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Starbucks changes terms of rewards program; small spenders lose

Chicago: American coffee company chain, Starbucks, is changing the terms of its rewards program so that people who just get a regular cup of coffee will have to spend more to earn a freebie.

Currently, customers earn a star for each transaction, irrespective of how much they spend, and get a free food or item of their choice after earning 12 stars.

Now, people will now have to earn 125 stars for a free item, with each dollar spent being worth two stars ? meaning they have to spend $62.50 to get their free item.

The company says the change is the No. 1 request among loyalty program members and predicts it will lead to higher spending by customers keen to earn more stars.

The vast majority of customers will earn rewards at an equal or better rate with the change, Starbucks chief strategy officer Matthew Ryan said. Without providing details, he said a small minority of customers will earn rewards at a slower pace.

Ryan further added that the current rewards system can also increase waiting times in store lines because some people try to get additional stars by asking to ring up multiple items separately, and such instances account for 1 percent of all transactions.

The change has come as the company has been trying hard to get more people signed up for its My Starbucks Rewards program. Loyalty members spend three times as much as non-members, and help push up profit.