Customers who just want a cup of coffee are furious about Starbucks’ new rewards program

Here’s news about Starbuck’s new rewards program…

http://www.seventeen.com/life/food-recipes/news/a38320/starbucks-just-made-a-major-change-to-its-loyalty-program-andyou-wont-be-happy-about-it/

So, in relation to the sample research proposal from the previous students’ work that I shared with class a couple of days ago, unexpected events occur that can change the game IF competitors’ advisors or researchers or project whiz-kids are alert and can sense advantage.

As it happens last week, Starbucks has become embroiled in a massive row over a major change to its Rewards program (announced Feb 22-23), with many long-standing Starbucks clients now extremely unhappy about the change, and saying so very publicly on social media and directly to the print media. Many of the complaints include the promise/threat to break away from Starbucks and never return. Because CBTL probably could reap benefit from this or have some lesson to be learnt, right, this would be an additional consideration or factor in the project analysis and planning for Coffee Bean (vs. Starbucks).

I think this case might be relevant to “psychological reactance theory” which would tell “”grass was greener on the other side…”

The underlying logic is; once any policy change is announced people tend to strongly eager to hold on to what they’ve got or enjoyed so far rather than focusing on new benefits retained by the change. Hence, it is indicated that generous offers for the first round of social marketing to rapidly garner ppl’s attention or to raise awareness might backfire (or complainers’ voices are over-represented) at the end when you have to take it back.

What is your thoughts on this case? What could be done for Starbucks to relieve the reactance?

3 thoughts on “Customers who just want a cup of coffee are furious about Starbucks’ new rewards program

  1. I believe Starbucks decided to come up with this new policy because of how well-received the Gold Rewards Programme was. My guess is they were busy issuing out Gold cards till the point where they were tempted by how much more profits they could be earning if they were to make it more difficult to get a Gold card.

    Currently, Starbucks Global Chief Strategy Officer Matthew Ryan have said that this is what customers wanted but customers are obviously saying otherwise on social media platforms. As this issue becomes more viral, Starbucks Global Chief Strategy Officer Matthew Ryan may have to retract his words. This is especially so after he said that “there are a small minority of people who would either be advantaged or disadvantaged by the change”.

    Looking forward to see how Starbucks is going to handle his crisis, are they just going to let the issue die down or are they going to step forth and apologise?

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  2. Starbuck’s new rewards program could definitely alienate a certain segment of its customers. Previously, the system was designed to reward frequency of visits but now the system rewards those who spend more money. This means that Starbucks might lose some of its customers – those who don’t spend much each time they visit a store and were able to take advantage of the rewards program.

    More interestingly, I came across an article that argues how it might be a smart move by Starbucks to push these customers to rival business such as Dunkin’ Donuts, which also has a loyalty rewards program. This is similar to the business strategy of divesting business units or products that are not performing well and are preventing the business from moving forward. It seems as though this is a new challenge for Starbucks’ rivals. Can Dunkin’ Donuts leverage on this new group of people and turn them into better spending customers?

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  3. First round of social marketing to raise awareness of a change of policy might backfire, but I feel that it is a safer way of doing it. Companies will be able to use such a method to gather feedbacks and tweak it accordingly if necessary. This is important because companies need to meet the demands of its customers to be successful. All these ‘negative’ comments are useful in its own way, as Starbucks will be able to know what their customers are not happy with the new policy. Starbucks can then adjust it accordingly, or explain to its customers and persuade them into their side.

    I feel that this is safer than simply releasing the change of a policy without any prior marketing. If the new change is not liked by its customers (just like in this case), the customers may just boycott the company altogether and stop buying from it. Customer may, and most probably will, still send their feedbacks and complains, but at this point of time, it may be too late for the company to withdraw or make needed changes to the policy.

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