Red Peak
03 / 06 / 2016
Changing Your Loyalty Program? Be Prepared for a Potentially Brutal Impact on Your Brand

Red Peak’s President, Susan Cantor, is quoted in an Adweek article on Starbucks’ changing its loyalty program and the resulting backlash.

A lesson for brands thinking about overhauling their loyalty programs to save some money or boost sales: You could be doing more harm than good.

The most recent brand to prove this point is Starbucks, which just saw a dramatic drop in consumer perception after overhauling its rewards platform.

On Feb. 22, Starbucks announced that, starting in April, it would change its loyalty program from rewarding customers based on number of visits to instead rewarding the amount of money spent. Predictably, the idea of having to spend $62.50 to earn a free item, instead of as little as $24, didn’t thrill regulars, who reacted negatively and vocally on social media.

Starbucks’ brand perception plummeted as a result, dropping by 50 percent, according to YouGov. Starbucks’ “buzz” score, which asks respondents whether they’ve heard positive or negative statements about the brand, dropped from 60 to 29 in the week following the change.

Changes such as these actually could make your loyal customers less loyal, said Susan Cantor, president of Red Peak Branding: “It erodes good will. If you make a change, it needs to be more in line with previous customer expectations.”