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Starbucks Redesigns Its Loyalty Program

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Starbucks Inc. (SBUX) has announced changes to its Starbucks Rewards loyalty program, noting that the revamp will provide its members with more flexibility and choice when they redeem stars at the company's stores. The Starbucks Rewards program was introduced by the coffee giant a decade ago, in 2009.

Last year, Starbucks had said that in fiscal 2019, it expects newer digital initiatives to contribute one to two points of comp growth in the U.S.

According to the company, this will be supported by a redesigned Starbucks Rewards program that will provide customers more choice around redemptions and payment as well as expanded personalization capabilities for customers having a digital relationship with the company.

"Since introducing Starbucks Rewards ten years ago, we've experienced tremendous growth and continued to evolve the program to meet the changing needs and purchase patterns of our customers. These new updates put choice in the hands of our customers and a personal touch they can only get from Starbucks," said Matthew Ryan, Starbucks chief marketing officer.

Starting on April 16, all members of the Starbucks Rewards loyalty program will be able to earn and redeem Stars for Rewards immediately after they join the program.

Members will continue to earn two stars for every $1 spent when they use a registered Starbucks Card for eligible purchases at Starbucks stores.

Starbucks said that a new, tiered rewards structure will replace the current single option at participating Starbucks locations. Further, stars earned by Starbucks Rewards Visa credit and prepaid members will no longer expire.

New Starbucks redemption options now include an extra espresso shot, dairy substitute or additional flavor for 25 stars, brewed hot coffee, hot tea or select bakery items for 50 stars, and a handcrafted drink, hot breakfast or yogurt parfaits for 150 stars.

Other tiers include lunch sandwich, protein box or salad for 200 stars, and select merchandise or packaged coffee for 400 stars.

Starbucks noted that membership for the loyalty program has increased more than 25 percent over the past two years alone, climbing to 16 million active members as of December 2018. This represents a 14 percent increase over the prior year.

The company also noted that Starbucks Rewards transactions accounted for 40 percent of tender in U.S. company-operated stores in the same time frame.

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