No more free coffee on your birthday? Companies rein in customer rewards programs — here’s why

Jul 5, 2023, 2:03 PM

WASHINGTON (AP) — Reward programs, including birthday freebies and discounts, have long been a way for brands to build loyalty and incentivize spending. But now some companies are becoming a bit more stingy — and customers are taking notice.

Last fall, for example, many balked at Dunkin’s decision to stop offering a free drink on their birthday and instead give them triple loyalty points on their purchase. On June 1, Sephora started requiring a $25 minimum purchase for online customers looking to claim a free gift and 250 loyalty points during their birthday month. And Red Robin added a dine-in only and $4.99 minimum purchase requirement for customers to get their free birthday burger.

Changes to birthday rewards or redemption requirements aren’t new. Starbucks, which gives its rewards members a free drink or food item for their birthdays, progressively limited the timeframe for redeeming that gift over the years — from 30 days, to one week, to four days and, finally, to just the date of your birthday in 2018.

Some experts say the cost of maintaining loyalty programs, as well as recent impacts of inflation and changes in consumer behavior since the start of the COVID-19 pandemic, are among the reasons why companies may be pulling back.

“While we’re assessing our own personal expenses, so are businesses,” Marshal Cohen, chief industry advisor of Circana and retail expert, told The Associated Press. “Businesses have to look and say, ‘Are these programs working? Are they working to full capacity? … (And) is there another way of doing this that wouldn’t cost us as much money?’”

For Sephora customers enrolled in its Beauty Insider birthday rewards, for example, they can still claim their free gift in person with no minimum purchase. But it costs the company money to ship products sold online, noted Leora Lanz, assistant dean of academic affairs and assistant professor of practice at Boston University’s School of Hospitality Administration.

Sephora did not immediately respond to The Associated Press’ request for comment.

Despite consumer pushback, some chains have argued adjustments to rewards programs simply reflect how customers behave. In a statement to The Associated Press, Starbucks said it “found that the vast majority of members were using their birthday reward on their actual birthday.”

Dunkin’ argued that its new rewards program would give its customers more flexibility and a larger variety of food and drink options — and in a statement to The Associated Press last week, the company said the new program lets “members celebrate their birthday even longer,” pointing to the three-day window within which customers can triple their loyalty points on birthday purchases.

Still, the announcement felt off-putting for many Dunkin’ customers, who shared frustrations online. In the months following Dunkin’s announcement, dozens of Twitter users have expressed disappoinment over learning that the free birthday drink was gone. Some joked that they “no longer run on Dunkin,’” a dig at the chain’s slogan, and others suggested that they might take their future business elsewhere.

Experts say the way companies communicate changes to rewards programs is key.

“What (brands) need to do is not make too many changes so often — because you’re going to start rubbing your audience the wrong way and it could backfire — and you should be very thoughtful about it,” Lanz said. “They do need to communicate it so that it’s not a complete surprise.”

Others say that drawing attention to what’s “being lost” can also cause backlash — and it’s better to provide clear alternatives for consumers to feel rewarded.

Red Robin, which said it began the dine-in only and $4.99 minimum purchase requirements to its free birthday burger “to maintain the integrity of the promotion” and give guests “the best possible experience” by celebrating in restaurants — also introduced a half-birthday treat in 2023 “as an added gesture of appreciation.”

Consumers are likely to continue to see changes to birthday rewards and customer loyalty programs down the road, Cohen noted.

“The pie is getting smaller for a lot of these discretionary items,” he said, pointing to persistent high costs of living that consumers are facing and the increased competition among businesses vying for those limited dollars. “You’re going to see a lot of (companies) assess their programs to try to figure out how to drive business in a more profitable way.”

It’s possible this could mean a scaling back of more rewards programs. But there could also be an opposite effect, Julie Ramhold, consumer analyst with DealNews.com, said — noting that some retailers could offer “potentially better birthday rewards to encourage a return to spending on frivolous items.”

United States News

Associated Press

Judge rejects calls to halt winter construction work on Willow oil project in Alaska during appeal

JUNEAU, Alaska (AP) — A federal judge in Alaska on Friday rejected requests from environmental groups to halt winter construction work for the massive Willow oil project on Alaska’s North Slope while the groups’ legal fight over the drilling project wages on. U.S. District Court Judge Sharon Gleason just last month upheld the Biden administration’s […]

56 minutes ago

FILE - Rioters at the U.S. Capitol on Jan. 6, 2021, in Washington. Frank Rocco Giustino, who skippe...

Associated Press

Lawsuits against Trump over Jan. 6 riot can move forward, appeals court rules

Lawsuits against Donald Trump over the U.S. Capitol riot can move forward, a federal appeals court ruled on Friday.

1 hour ago

Associated Press

Former Colombian military officer accused in base bombing extradited to Florida

MIAMI (AP) — A former Colombian military officer accused of injuring dozens, including three U.S. soldiers, in a bombing attack at a Colombian military base has been extradited to South Florida. A five-count indictment against Andres Fernando Medina Rodriguez, 39, was unsealed Friday in Miami federal court, according to court records. A federal grand jury […]

3 hours ago

Associated Press

Los Angeles police searching for suspect in three fatal shootings of homeless people

LOS ANGELES (AP) — Los Angeles police are searching for a suspect in the fatal shootings of three homeless people in separate incidents around the city, authorities announced Friday. All three shootings occurred in the early morning hours over several days in November, Police Chief Michel Moore said at a news conference along with Mayor […]

3 hours ago

Associated Press

US expels an ex-Chilean army officer accused of a folk singer’s torture and murder

MIAMI (AP) — The U.S. has expelled a former Chilean Army officer accused of torturing and killing folk singer Victor Jara during the country’s bloody 1973 coup. Pedro Barrientos had emigrated to Florida in 1990, the same year the bloody dictatorship of Gen. Augusto Pinochet came to an end. This year, he was stripped of […]

3 hours ago

Associated Press

Guest lineups for the Sunday news shows

WASHINGTON (AP) — ABC’s “This Week” — White House National Security Council spokesman John Kirby; Ron Dermer, Israeli minister of strategic affairs; Sen. James Lankford, R-Okla. ___ NBC’s “Meet the Press” — Kirby; Florida Gov. Ron DeSantis, a Republican presidential candidate; Allyson Felix, Olympic gold medalist and Black maternal health advocate. ___ CBS’ “Face the […]

4 hours ago

Sponsored Articles

Follow @KTAR923...

The best ways to honor our heroes on Veterans Day and give back to the community

Veterans Day is fast approaching and there's no better way to support our veterans than to donate to the Military Assistance Mission.


Dierdre Woodruff

Interest rates may have peaked. Should you buy a CD, high-yield savings account, or a fixed annuity?

Interest rates are the highest they’ve been in decades, and it looks like the Fed has paused hikes. This may be the best time to lock in rates for long-term, low-risk financial products like fixed annuities.

Follow @KTAR923...

The 2023 Diamondbacks are a good example to count on the underdog

The Arizona Diamondbacks made the World Series as a surprise. That they made the playoffs at all, got past the Milwaukee Brewers in the NL Wild Card round, swept the Los Angeles Dodgers in the NLDS and won two road games in Philadelphia to close out a full seven-game NLCS went against every expectation. Now, […]

No more free coffee on your birthday? Companies rein in customer rewards programs — here’s why