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Tag Archive for starbucks

Dukin Donuts Takes a Swing at Starbucks

 

Back in February, Starbucks was under fire for changing up their loyalty program. They claimed the changes were made after listening to their customers, but the reaction many customers had was less than ideal.

 

This week Dunkin Donuts made a pitch to encourage new members of their loyalty program. Some speculate they are taking a hit at Starubucks with this new promotion.

 

dukin perks

 

In and of itself, the promotion isn’t much to think about. However, whether intention or not, the code to enter (STARS) is in line with Starbucks loyalty program, considering the tag line is “More stars. More things to love.”

 

In comparing the two programs, it looks like Dukin Donuts is offering a sweeter deal, likely in response to Starbucks newsworthy changes and the resulting backlash the company received. Another component to the more generous seeming program likely stems from the fact that Dunkin Donuts is typically less expensive than Starbucks, so they have to make an offering to allow customers to earn points and be worthwhile enough to join. Below are some of the differences between the two programs:

 

Dunkin: 5 points for every dollar spent

Starbucks: 2 points for every dollar spent

 

Dunkin: 200 points to a free coffee

Starbucks: 125 points to a free menu item

 

Dunkin: no member levels, continue earning as you buy

Starbucks: two member levels depending on purchase history/frequency

 

Coffee lovers seem to be loyal to their preferred brand, but it’ll be interesting to see if Starbucks customers migrate to Dunkin Donuts or stay loyal to Starbucks. If nothing else, this appears to be a dig at Starbucks for changing their loyalty program, which of course will gain additional visibility and online discussion. This is always good for a brand, so kudos to Dunkin for taking a swing!

 

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Starbucks Says They Listened, But Did They Hear Right?

 

Looks like Starbucks is in some hot water with their customers.

 

Citing the voice of the customer, Starbucks is changing their rewards program starting April 1st. If you haven’t seen the changes, Starbucks shared the changes on their website:

 

starbucks

 

In looking at this, I’m not sure they really heard what customers were saying, even though the company states that this change was made because a rewards program based on amount spent was a top customer request.

While this may be true, it’s important to segment customers – those who are regular visitors buying more complex beverages and those who have less expensive, simpler purchases. With this new model, they are sending a message to the lower spending base – spend more to earn the same rewards. Say, as an example, someone visits daily and purchases a regular, no frills cup of coffee for $2.00. With the old system, in a 30 day month, they will receive 30 stars, receive two free rewards, and reach Gold Status. With the new system, at the end of that same month, they will have 60 stars; double the stars, but still over a month away from a free reward.

The company says that even though customers are spending more to reach the same levels as before, they have incorporated additional ways to gain more points.

It also meets a need of the customer who, until now, has split purchases because they wanted more than one star when making bigger orders. With this new system, no order splitting is needed, which is a time saver for the customer and staff.

It’s not all bad, but it definitely has customers up in arms. It struck me that the company states this was a result of customer feedback, which is great, but it may be a case of listening and not hearing exactly what customers are saying.

I have no idea what steps Starbucks took between collecting the voice of the customer and developing this new program, but my hope would be that they took a step back in between the two to learn more, perhaps surveying their loyal customers and segmenting the data by spending patterns. From there, creating a system that works well for all customers would ease the “pain” that comes with any new program or procedure and not alienating one group or another.

Customer sentiment on this issue will be interesting to follow once April rolls around – maybe it will be the case that it’s not as bad as customers fear, and the sentiment will quickly change to the positive. Only time will tell on this one.

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