Rewards Case Study: Tim Hortons Rewards

If you’re familiar with Canadian culture you’ve probably heard of the largest coffee chain in the country–Tim Hortons. Despite being a national favorite, their recent rewards program changes have even the most patriotic coffee fans questioning their loyalty.

In February 2023, Tim Hortons decided to shake things up with changes to its Tim’s Rewards program. With adjustments to points earning and redeeming rules, a wider variety of rewards, and some updates to the app, it’s time to see how the new program measures up. In a competitive industry with brands like Starbucks and McDonald's zeroing in on loyalty program updates, Tim Hortons is up against some steep(ed) competition.

Let’s look at what this new program offers and if the changes were worth the wait or if it will have customers missing Tims’ old fashion plain rewards.

Where Tims Rewards sweetens the deal

With a complete overhaul of their rewards program, you can expect that customers’ reactions are mixed. With a variety of rewards, engaging bonus points events, and personalized offers, there’s a lot to raise a glass (or mug) to in Tims Rewards' new program.

A wide rewards menu

One of the best parts of Tims Rewards is its rewards. No matter whether you count on Tim Horton’s for your morning coffee or you opt for a full lunch, you can save your points for a reward that appeals to you.

Under their new rewards program, Tim Horton’s allows customers to redeem their points for almost anything on their menu. Offering diverse rewards is a great way to appeal to a wide range of customers.

As a coffee shop loved almost as much for their baking as their coffee, offering a full rewards menu is a good call.

Whether you are looking for frequent rewards or the chance to bank your points for a free lunch (who said there’s no such thing?), Tim Hortons caters to every type of reward program member.

Bonus point events with double (double) points days

One of the biggest critiques of Tim Horton’s former reward program was the lack of motivation to engage customers. Additional program features should be used to motivate member engagement. While Tim Hortons’ former program did have a dedicated mobile app it had several layers of complexity that didn’t add to the customer experience.

With their new program changes, Tims removed their 30-minute “cooling off” period for earning rewards, lowered the minimum spend from $0.50 to $0.10, and added bonus points days to create excitement around their program.

Tim Hortons introduced the concept of using their loyalty program as an event-based marketing tool through bonus point days. Along with introducing the new Tims Rewards, Tim Hortons offered customers 2X the points for 4 days in a row. The goal was to increase customer engagement and excitement with the new program. With competitors like Starbucks baking these gamification concepts into their program with Double Stars events and annual games, it was time for Tims to start playing the game.

Along with double points days, Tims Rewards engages customers with other mobile gamification techniques. Tims’ app features a points meter on the homepage to visually show customers how close they are to earning their preferred reward. As a Canadian staple, Tim Hortons stays true to its roots with its Tims Hockey Challenge allowing customers to predict 3 NHL players that will score in that day's games.

Tim Hortons shoots big with these gamification strategies, but did they score or hit the post?

Tims Rewards isn’t everyone’s cup of tea

As with most major changes, customers who were accustomed to the old program are feeling frustrated and undervalued. Let’s dig into the details and see if customers just need some time to adjust or if it’s time for Tim Horton’s to brew up something better.

Program changes are leaving a bitter taste in customers’ mouths

The sole purpose of a loyalty program is to turn one-time customers into repeat customers and build a loyal following. To achieve this, your program needs to be appealing and motivating for your customers. Unfortunately for Tim Hortons, their new program changes seem to have done the exact opposite.

Customers are taking to social media to voice their complaints about the new redemption values. In the old program, customers were rewarded 10 points for each visit they made, regardless of how much they spent. This meant that customers who visited daily for their morning coffee would earn 1 free coffee for every 7 purchases they made, earning a reward on a nearly weekly basis.

In the new rewards model with customers earning 10 points per dollar spent, these customers are the ones being negatively impacted. With the cost of a free coffee going from 70 points to 400 points, the amount customers needed to spend for that $2 coffee reward went from just over $12 to $40.

But this new points model isn’t all bad. Customers who tend to make larger orders will rejoice. If we do some quick rewards program math, customers who have an average order value of $5.72 ($40 / 7 visits = $5.72) or more will find more value in this new program than the previous 7 orders for 1 free coffee model.

Tim Horton’s is rewarding customers with high AOVs and punishing customers with high purchase frequencies.

Tim Hortons also addressed the difference in points value by multiplying all of their members’ existing points by 6.2 when they made the changes. Their goal was to compensate customers for their hard-earned points, but were the changes too little too late for such a drastic change in their reward redemption levels?

Inconsistent reward values

While Tim Hortons offers a wide variety of rewards, not all options are created equal. As one of the more affordable coffee brands compared to premium competitors like Starbucks or Dunkin Donuts, Tim Hortons appeals to customers who want value in their purchase. This means that they’re looking for value in their rewards program too.

As a general rule of thumb, we recommend giving 3-10% back in points for every dollar spent.

While a majority of Tims Rewards' new options fall within this category, there are a few that fall short. For example, if a customer is looking for an afternoon pick-me-up, an espresso worth $1.50 would cost them 800 points, or $80. That’s a return on investment of only 1.875% ($1.50 / $80 = 0.01875).

On the other hand, hashbrown lovers can rejoice! With a hashbrown worth $2 and redeemable for 300 points, customers are getting a 6.67% ROI.

As self-proclaimed loyalty program nerds, we’re happy to do this math and discover the true value of Tims Rewards. But the coffee brand shouldn’t expect their customers to have to do the same. A loyalty program should be valuable to all customers–hashbrown lovers and espresso enthusiasts alike.

Stranded in the middle of being overly complicated and unengaging

After being late to the party, only launching their first loyalty program in 2019, Tim Hortons finally built a loyal community of program members. But with these new reward program changes, that excitement quickly died down. This shows us that building customer loyalty is a continuous process.

Even with a mobile experience and decent rewards selection, Tim’s Rewards won’t be able to inspire the emotional connections that breed long-term loyal customers. Unless Tim’s can make it a delight to join, offer rewards their customers actually find valuable, and motivate customers to engage with the program like their competitors, customers won’t stick around too long.

While something is better than nothing, in the case of Tim Hortons' new rewards program it might just be too little, too late.