Dunkin’ Donuts Takes Aim at Starbucks’ Loyalty Program With a New App of Its Own

Apr 12, 2016

Dunkin' Donuts doesn't want Starbucks (sbux) to get all the attention this week.

The donut and coffee chain has unveiled its new mobile phone app and a promotion that helps people win a free drink faster this week, on the eve of the launch of Starbucks' new, controversial loyalty program.

The updated Dunkin' Donuts app lets customers use Apple (aapl) Pay at some stores, and win loyalty items and give gift cards simply by presenting a barcode to be scanned in the Dunkin’ Donuts store. Customers can manage and add money to their DD card directly from the app, parent company Dunkin' Brands (dnkn) said in a press release. The app will also be available on Android as of Tuesday. There are currently 4.3 million DD Perks members, Dunkin' said. That compares to 12 million at Starbucks.

The Dunkin' Mobile App has been downloaded more than 16 million times since launching in 2012.

But that still leaves that chain well behind Starbucks on the capabilities front: Starbucks introduced mobile ordering and payment in 2015, something Dunkin' has said it expects to roll out this year. Some 21% of Starbucks' sales are made via its phone app, well ahead of any other retailer or restaurant chain.

Dunkin' announcement coincides with the complete overhaul of Starbuck's rewards program on Tuesday.

Starbucks' new program bases rewards accrual on amount spent rather than number of visits. The company said when the re-launch was announced in February that this in part was aimed at speeding up service because many customers would split up orders to get more "stars," Starbucks-speak for rewards points. It is also designed to encourage people to spend more, rather than have people come in for a single item and get as many points as someone placing a big order.

On Tuesday Starbucks unveiled a new look and upgrade for its mobile app, including more personalized features including product suggestions. Members can now also win points for mobile orders for the first time. ( Starbucks said it gets 7 million mobile orders a month.)

Starbucks said customers who still have unused stars will see their balance multiplied by 11 with the move to the new program. (Until Tuesday, twelve stars got you a free drink at Starbucks. But now, members will get 2 stars per dollar spent, irrespective of the number of transactions. The scale will change so that customers will get the same payout in terms of freebies, the company has said.)

As for Dunkin', it is looking to benefit from any disruption at its rival during the transition by launching a new promotion that will allow DD Perks members to win extra points toward a free drink.

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