’t have to wait for that
card to be mailed to you. Additionally, your free drink card can be used on
food as well as drinks.
It’s a very subtle change but one that should succeed for
two reasons.
- Starbucks did a very good job communicating the change, giving customers a bone (star reduction), and easing the change into their stores. This should hopefully retain all customers.
- It should drive added profitability. Demand for soy and syrups is likely more inelastic than elastic, so the change in price (from free to 50 cents) should increase revenue. The syrups cost $8.00 retail for a 25 oz. bottle. Guesstimating a wholesale price of 80% retail, that’s $6.40 a bottle. Each pump is roughly 0.35 ounces, which works out to 9 cents a pump. 82% profit margin is quite nice!
This change to their loyalty program, in addition to
continued expansion of their Beer & Wine stores and soon addition of
dedicated Tazo Tea stores will continue to enhance the Starbucks brand.
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