Customers are expressing their discontent as more and more well-known companies are scaling back their reward programs, including birthday freebies and discounts. These rewards have traditionally been a way for brands to cultivate loyal customer bases and encourage spending. However, Dunkin’ Donuts discontinued giving customers a free birthday drink last year and instead offered triple loyalty points on a purchase. Similarly, Sephora now requires customers to spend at least $25 to claim a free gift and loyalty points when shopping online during their birthday month.
The reason behind these changes is multifaceted, with experts suggesting that the cost of maintaining loyalty and reward programs, along with the impact of inflation and changing consumer behavior during the Covid-19 pandemic, are factors. Businesses are reassessing their expenses, just as individuals are, and questioning the effectiveness and cost of these programs. Marshal Cohen, a retail expert at Circana, explains that companies are considering alternative approaches that would be more cost-effective.
Red Robin, a burger chain, has also made adjustments to its loyalty program. In order to receive a birthday burger, customers now need to dine in and spend at least $4.99. Similarly, Starbucks has reduced the timeframe for redeeming birthday rewards over the years.
While some companies argue that these changes align with consumer behavior, others have faced criticism from customers. For instance, Starbucks discovered that the majority of their members used their birthday reward on their actual birthday. However, despite pushback, companies need to carefully communicate these changes to avoid alienating their audience.
Experts predict further changes to birthday rewards and loyalty programs in the future as companies strive to drive business in a more profitable way. With consumers cutting back on discretionary items, brands are reevaluating their programs to cater to evolving consumer preferences. The Covid-19 pandemic has caused a shift in spending habits, and companies need to adapt accordingly.
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