Business & Economy Personal Finance Who Benefits the Most from Starbucks's New Rewards Programme?

Who Benefits the Most from Starbucks’s New Rewards Programme?




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If you’re an avid coffee drinker, you may have already heard about the changes to Starbucks’s new Rewards Programme. In fact, even though the changes were implemented just earlier this week, frustrated customers all over the world are already kicking up a storm. But even as the new programme may seem like a second-rate deal on its face, it may actually benefit a large group of people. We’ve closely analysed the new Starbucks’s Rewards Programme below, so you can make the most of these changes–rather than losing out.

Quick Overview: What Changed?

Before getting into the details, let’s review what’s actually changed within the new rewards programme. The biggest update has been changes to the programme’s rewards redemption schedule. While the ‘earn rate’ for stars remains constant (S$1 spend earns 2 Stars), you’ll no longer be able to redeem 125 Stars for any drink or food item. Instead, redemption options are divided into tiers with different Star requirements. You’ll have to earn a bit more to access handcrafted drinks, but you can now get a free hot brew for a fraction of the previous Star ‘cost.’

Table showing Starbucks's rewards redemption rates under the previous and new rewards programmes

Other changes are a bit more controversial. As of April 16th, all Green Level customers (basic programme membership) lost all unredeemed Stars they’ve accumulated on their account. This can be especially frustrating for those who were on the cusp of earning Gold Level membership, which requires 300 Stars. While Gold Level members retained their Stars, the tiers will now be collapsed into one, which may be considered a perk since there are no longer any special benefits that are exclusively available for certain groups. Instead, everyone can enjoy features previously limited to the Gold tier–namely, free hot coffee and tea refills!

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Another change is that now, you can apply Stars towards non-consumable purchases, which were previously excluded. After earning 400 Stars, you can redeem them for items like a bag of ground coffee, a signature cup, or a coffee accessory worth up to USD$20. This option expands your opportunities–in fact, the split tiers make rewards more accessible to everyone.

Hot Coffee Lovers Benefit the Most, Latte Drinkers Lose Out

Interestingly enough, the new rewards programme has a split impact on customers, based on drink preference. If you’re a hot coffee drinker, you’ll benefit the most. While you’d previously need to purchase 17 cups of coffee to earn a free one, you can now earn enough Stars from 7 Tall hot brews to redeem the 8th one for free. Given a cost of S$3.80 per order, you’ll actually end up saving S$0.47 on each cup! This is a full S$0.26 higher than what you would have saved under the previous programme. While you won’t have the chance to ‘splurge’ on a fancy freebie item, you’ll get an everyday coffee for free far more often, after lesser spend.

The new rewards programme offers greater average savings to frequent hot coffee drinkers than the previous programme

This is not the case for latte drinkers or anyone who likes specialty drinks. In this case, the new programme is actually a bit less rewarding than the previous one. If you’re in the habit of buying handcrafted drinks, you’ll need to spend more before you can access your freebie. You’ll also get fewer savings than on the previous plan. However, it’s worth pointing out that the discrepancies are quite small–just a S$0.09 difference in savings and 2 drink difference for accessing your reward. Overall, the change isn’t quite as detrimental as it may have seemed.

The previous rewards programme offers greater average savings to latte drinkers than the new programme

Star Redemption Value is the Highest for Hot Coffee

In terms of maximising redemption value, the new programme also favors those who enjoy hot brewed coffee. To begin with, the redemption value of each Star can be calculated based on a few factors. First, consider the estimated cost of the reward itself, and how many stars are required for redemption. For example, a hot brewed coffee is generally worth S$3.80, and you’ll need to redeem 50 Stars if you want to enjoy get one for free. This essentially means that 50 Stars equal about S$3.80 in value when redeemed. Dividing both sides by 50 reveals that 1 Star equals about S$0.076 in redemption value. In comparison, all other options offer redemption rates of just S$0.03–0.05 per Star.

The redemption value of 1 Star is different across different rewards tiers

Ultimately Not Much Worse Than Previous Programme

Under the previous programme, the ability to redeem Stars for any drink or food item was previously seen as a big perk–you could earn Stars on simple coffee purchases, and then redeem them for a more expensive reward. While it might seem like the new system robs us of this advantage, the difference surprisingly isn’t very substantial. As you can see below, under the previous programme you needed to purchase 17 Tall hot coffees to earn enough Stars to redeem 1 latte. Considering your total spend and the total number of items, your average effective cost comes to S$3.59/item. This comes to a savings of S$0.35 off the price of a drink. The new programme offers similar savings. While you now need to purchase 20 coffees to earn enough Stars for a latte reward, you’ll ultimately enjoy a savings of S$0.32/item. This S$0.03 difference in savings between the old and new programmes is almost negligible.

The average savings yielded by redeeming Stars for a latte is not very different for hot coffee drinkers under the old and new rewards programmes

Starbucks’s Loyalty Programme Still Leads the Pack

Despite these changes, Starbucks still has a more generous loyalty programme than many of its competitors, especially those with similar sit-down outlets and a variety of specialty food items and drinks. For example, the Coffee Bean & Tea Leaf’s programme offers a lower rewards return per S$1 spend, especially if you typically purchase hot coffee or tea. This discrepancy becomes even more pronounced as the Coffee Bean also has higher prices. You’ll earn lesser rewards for your spend and then have to pay more for your drink.

In this light, Starbucks’s programme is still a more economic option. And, if you want to save further, there are a few easy options. Consider checking for gift cards for resale on Carousell; you can often find options discounted by S$5 or more. Also, there are quite a few in-store hacks. For example, you can order a small coffee in a medium cup so you have space for milk, rather than pouring some of the drink out to make room. Finally, check your credit card benefits. Many offer promotions offering discounts at cafes; others also reward coffee purchases with cashback as high as 10%. The best part of these perks is that they easily pair with, and supplement, the rewards you can earn through Starbucks’s new rewards programme.

Competitor coffee chains' rewards programmes offer customers lesser value than Starbucks's programme


Ultimately, Starbucks’s new Rewards Programme isn’t nearly as devastating as you might think. In fact, if hot coffee is your drink of choice, you actually stand to benefit. Even those who prefer handcrafted beverages aren’t likely to lose out by much, compared to the previous programme. In addition, the programme still offers a better return on your spend than competitors.

The article Who Benefits the Most from Starbucks’s New Rewards Programme? originally appeared on ValueChampion.

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