Loyalty & Rewards

Dunkin’ Targets Loyal Starbucks Customers

Dunkin’ Donuts is a regional power, while Starbucks is a global one, but that doesn’t mean the smaller coffeehouse chain can’t go toe-to-toe with the empire above it — as long as it picks its spots.

That’s exactly what Dunkin’ Donuts and CEO Nigel Travis are planning, Reuters reported. In an interview, Travis remarked that the recent changes Starbucks made to its rewards program — ditching points per purchase in favor of points per dollars spent — could open up an opportunity to win back low-margin spenders from the larger chain.

“We feel excited about the change to Starbucks’ loyalty program,” Travis told Reuters.

How is Dunkin’ going about its Starbucks loyalty subterfuge? Since the change to the Seattle coffeechain’s reward program now rewards customers who spend more per purchase, irrespective of how frequently they go, Travis said that his company is giving out $5 gift cards to publicize its more advantageous loyalty program. At DD, customers have to spend $40 to earn a free beverage, compared to $62.50 at Starbucks.

It’s not just Travis and dyed-in-the-wool Dunkin’ diehards who think the chain could clean up on Starbucks’ changes. Stephen Anderson, an analyst at Maxim Group, told Nation’s Restaurant News that Starbucks could see a slow hemorrhaging of certain customers for months to come.

“Given the lower-dollar threshold for the DDPerks program, we believe that some Starbucks customers — particularly lower-dollar transaction customers — may shift their ordering preferences to Dunkin’ Donuts in the new few quarters,” Anderson said.

Travis was willing to put a number on the Starbucks diaspora his company is eagerly awaiting. Depending on the scope and scale of the stream of customers, Dunkin’ Donuts could see increases of between 0.25 and 0.4 percent when all is said and done.

Those customers can’t come a moment too soon, as Dunkin’s sales dropped 0.8 percent in the last quarter.

——————————–

Featured PYMNTS Study:

More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.

TRENDING RIGHT NOW