Best Buy, Dunkin' and Starbucks changed their rewards programs. Then came the backlash

ByNathaniel Meyersohn, CNNWire
Monday, January 16, 2023
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If you want to earn rewards points at Best Buy, you'll have to take out a Best Buy credit card to be able to redeem them.

Some customers hate the idea.

The company's free "My Best Buy" program has for years offered members points on purchases they can accrue to earn cash rewards, as well as other perks like exclusive savings offers and services.

Starting next month, however, reward points will only be available to customers who hold a Best Buy credit card. (Customers with reward points who don't want to apply for the card will get a certificate they can use to redeem remaining points.)

At the same time, Best Buy has tried to sweeten its benefits program by offering free shipping on all orders - no minimum required - for members. Previously, Best Buy had a $35 minimum to qualify for free shipping.

Offering free rewards can be expensive for companies, and they are trying to control costs during a period of high inflation. More brands have been redesigning their loyalty programs during the pandemic to manage rising costs of advertising and technology expenses and credit card liabilities.

Best Buy's changes were designed to offer customers a free alternative to Amazon Prime and Walmart+, both paid membership plans, and it was also aimed at getting them to switch to its branded credit card. Around 25% of Best Buy's sales are transacted using one of its credit cards, and research shows that customers with store credit cards spend more money than customers without them.

People in Moscow who were disappointed when Starbucks closed its coffee shops after Russia sent troops into Ukraine may now feel a caffeine jolt of hope: A nearly identical operation is opening in the capital.

But some customers were more frustrated about reward points ending for non-Best Buy credit card holders than excited about free shipping.

Customers on Twitter and Reddit criticized the changes to the points system and said they did not want to be forced to take out another credit card to earn rewards. Some said they plan to stop shopping at Best Buy as a result of the changes.

"Not sure if @BestBuy is even worth it at all now," one user on Twitter wrote Thursday. "Can get free shipping from plenty of places that don't need a branded credit card to get rewards."

Another user posted on Twitter, "No longer offering reward points unless you have a Best Buy Credit card is a VERY bad idea. It sometimes is the only reason I'll purchase from Best Buy rather than Amazon or Walmart."

Best Buy did not comment on the customers' response.

It is uncommon for companies to end rewards for customers without a credit card, said Yuping Liu-Thompkins, a marketing professor at Old Dominion University and director of its Loyalty Sciences Lab. She was uncertain whether free shipping would be enough to balance out customer anger over the redesign.

It was another example of the pitfalls of companies changing customers rewards programs.

Rewards programs are an important tool for companies to acquire customers, learn more about their preferences, and promote brand loyalty. But while rewards members may love freebies and other perks, they're equally quick to criticize companies for any tweaks.

The reaction to Best Buy's move mirrored customer backlash after changes to Dunkin' and Starbucks' rewards programs last year.

Both chains increased the threshold to earn rewards, part of what Liu-Thompkins said was a larger trend of companies devaluing points, miles and other benefits to combat higher costs.

Dunkin' said in October that it was replacing its old rewards program, DD Perks, with a new program called Dunkin' rewards.

The new system came with a number of changes. Members need 700 points to get a free coffee and 900 points for a frozen drink or hot or iced signature latte. With DD Perks, members were able to get a free drink, without those limitations, for just 200 points.

"Please keep DD Perks - it's a million times better," one person wrote on Twitter, adding "why do you have to try and fix things that aren't broken???" Another said "I hate the new dunkin rewards," adding a cry face emoji.

Starbucks also said in December that it was making changes to its rewards program, requiring members to spend more to earn some popular freebies like coffee and baked goods.

Some customers protested the changes, which go into effect next month.

"Did they not see the backlash dunkin got when they changed their program a couple months ago," one TikTok user posted.

Mary Pilecki, who leads loyalty marketing research at Forrester, said there are risks to changing loyalty programs and brands will lose some customers.

But loyalty program changes usually are not fatal for brands and are just one factor out of dozens that go into customers' decisions about where to shop, she said.

Her research indicates that the largest consumer reaction comes in the first month or two after a company announces changing. After that, it dies down significantly.

CNN's Danielle Wiener-Bronner contributed to this article. The CNN Wire & © 2023 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.