Starbucks' controversial rewards program changes drove almost 1 million customers to join

Starbucks

While many customers protested Starbucks' revamped rewards program, the company reports that the changes are already causing more customers to sign up.

About 900,000 customers joined the company's rewards program in the second quarter, Starbucks reported on Thursday. That's a boost of 8% versus the first quarter of the year, and an increase of 16% since this time last year, bringing Starbucks to a total of 12 million active loyalty members in the US. 

These new members have joined since Starbucks announced plans to introduce some major changes to its rewards program in February.

Under the new program, which went into effect April 12, customers earn reward stars based on the amount of money they spend at Starbucks. Customers previously earned one star per visit with My Starbucks Rewards, no matter how much money they spent.

Starbucks

When the change was announced in February, many customers reacted negatively. The company’s "buzz" score dropped 50% in eight days, following the announcement that rewards would soon be based on how much money customers spend, according to YouGov BrandIndex, reports CNBC.

Despite this, analysts said the change would likely be positive for the company. 

"The more money spent, the more stars earned… which is, all else equal, more incentive to spend more money," Nomura analyst Mark Kalinowski wrote of the revamped rewards program in a research note. "From many customers’ perspective, it probably is viewed as being more fair — somebody spending $6 should earn more stars than a different customer spending $3."

Starbucks

The new rewards program is key to expanding Starbucks' rewards program far beyond coffee. In March, Starbucks announced it would be releasing a prepaid Visa card by the end of the year that allows customers to earn rewards points, or 'stars,' to be used at Starbucks every time they use the card.

On Thursday, executives said that they hoped that the prepaid card would allow Starbucks to tap into America's $4 trillion debit-based card industry, building the foundation of a program that allows customers to "earn stars everywhere."

Starbucks has provided some big incentives for customers to sign up for the revamped rewards program. The chain is upgrading customers to Gold rewards status automatically if they make a purchase using their Starbucks card or app between April 12 and May 2. If customers who are already Gold (a status typically reserved for frequent users that allows for exclusive perks) make a purchase during the period, their statuses are extended for another year. 

While the new Starbuck Rewards has boosted new member counts, Starbucks fell short of analyst expectations for the quarter. The company reported $5.00 billion in revenue, missing expectations of $5.03 billion.

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