Starbucks merging reward plans, adding free drinks

By Lisa Baertlein LOS ANGELES, Oct 30 (Reuters) - Starbucks Corp is merging its rewards cards into one free program, as the coffee chain aims to tap a rush of post-holiday traffic for steady patronage. Starbucks tends to see millions of gift card recipients in its stores in the days following Christmas each year. It is launching the new rewards program on Dec. 26, when it also will devote all of its in-store marketing to persuading those often-infrequent visitors to become loyal members. People who advance to the top level of the new program will get a free drink with every 15 purchased. "We're comfortable that we have a better program," Terry Davenport, Starbucks' senior vice president of marketing, said of the merged loyalty card program, which is called My Starbucks Rewards and launches with no annual fee. The new program is designed to minimize confusion and eliminate the $25 annual fee attached to the Starbucks Gold card, best known for giving users 10 percent off on purchases. Last winter, the company sold 26 million new Starbucks cards as holiday gift cards. The Seattle-based company already has more than 2.5 million customers who have registered their Starbucks or Starbucks Gold rewards cards. Davenport hopes to one day double that number. Starbucks stepped up direct communication with customers when the economy turned in late 2007, with good results. Its rewards programs give the company more information about customers and an avenue for sending personalized promotions. The chain is due to report quarterly results on Nov. 5. In July, it posted reported better-than-expected quarterly profit as it benefited from cost-cuts and store closures. SIMPLER AND FREE Starbucks' two rewards card programs have different benefits and Davenport said one customer even went so far as to glue a card from each back-to-back to make the most of each. Under the merged program, new members will enter at a "welcome" level and receive a free birthday drink. As purchases add up, they graduate to higher reward levels. Registered Starbucks card users come in at the second "green" level, which offers two hours of free Wi-Fi, free brewed coffee refills and other benefits. Gold card members enter at the "gold" level, which adds to the previous offers with tailored coupons and a free drink with every 15 purchased. Existing Gold card members will get their same benefits for a full year after the purchase of their cards and none of the card benefits will expire before January, even if a member's benefits were due to run out, Davenport said. Davenport said Starbucks asked a sampling of its roughly 850,000 Gold card members if they would like to switch to a no-fee program. He said there was a two-to-one preference for eliminating the fee. (Reporting by Lisa Baertlein, editing by Gerald E. McCormick) Keywords: STARBUCKS/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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