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Posts tagged rewards

aa_eliteIf you haven’t seen the news, American Airlines announced changes to their frequent flyer program, AAdvantage. Most notably, and least surprising, is the fact that they are moving to a spend requirement for elite status in 2017. They are also adding a new elite level, Platinum Pro, one level above Platinum. It is equivalent to United’s Platinum status and requires 75k miles or 90 segments and $9,000 in spend.

I am not an American flyer, but Seth has a pretty great write-up on the changes.

There is virtually no creativity in the changes. Not that I was really expecting any, but I had a sliver of hope that things would be different in one way or another. Upgrades for top-tier elites on award tickets is probably the closest thing to that in my book, and that’s a nice nod to those customers, but the overall changes really are boring.

I have to agree. There is not a lot of anything special in the announcement and American seems to just be following in the footsteps of Delta and United.

I am probably not the customer Starbucks wants using their rewards program. When I am in a city where there are not a lot of local coffee options, Starbucks is my backup. The blonde roast is drinkable and if it is not being brewed they are happy to make a pour-over of it. All of this to say, a lot of my recent work travel has not been close to local coffee shops, but Starbucks were readily available.

The recently announced changes to Starbuck’s rewards program are not going over well.

Under the new plan, the “stars” that are stockpiled to earn free drinks and other rewards are awarded at a rate of two stars for every $1 spent. Currently, customers earn one star per visit. But it will take 300 stars to get to the company’s Gold status, up from 30 stars, and it will take 125 stars for a reward, instead of 12.

Stars will now be earned based on spend instead of number of transactions, meaning people who buy the expensive Frappuccinos will earn more stars than someone like me who orders a grande coffee. I am sure this is specifically targeted at a customer like me who earns 12 stars by ordering coffees and then redeems (or has someone else redeem) an expensive drink. Or worse, the person who orders a coffee and a pastry but in separate transactions to earn two stars and then redeems for something expensive.

Are the Starbucks changes aggressive? Yes, but just like in the airline mileage earning and redemption world you have to remember: Pigs get fat and hogs get slaughtered. Starbucks could have probably made some rules changes that simply limited the number of transactions per day to something reasonable (2 per day maybe?) but they decided to go fully revenue based. The revenue based rewards are quickly becoming commonplace across tons of different industries as a way to “reward” someone for their spend rather than their loyalty. The thing to remember is that spending more to earn a reward usually is not beneficial to you mathematically. Well, unless you’re buying the office coffee on a corporate card; Then you’re making out like a bandit.

In the end, this probably will not change my habits when it comes to Starbucks. If there is no local option when I travel, I will visit Starbucks. And that’s probably exactly what Starbucks wants. Spending habits stay the same but the number of rewards will decrease.

Craig Karamin and Ezequiel Minaya for the Wall Street Journal:

Marriott International Inc. said Monday that it has agreed to acquire Starwood Hotels & Resorts Worldwide Inc. in a deal worth $12.2 billion that will create the world’s largest hotel company with more than a million rooms globally.

Under the terms, Marriott will forward 0.92 share along with $2 in cash for each Starwood share, for a total of $11.9 billion in stock and $340 million in cash. The transaction has a value of $72.08 a Starwood share.

I can’t say that I am thrilled by this news. I used to stay at Marriott properties almost exclusively and was never all that impressed. There were a few standout locations that I enjoyed staying at but a number of them were poorly maintained or just poorly built (lots of noise through the walls). My Marriott status was Platinum for quite a while but I never saw much benefit from that status and I actually had to deal with Marriott’s rather quick expiry of points more than once.

At the end of the day, these buyouts and mergers are not about you and I the customers but about the shareholders and the health of the business. We will have to wait and see what this means for the different aspects of the rewards and loyalty programs of both hotel chains.

If you missed the news, United is lowering the value of their mileage currency on February 1, 2014. The main area of impact is international premium cabin rewards, with those flights on United metal going up in price slightly, but flights on partners going up significantly.

Be sure and book your rewards soon if you want the lower prices. After February 1, 2014, any change to an award that requires the ticket to be reissued has the potential to be repriced at the new reward levels. I do have a prediction: the implementation/roll-out of this new price reward chart is not going to go off without a hitch.

If you want more information on the devaluation and what different flights will cost, Seth has a great breakdown here.