Tuesday, September 21, 2010

How my local coffee shop got loyalty all wrong

My local coffee shop near work has recently got competition, a short walk away. No surprises then, I suppose, that to provide a little disincentive for us to try out, or indeed switch to the opposition, a coffee card appeared. Every ninth coffee free.

The general vibe from customers appeared to be slightly on the cynical side - the shop didn't seem to particularly care about us before they had opposition. But a discount is not to be sniffed at, and pretty quickly we were filling up our cards with stamps.

But then, some strange behaviour. Unannounced, ordering a "medium" rather than "small" earned two stamps, not one. But the next day, "medium" reverted to one stamp. Then, a few days later, again unannounced, I received three stamps for a "small" - an unexpected bonus - customer surprise and delight, even.

But then the bonuses totally disappeared. A sense of frustration not knowing what behaviour I had to exhibit to be treated any more favourably.

Then, today, shock above all shocks, only a matter of weeks on, they are not handing out any more coffee cards! End of program looms! "Head office directive", mumbled the barista. I'm wondering now whether they'll "lose" the stamp, leaving me with unredeemed cards!

The prevailing theory among we, the hapless clientele, is that the coffee shop feels it has weathered the onset of the new competition just down the road. Therefore, they need not "pay" for our loyalty any longer.

Phew! My reflection is that this little whirlwind over the last two months has provided a salutary microcosm concerning things loyalty.

The "launch" phase, while unremarkable, was flawed. The sell-up of the offer seemed to lack a raison d'etre, or sufficient promotion at the least, that it came across as a disingenuous ploy only because decent opposition loomed. Certainly not part of an integrated customer-focused strategy.

Secondly, the rather bizarre, inconsistent crediting of bonus stamps left a sense of confusion rather than goodwill. A loyalty currency, even in the base and unsophisticated form of coffee stamps, can provide a strong mechanism for behaviour change. Yet it was never clear what behaviour they were seeking in order to gain the extra benefit. And having had a brief taste of the complimentary stamps, they disappeared. Such is the challenge for a loyalty marketer that the introduction of bonus points - or any additional benefit - creates an ongoing obligation to keep up that supply. And for it to be crystal clear what a customer has to do to earn a premium.

And finally, this tawdry vignette adds another chapter to the book entitled "it's harder to end a loyalty program than start one". In the case of our coffee shop, the end game could hardly have been executed in a less customer-friendly manner. The fact that it is being shut down so soon after beginning has reinforced a notion that we poor customers have been mere pawns in a brazen and coarse exercise.

Of course, in the larger loyalty landscape there have been any number of much higher profile (and very costly) failures. Any loyalty strategy needs to be finely planned and carefully executed. The ultimate cost for my coffee shop has been customer disaffection and distrust. Any modicum of goodwill that was tentatively established when the cards and stamps appeared has been more than wiped away by the brusque nature of its abandonment. Ironically, from this sad exercise the coffee shop has indeed created a unique "point of difference" from its competitors - just not the one it was looking for!


Apostropher said...

The idea of "coffee loyalty" makes me chuckle when I remember my experience at the place I used to get mine from. They had a loyalty card, of course, but they also had a coffee "happy hour" from 7:30-8:30 in the morning where a small coffee was $2. Queues every morning at the counter, and plenty of people eating-in too.

Then one day new management arrived, and the happy hour departed. Day One there was a bit of confusion at the register as people didn't get the change they were expecting or were asked for more money than they'd given, but when I was there everyone still bought their coffee.

I went back the next day though and the place was empty. Same the day after that. So much for loyalty. :) There were so many coffee shops in the area that no one bothered to go out of their way any more. It was the only point of difference they really had.

A few months later Happy Hour returned, but the damage was done. People had investigated the other options and hadn't bothered to go back. I'd actually taken the time to learn how to use the machine at work, so they did me a favour. Free coffee every morning. :)

Phil Hawkins said...

Interesting tale indeed. Any loyalty program, will certainly provide some stickability, but it's only ever a part of the mix. If the other bits aren't right, e.g. the coffee's no good or the owner is surly, then stamps, happy hours or other deals will be a waste of time. In another workplace I had a large choice of coffee shops, and became a fan of one shop largely driven by the bonhomie promoted by the owner (the coffee was also good). He was the only one NOT offering a coffee card!