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Starbucks offers new flavor: Free Wi-Fi
Thirsty for more business during the worst slump in its history, Starbucks will try to lure more customers by offering two hours of free AT&T Wi-Fi a day.

The Wi-Fi freebie will be available starting Tuesday to customers who purchase a minimum $5 reloadable Starbucks Card, register online for the Starbucks Rewards Card program, and use the card at least once a month. The two hours must be consecutive. New members also receive a voucher for a free drink.

Starbucks' 7-year-old relationship with T-Mobile for Wi-Fi service is being phased out in 2008.

For the coffee chain, the move is an attempt to entice its shrinking customer base — cutting back on pricey treats during the economic downturn — to return. Traffic and sales have been shrinking for months as founder Howard Schultz searches for a way to revive the brand. He's hoping the Wi-Fi freebie will attract more traffic to its 7,000 company-owned U.S. stores.

"Customers have let us know they want to be recognized for choosing Starbucks," says Brad Stevens, vice president of customer relationships. Particularly, he says, at a time when "budgets are tight."

While the Starbucks Card is 6 years old, the rewards program attached to it was rolled out in April. Rewards program members who register online already receive free syrup and milk options with drinks as well as free refills of hot and iced brewed coffees and a free drink when they buy a pound of coffee beans.

One brand experts says Starbucks still has a ways to go to revive the brand's image.

"They are desperate to keep the traffic going in their stores," says Eric Zeitoun, president of Dragon Rouge USA, a brand consulting firm. "But free Internet access won't get you there. Starbucks needs to fundamentally rethink the environment of its stores."

But Stevens says that free Internet will become a "core benefit" of the rewards program.

The Starbucks Card has become a behemoth — with more than $1 billion loaded onto cards last year.

Nearly 14% of all U.S. transactions at Starbucks are paid for using the Starbucks Card, says Stevens.

The card's new rewards program gives Starbucks an opportunity to gather personal information on its best customers (if they opt in), including details on what they like to eat and drink, and even when.

Starbucks is trying to figure out ways to market individually to consumers based on those preferences. "The Holy Grail is to reward customers with exactly what they want," says Stevens.

If you buy a scone each time you visit Starbucks, the chain is looking at programs that would reward you in the future with a free scone from time to time, he says.

Starbucks also is looking at ways to put card data on key fobs, cellphones and even travel mugs.

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