Dunkin’s disastrous launch of a new rewards program is a lesson for any company changing their products or services.
As a loyal Perks member, I knew Dunkin’s new rewards program wasn’t going to go over well, but this is a much bigger PR fail than I could have anticipated. Customers are angry and vocalizing their displeasure across social media. Media outlets can’t stop writing about the outrage. It is as much a marketing failure as it is a design and strategy one.
The failure to anticipate and attempt to preempt the backlash to changes that were sure to be unpopular is one that the leadership at Dunkin’ must take ownership. It’s a failure of strategy (alienating loyal customers), design (the new rewards program is unnecessarily more complex) and marketing (losing control of the narrative).
The core problem with the coffee behemoth’s new rewards program is that it is now much more difficult to earn free drinks than it was before. It costs more and it takes longer, especially for anything other than regular hot or iced coffee.
This change would have frustrated loyal customers even if it had been made within the former program (DD Perks). The new program (Dunkin’ Rewards) makes this painful change worse with a new progress meter that goes beyond 900 (previously 200, the points total you needed to get a free drink) and a new “boosted” tier where you earn more points per dollar spent, but only after visiting 12 times in the same month (!!).
Buried in the stories about unhappy Dunkin’ customers were two major positives to the new program:
- Individual stores no longer have to eat the cost of your rewards. Did you know that under DD Perks, each franchisee had to pay for redeemed rewards out of their own pockets? I didn’t. The new program reimburses franchisees for part of these costs. This is a positive development that the company can be proud of and focus on. They haven’t.
- You can now redeem your points for food. While you could earn points for all purchases (including food) under the old program, you could only redeem your points for drinks. This gives more flexibility to customers and of course adds new rewards.
Dunkin’s social media accounts have done nothing to tackle the obvious pain points that customers have with the new rewards program. In fact, they haven’t mentioned Dunkin’ Rewards at all. Did the marketing team know this was going to go over like a fart in church and just stay out of it altogether? Maybe they are just siloed off from the rest of the company, which would not be surprising given their content strategy. They should have been a key part of the rollout, but now those folks are left to deal with the intense social media backlash.
Dunkin’ announced the new rewards program and app via email on October 4th. The new app was available October 6th. That’s not exactly a big window of time to prepare your most loyal customers for a jarring shift.
The company should have taken more time between announcing Dunkin’ Rewards and the actual launch. That time could have been spent explaining the changes better across email, social media and in the old app in a way that addressed these easily foreseeable challenges. It would have softened the blow. If they had focused on the big positives mentioned above, they might have been able to shape the narrative. They didn’t do any of these things, and they have unsurprisingly lost control of the narrative.
The most egregious error of Dunkin’s launch was the decision to give away 150 points away to customers for the new program. It might seem counterintuitive that a giveaway could be a colossal blunder, but in this case it was.
Under DD Perks, 150 points meant you were already close to the 200 point threshold for your next free drink. Instead, customers logged in to see their 150 points barely register on the massive new progress meter and realize that their favorite drink would probably require double or triple the points they were just given. Dunkin’ put a huge spotlight on their reward program’s biggest problem on launch day.
Thanks a latte indeed.