Brands thinking about overhauling their loyalty programs may end up doing more harm than good. Consider Starbucks, which recently saw a dramatic drop in consumer perception after overhauling its rewards platform.
This April, Starbucks unveiled changes to its much-loved loyalty program: rather than rewarding customers based on number of visits, under the new system, customers are instead rewarded for the amount of money they spend. Unsurprisingly, the overhaul wasn’t received well—the company went from requiring a total of 12 purchases of any dollar amount to requiring customers spend more than $60 to receive a free treat. Starbucks’ brand perception plummeted as a result, dropping by 50 percent, according to YouGov.
The negativity surrounding Starbucks’ “enhanced” loyalty program paints a telling picture—changes such as these can actually make loyal customers less loyal.
“As soon as you say you’re changing your loyalty program, an instant skepticism emerges. When you make the reward harder to realize, it feels like something that’s just helping the companies improve their revenue streams. We recommend telling customers how this is going to improve their daily life. Before, Starbucks was doing it really well by rewarding them based on frequency. It said they valued the customer no matter what,” said Katie Hooper, managing director and vice president of strategy at HZDG.
According to AdWeek, brands should consider “grandfathering in” current members to new loyalty programs, so that new restrictions don’t apply to longtime participants—or at least giving them a choice.
“You’re playing with fire if you change any program targeted at loyal customers. Letting your loyal customers stick with the current program for a few years would make them feel more special,” said Allen Adamson, founder of Brand Simple Consulting.
Adamson also suggests that brands “sweeten the pot.”
“You could say, ‘I know this is a change, and because of that, we’re going to give you a free shot of espresso every week.’ You have to give them something else. You can’t build loyalty by taking things away from customers. If you keep taking things away from customers, they’ll punish you, and you deserve it,” Adamson said.