Will Starbucks win by giving rewards for purchases made at Dunkin’ Donuts?
According to COO Kevin Johnson, Starbucks wanted to find a way to reward customers for using a payment card with its name on it, even if the company is handing out stars for purchases made at other businesses. That’s where the new Starbucks Rewards Prepaid Card from Chase comes in — or at least it will before the end of the year.
Several reports have speculated that the timing of the new Starbucks card announcement may be a public relations move to soothe loyalty card members upset by the company’s change last month to calculating rewards (stars) based on dollars spent instead of store visits.
In the current scheme, Starbucks Gold cardholders earn a free drink after 12 visits to the chain’s stores. Because the average customer spends a little over $5 when they visit Starbucks, it takes roughly 12-and-a-half trips for Gold members to earn a freebie. Under the new program (beginning in April), it will take 300 stars to become a Gold member, the equivalent of 30 store visits at present.
With the new prepaid card, customers will have points directly transferred into their Starbucks account whenever they make a purchase — anywhere. They may then use the stars they earn in a Starbucks store or on starbucks.com.
Starbucks and JP Morgan Chase have an existing relationship. Last October, Starbucks announced Chase was taking over for Square as its payment processor. The chain’s stores also accept Chase Pay, the bank’s mobile payment option that uses QR codes.
- Complete Recap of Starbucks Annual Meeting of Shareholders – Starbucks
- Starbucks announces new prepaid Visa rewards card with JP Morgan Chase – GeekWire
- Starbucks launches prepaid Visa rewards card – USA Today
- Starbucks, Chase Launch Branded Prepaid Rewards Card – Payments Source
- Will dollar-based rewards boost Starbucks’ loyalty program numbers? – RetailWire
- Chase Pay gets boost from retailers in mobile payment race – RetailWire
DISCUSSION QUESTIONS: What do you see as the benefits of the new prepaid Visa for Starbucks? Do you see a downside?