In the world of comic shops there is undoubtedly a ‘big three’ major players. This is somewhat of a ‘holy trinity’ of coffee, that accounts for much of the industry’s business and where most of us will spend a lot of money. The brands in question of course are ‘Starbucks’, ‘Costa’ and ‘Café Nero’, each of which has a number of unique benefits of downsides that wins them their own fans and enemies.
One of the things that all three have in common is some form of rewards scheme to try and keep their customers loyal. These schemes are smart from a business perspective as a way to get repeat business from their customers but each works in a slightly different way and like the coffee itself, each has its own advantages and disadvantages. Here we will look at some of the advantages and disadvantages of each system and what you can learn from them as a business.
Café Nero has perhaps the most simple of all three reward systems and is also the place where you will get the most free coffee. At Nero you can pick up a loyalty card at any of the stores when you buy coffee and then get a stamp or two each time you make a purchase. Once you’ve filled up the nine slots you can then get a free coffee of any kind.
The simplicity of this system is first and foremost a huge bonus. This means that anyone can pick up a loyalty card even if they’re in a rush and understand it in a moment. At the same time, these cards benefit from their disposable nature – if someone loses their loyalty card they can just pick up another one and not feel hard done by.
This disposable nature though also makes them very easy to forget about, while the fact that people won’t have a card after their ninth purchase means there’s a small point where that person will have no ‘commitment’ to Nero.
Costa uses a slightly more conventional points rewards system that uses a card with a magnetic strip. Users can then have their card swiped every time they buy a coffee and get points added to their card that they can spend as they choose. Unfortunately this system is somewhat ‘stingy’ meaning you’ll probably have to drink about 20-30 beverages before you get anything for free – a fact that will cause many customers to become resentful.
While Costa’s system is relatively simple to understand, there is an online aspect for people who want to sign up, which creates new marketing opportunities for Costa and provides extra incentives to the customer.
Starbucks have made something of a mess of their rewards scheme. Recently they had a system that requires users to ‘top up’ their loyalty card by paying money into it, which meant they had to be willing to pay $20 or more for their first coffee and often left them with money ‘stuck’ on their card (though it was useful for giving to people as a gift). This system wasn’t intuitive so Starbucks has since scrapped it but the confusion has led to few people adopting the new format.
So the winner is Nero! How can your business learn from this lesson?
Jack Voltz is a business analyst and an ardent coffee lover. While there are many successful business models, he has listed 3 top coffee chains in this post and their various incentives which has led to their success.