Have you ever stopped to think about just how many options you have when it comes to where to shop and how to spend your money? With so many options, I tend to shop at places that have a loyalty program that I find valuable. Having a program, based on valuing their customers “loyalty” and choice to shop with them, sets their stores apart from their competitors. I shop for my dog’s food at a particular store with a program that after I buy 12 bags my 13 bag is free. I drink Starbucks coffee, not because I find that Starbucks has great coffee. I drink Starbucks coffee for two reasons: convenience and their loyalty program. Recently Starbucks changed their loyalty program to the distaste of many of its customers. Anyone scouring through blogs, Social Media, and news outlets will quickly note the perceived value had significantly changed. Now that customers are able to tell the actual value of their reward system in dollars vs. drinks purchased, the perception of how valuable this loyalty program is has lowered.
I will completely and fully disclose that I do not have any insights as to why Starbucks decided to change their program. I am going to assume that this new version of the program was initiated after hours of analyzing current loyalty customers’ spending habits to enhance the program. To give a quick example, if you were a Gold Member (purchasing 30 drinks in one year), you would receive a free item (this could include food or drink) after 12 purchases. So 12 Latte’s = Free item. The new system is a based on how much money you spend, 2 stars for every $1 you spend. A Gold Member (300 Stars) has to earn 125 stars to receive a free drink. (approx. $63.) Photo courtesy of Starbucks.com.
There are two ways of viewing this. If your daily drink is a coffee at $2.00, the new plan isn’t awesome. However, if you are an avid drinker of a double latte with chocolate sauce and unicorn tears at $4.50, the changes of the program will benefit your purchasing habits! So to break it down: you spend more and you are visiting less often to receive rewards. Makes sense right?
I bring up Starbucks Loyalty program to discuss perceived value vs. actual value. Most loyalty programs do not break down what the actual value (monetary) is of the reward. It is all based on customer perceived value. If a customer feels they are receiving something for free and that it benefits them, they are more likely to shop at your location. The difficult part is looking at your business model and analyzing your customers’ spending habits to ensure your program has a positive customer perception.
Does your loyalty program stand out from your competitors? Do you have a program that benefits your customers but won’t break the bank? Do your customers perceive the value to outweigh the monetary value? If you are asking yourself these questions, then you should be calling Brand X Consultants to come in and evaluate your customers’ perceived value of your loyalty program. We can help you determine its effectiveness and value…to you and your customers!