When coffee shops and other restaurants give you one free product for every ten you buy, they are buying your loyalty. Basically they are getting you to think about your 11th cup of coffee. This is short sighted loyalty. Owners of businesses using loyalty cards need to have their customers thinking what they are going to get for their 100th cup of coffee or better yet, their 1000th cup.
An idea for a 100 coffee purchase might be a insulated travel mug with the store logo on it. Of course it should be filled when awarded. 1000 cups could have two purposes. One could be a race for a big prize like a nice heavy jacket for the first person to buy 1000 cups. Everyone else would get a smaller reward like a sweatshirt or a cheaper wind breaker. All prizes should have the store logo on it. After all, you are looking for maximum benefit for the money you spend. You could also give away an extra stamp for bringing in a friend who makes a purchase and starts a card.
Keeping track of cards and minimizing counterfeit cards are concerns that need to be addressed. This idea would work for microbreweries, book stores, sandwich shops, bakeries, bagel stores and coffee houses.
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If simply rewarding the customer with his 11th cup of coffee (the coffee itself being the least of the shop's expenses) keeps the customer coming back again and again and again, and puts that customer in a routine of doing so (like my local Coffee Bean and Tea Leaf does), why go to the extra expense of the big prizes?
Vince,
In my wallet I have 11th cup cards for 4 different coffee shops. The reason for the bigger incentives is to get people to only buy at your shop.
Awarding prizes for 100 or 1000 cups of coffee doesn't preclude the practice of giving a free coffee away after the 10th has been purchsed. By the way, we'll soon have a wireless way to transmit credits for purchases to PDAs. As an aside, why not try intermitant reinforcement? The alure of gambeling seems to keep people coming back. "That one's on the house sir. Have a nice day." I think the recpient is more likely to have a nice day. Shoe Carnival has a "spin the wheel for a discount" wheel. How about a skill based approach? Toss the coffee bean in cup behind the counter and win a free cup of coffee. Recite a coffee poem for a free cup. For the folks who hang around coffee shops and consider themselves intellectuals, how about "solve the conundrum and win a free cup of coffee." I would hazard that nearly all of them will continue to pay. Hey, Ben & Jerry could award a cone for cone.
how about randomising the whole thing? the retailer could guarantee that they will give away for free a percentage of their average sales, say 5 or 10 %. this would mean that when you went into purchase whatever it was, you would never know if it was your turn for a freebie. of course, the retailer would have to be honest and declare how many freebies they give each day, but it might make buying a cup of coffee interesting. i dont even like coffee.
A few thoughts on this.
- re "game of skill" - Caribu coffee (at least here in Chicago) has for years posted a trivia question of the day, get it right and save $0.10 on your purchase (but you generally have to be a regular to know about this...)
- A number of restaurants here in Chicago award prizes for the person who orders the Nth of a certain dish (in one case a Risotto that is the house speciality, for the thousands I think the prize is a free meal, but for the 10,000's they award a trip to Italy! (and have awarded multiple so far that I am aware of)
- This would seem easily done by something like the Dueetto card from Starbucks (Visa card that is also a stored value card for Starbucks purchases, it pays bonuses not in miles but by adding to the stored value on the card to buy more cups of coffee.. truly a brillant credit card and one that might actually tempt me to apply for it...). Such a stored value card should, I think, fairly easily then also track total purchases by that person - allowing the store to offer a prize at certain levels.
- This is very much akin to the "player cards" used by Casinos for many, many years now.
As the price of DVD players declines, offering something that may have a high perceived value to coffee customers could stimulate additional purchases. Or, associating coffee with other technology products, like USB memory keys, which are near commodities now, might help gain a reliable following. I think the point of these programs is lowering the upfront costs of customer recapture, so the idea of offering bigger prizes for greater demonstrated loyalty makes tremendous sense to me.
Better would be an RFID wand, like the gas stations now are beginning to use.