In April of last year Starbucks modified its customer loyalty program, linking reward “stars” to dollars spent instead of store visits. Where previously you nabbed a free coffee for twelve trips to the cash register, you now need a total purchase value exceeding $63 . According to CNN, “…customers were furious with the new program.” Maybe so but those customers didn’t stay away either. Starbucks’ 2016 gross sales were $21.3B, up 10% from its previous fiscal year.
Once upon a time I resisted customer rewards programs but over the years I’ve made peace with them. I keep a couple dozen loyalty cards in the car or on my phone, ready to play whenever I visit this store or that restaurant. I still control where, what, and how much I purchase. Since I don’t keep a close eye on my rewards, I’m pleasantly surprised whenever I qualify for a freebie or a discount.
But here’s what I don’t like about rewards programs. They’re designed to manipulate your spending habits. That’s where Starbucks – like so many other merchants – gets a “fail” on my customer satisfaction test. In addition to their stars program Starbucks sends emails every other day (which I unsubscribe from but always seem to return). Those emails encourage me to purchase in certain ways or quantities or timeframes with the allure of “bonus” stars. It’s a ruse; plain and simple and obvious. No amount of “free” will ever tempt me to buy three breakfast sandwiches in five days. Or three Frappuccino’s in three days. (I don’ t even buy one breakfast sandwich or one Frappuccino. Just coffee.)
Starbucks may annoy me with their sales tactics but I still buy their products. The same cannot be said for credit card companies. The newest Visa and MasterCard programs include sophisticated reward programs where spending is literally the only path out of debt. Take Chase Bank’s Sapphire Reserve Visa card. As trendy as this elegantly thin metal card appears to be, it’s utterly manipulative. For starters, just holding the card in your hand sets you back $450 a year. Then you’re encouraged to spend $4,000 in the first three months to qualify for 100,000 reward points (recently sliced to 50,000). You’re also tempted by an instant $300 travel credit – which can only be used through Chase’s partners – as well as credits towards Global Entry, TSA Pre, and airline lounge fees.
No matter how you justify the rewards of Chase Sapphire Reserve you’re still spend-spend-a-spending to recoup the costs. Consider Sapphire points are valued at 2.1 cents each. The best-case scenario therefore – spending on travel or dining – still needs to add up to $15,000 before you’ve paid off the $450 annual fee. Too rich for me.
Las Vegas is getting in on the rewards game too. Sin City’s legendary “free drink” is about to enter the history books. Slot machines now include small colored lights, easy to spot by the passing cocktail waitress. If you’re “red” she’ll walk right past you without so much as a smile. If you’re “green” you’ve fed your machine enough to earn a “free” drink. The same goes for casino parking lots; spend enough inside the building and you’ll earn a voucher for outside. Is it any wonder gambling is no longer the biggest source of revenue in Las Vegas (in favor of hotel, restaurant, and bar purchases)?
Despite these trends, I’ll keep playing the rewards game and very occasionally cashing in on anything “free”. But I’ll also be wary of the subtle manipulations. Just yesterday I received my umpteenth Southwest Airlines’ Visa card offer. All I must do is spend $2,000 in three months for 50,000 points and no annual fee. That application goes straight to the shredder every time. My one and only Visa card with its no-frills-no-cost rewards program suits me just fine.