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My Starbucks Rewards: The Cost of Loyalty

Gold Card, Starbucks

This morning I received an email from the My Starbucks Rewards program. “The next one’s on us,” it read. “In fact, it’s already on your Starbucks card.” I’d earned a free drink or food reward!

Immediately, I switched over to the Starbucks app to check my reward’s expiration date. April 6. I have a little more than a month to cash out.

I’ll definitely be back within a month. The real issue is finding a day that I want a Venti of my favorite overpriced soy beverage. Usually I don’t want anything more than a tall.

In September 2011, Starbucks announced that it would be changing the My Starbucks Rewards program in a big way: More free drinks, no more free soy milk & syrups. While some customers were excited about the new benefits, others made waves, starting petitions, tweeting the company, and announcing that Starbucks could kiss their loyalty goodbye.

I was one of them. You can probably tell how that worked out.

The My Starbucks Rewards program converted many occasional Starbucks visitors into enthusiastic and loyal customers who wouldn’t leave home without their Gold Card. Starbucks may have believed this devotion was unshakable, but then the coffee giant decided to shake things up.

Depending on what kind of Starbucks customer you are, the new program could be benefiting you or adding a great deal of additional expense to your loyalty. I’ve crunched some numbers, and below I’ll tell you how much more you are probably saving or spending since the October 16, 2012 overhaul.

First, though, here are the details of the new program:

The Pros: Free drinks instantly and more often. Now you can have a Venti Starbucks coffee pumped full of soy milk and syrups galore for free after paying for only 12 drinks instead of the previously required 15 purchases. You don’t even have to wait for a postcard in the mail anymore. The new rewards are available instantly.

Additionally, your freebie doesn’t even have to be a Starbucks beverage. Food can be your freebie, too! According to Starbucks, this means that you can now enjoy anything from “muffins, scones, oatmeal, pastries, [and] breakfast sandwiches” to “bistro boxes, wraps and paninis.” What a deal, right?

The Cons: No more free soy milk, no more free syrups (both on paid drinks), and no more free tall Starbucks coffee with whole bean purchase.

Lactose intolerant? Vegetarian or vegan? Starbucks hates you.

Just kidding. I can’t say that definitively.

Some have suggested that it isn’t Starbucks’ responsibility to subsidize lactose intolerance and the dietary choices of vegetarians and vegans, but it doesn’t change the potential for this to affect their loyalty.

Saving Consumers Money, or Costing Consumers More?

Here’s what I’m interested in, though: Does it really cost those of us who relied on the old incentives more cash, or will the My Starbucks Rewards perks, which Starbucks points out will allow customers to enjoy free drinks 20 percent faster, ultimately allow us to save money (or at least break even) in the long run?

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The clear answer is basic: Customers who do not use soy or syrups in their Starbucks drinks will save more; customers who do use them will pay more.

Basic isn’t good enough for me, though, so I’ve crunched some numbers to find out just how much more money those who previously enjoyed free soy milk and syrup with their Starbucks gold card will now be spending.

Using a Grande Starbucks Latte as a control variable, I will outline how much was saved under the previous My Starbucks Rewards program for people who do not use soy milk, for people who do use soy milk, and for people who use soy milk and syrup. Then I will illustrate how much is saved under the new My Starbucks Rewards program as of October 16, 2012. All savings are in comparison to what non-Starbucks Gold Card holders would pay in each circumstance.

The Procedure

Lots and Lots of Math. Readers may skip to ‘The Results’ or even ‘Conclusions’ for a very basic rundown of the results if you would like.

Because free drinks must be factored into this as savings, a common denominator–the number of purchases required before each lands on a free drink–must be calculated between the new and the old program.

Previously, the 16th drink was free. In the new My Starbucks Rewards program, the 13th drink is free.

The lowest common denominator to land on a free drink is 208 purchases (the 208th drink is free, no matter if you are using the old program or the new program. It is the soonest both programs offer a free item on the same number, which is why I’m using it; it makes the calculations practical).

In the old program, 208 purchases would yield a total of 13 free drinks. In the new program, 208 purchases provide 16 free drinks.

Calculations from hereon will begin by considering this number of 208 purchases. In each section, I will divide the total savings by 208 to find the average savings per drink in each circumstance.

In addition, the annual savings for an average Starbucks customer and a loyal Starbucks customer will be calculated in each category, based on the statistic that the average Starbucks customer visits a location 6 times per month, while loyal customers typically visit 16 times per month.

The cost of a Grande Starbucks Latte (in Southern California) is $3.55.
Cost of additional soy milk, without rewards: $0.60
Cost of Starbucks syrup, without rewards: $0.50

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Since many customers are likely to go all-out on their free beverage, I will calculate the free drink in each category as a Venti Starbucks Soy Latte with Vanilla Syrup. The savings that will be considered in each case for free (rewards) drinks, then, will be the price of Venti plus cost of soy milk and vanilla syrup ($3.95+$0.60+$0.50=$5.05 per free drink, every category).

Note that this has an effect on the savings calculations (and the control variable) in a way, but it is much more believable, in my experience and in my conversations with Starbucks baristas and managers (including my roommate who is a Starbucks manager), that a customer will make his free beverage extravagant rather than just order his typical Starbucks drink. I’ve explained how this can affect results in the first footnote (*).


Previous Program

Grande Starbucks Latte – Previous Starbucks Gold Card Rewards Program
After 208 purchases, one would save $65.65 cents (13 free Starbucks Venti Soy Lattes with Vanilla Syrup)
Average savings per purchase: $0.32 (savings divided by total 208 purchases)
Savings for an average customer in a year: $23.04 (savings per drink times 72 visits per year)
Savings for a loyal customer in a year: $61.44 (savings per drink times 192 visits per year)

Grande Starbucks SOY Latte – Previous Starbucks Gold Card Rewards Program
After 208 purchases, one would save $182.65 ($0.60 soy for 195 purchased drinks + cost of 13 free drinks)
Average savings per purchase: $0.88
Savings for an average customer in a year: $63.36
Savings for a loyal customer in a year: $168.96

Grande Starbucks VANILLA SOY Latte – Previous Starbucks Gold Card Program
After 208 purchases, one would save $280.15 ($0.50 syrup for 195 purchased drinks + total savings in above category)
Average savings per purchase: $1.35
Savings for an average customer in a year: $97.20
Savings for a loyal customer in a year: $259.20

New Program

Grande Starbucks Latte (W/OUT SOY MILK, WITH SOY MILK, WITH SOY MILK & SYRUP) – New My Starbucks Rewards Program as of October 16, 2012
After 208 purchases, one will save $80.80 ($5.05 times 16 free drinks)
Average savings per purchase: $0.39
Savings for an average customer in a year: $28.08
Savings for a loyal customer in a year: $74.88


Clearly, some people are actually saving more money with the new My Starbucks Rewards program. Starbucks has changed the way coffee and tea beverages are perceived, but for people who like basic drinks without any fancy additions (and who don’t require dairy alternatives), the new rewards setup is beneficial, granting customers an additional savings of $5 (avg customer) to $14 (loyal customer) per year.**

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If you’re that guy who always gets a Grande Starbucks Vanilla Soy Latte, though, it might be time to find other options (or take up a part-time job on the side). These people are actually spending $69 (avg customer) to $185 (loyal customer) more per year under the new My Starbucks Rewards program as opposed the old program. In other words, they are saving that much less.

What do you think of the changes? Should Starbucks have eliminated both free soy milk and free syrups? Are you going to miss the free tall coffee with the whole bean coffee purchase? Will the new My Starbucks Rewards program benefit you or hurt you?

*Obviously, this data is not conclusive for all Starbucks customers. There will be differences between what is really paid by a Starbucks customer and the above conclusions because (1) the savings are being based on what is being consumed, not on what might be consumed if there were no rewards program. The savings goes down in every category if it is assumed that the customer would only be opting for his or her typical drink with each rewards freebie instead of increasing the size and adding soy and syrup, or if the customer chooses any other beverage or food item for his or her freebie; (2) many people will not drink the same thing every single time, so there will be price variations between drinks; (3) prices may be different at different Starbucks locations. Even in Southern California, for example, drinks at a Starbucks in Von’s Supermarkets are often $0.05 more; (4) customers may visit more or less often than an average or loyal Starbucks patron; (5) savings are all based on average savings per drink, which is not an actual savings per drink–you will not save $0.39 on your beverage if you buy only one grande latte under the new program, for example. Savings represent average savings after purchasing multiple drinks and taking advantage of free rewards beverages; (6) any number of variables may alter the actual savings.

**That is, if they’re the type of person to get a little risky and enjoy vanilla and soy for their free drinks. Otherwise, the additional savings are much less for people who consume neither soy nor vanilla.