TwinsTalkStocks, 8 year old twins Ashay Jorel & Devin Kalel, talk about the revamped Starbucks (SBUX) Rewards loyalty program over coffee.
Currently members get one star per visit, no matter how much they spend. Currently there are 11 million active members in the loyalty program (up 23% from a year ago). One of out of six customers is a loyalty member.
The current structure of the loyalty program has 1% of the total transactions result in “check splitting” This is where members ask baristas to break up their purchase into several separate transactions to get more stars.
SBUX says the new plan will improve transaction time (since “check splitting” will no longer be rewarded with the revamped loyalty program) and will result in higher profit margins for the company.
The revamped program will begin in mid-April 2016. Then members will get $2 per dollar spent. SBUX says the average transaction is $5, so the payout will be the same.
A Gold member will need to spend $62.50 (or 125 stars) to get a free drink under the new program. If a member spends $5.20 per visit, that member will come out ahead under the new, revamped Starbucks Rewards program.
If you spend $2.75 per visit for a medium-sized regular coffee, you currently get a free drink after 12 drinks. Under the new plan starting mid-April, it will take 22 visits to a free drink.