There’s change brewing among famous coffee shops’ rewards programs, and they’re about to get a lot less rewarding.
Driving the news: Tim Hortons is shifting from a per-visit earning model to a revenue-based model next Tuesday. You’ll no longer earn ten points per visit—instead, you’ll get one point for every dime you drop.
- Timmie’s is also more than double-doubling the number of points you’ll need to redeem for a free item—under its old rewards structure, you could get a free coffee for 70 points (or after seven visits.) Now a free coffee requires 400 points which you’ll accrue after spending $40.
- Starbucks also rolled out a more expensive rewards program this week—a small coffee now costs 100 “stars” when it used to cost 50. But some items like bagged coffee or an iced coffee require fewer stars than before.
Why it’s happening: Rewards programs can be expensive for companies—redesigning them and devaluing points is an easy way to cut costs and focus on profitability as inflation continues to drive operating costs and prices higher.
- And it’s not limited to the fast food industry—Best Buy is changing their program, offering rewards only to US customers who purchase with a store credit card.
Yes, but: Some companies like Michael’s, ViaRail and Porter Airlines are expanding their rewards program, looking for a competitive edge and trying to lure points people into becoming customers.
- When rewards are easier to earn, it drives customers to collect them, especially as they approach a coveted redemption tier—in the airline industry, these are called “mileage runs.”
Why it matters: Positive reinforcement is at the heart of any rewards program—and while Canadians have been happy to use these benefits to offset increased costs, devaluing them now feels like a punishment for being a loyal customer.