In a world where customers have no shortage of choices, how can your brand or business earn customer loyalty? To many coffee retailers, “loyalty programs” are synonymous with promotions and giveaways. While these programs are important, we at Insight Beverages have a foundational five-step plan to earn customer loyalty that extends beyond promotional tactics.
1. Know Your Customer
Consumers vary widely, so first identify your core shopper, and then understand this group’s shopping choices. For example, if you are targeting Millennials, research indicates a demand for convenience and a willingness to pay more for it. Convenience can come in many forms—it can be the portability of the Starbucks VIA® brand, the portion control of single-serve K-Cups®, or the ability to customize a beverage to suit a personal preference. For more price-conscious consumers, it could mean a great cup of coffee at a great value served through a convenient fast food restaurant drive-thru or bought during a quick stop in the morning at their local convenience store.
An understanding of your core shopper, as well as general industry trends, should shape what you offer. It is the first step to earning customer loyalty.
2. Offer a Great Product
Once you have an understanding of your core customer, offer great-tasting products at a fair price, in an atmosphere people enjoy. Getting that right will do more for your business than any punch card. Starbucks® and Wawa® are both examples of great products served consistently, and they have earned legions of loyal customers. If establishments choose a value price strategy, they must be careful not to downgrade the overall experience, including customer service and in-store ambiance. Offer consumers the best product and experience that you can.
3. Develop Management Quality To Enhance Customer Retention
Loyalty is generated at the local level, but support for it has to be a company-wide commitment. Equally important: Define what loyalty will look like for your business, and then track it. Some companies measure loyalty by how many customers promote their brand to their friends and family. Others choose to measure it through repeat business. It is widely understood in the restaurant business that the quality of local store management influences employee satisfaction, which, in turn, influences customer satisfaction, loyalty and same-store sales. Coffee retailers must ask how they are driving and measuring employee and customer satisfaction.
4. Build a Strong Brand
Building your own brand is a commitment to earning customer loyalty because it is a way to differentiate yourself and satisfy consumer needs. Safeway® has done it through its private label O® Organics brand and Eating Right® line of better-for-you foods. These are corporate brands, but you wouldn’t know they are Safeway® labels. However, be selective where you create your own brand. Many retailers successfully partner with other brands to provide complementary products and services. For example, many grocery retailers have national brand coffee outlets and banks on-site. Besides meeting a consumer need, they recognize the power of association with a premium brand like Starbucks®. Many coffee retailers offer single-serve dairy and juice beverages from leading national brands. As a coffee retailer, consider pairings with other businesses in your market in order to extend your brand. This could be a local bakery, catering company or wireless Internet service. Could local restaurants or offices start serving your coffee? Many coffee and tea retailers have made the move to sell their products at local and national retailers. Can a local Internet provider help you sell your products online? The choices are almost endless, depending on your market and clientele.
5. Don’t be Afraid to Innovate
Coffee retailers can earn loyalty by customizing their products for the season. In doing so, they show that they know what the customer expects: Pumpkin flavors in fall; eggnog, mint and cinnamon flavors in the winter. Coffee retailers can also earn customers’ loyalty by adopting “hot trends.” Salted caramel and marshmallow are among the most popular flavors currently, and at Insight Beverages, we have created products based on these trends. Coca-Cola® capitalized on iced tea as being one of the largest, fastest-growing beverage categories in foodservice when it took a successful retail brand and began selling Fuze® Iced Tea in U.S. restaurants. There is also a lot of innovation in natural and organic beverages that can be leveraged by coffee retailers. Innovation requires some economic flexibility and a willingness to risk trial and error. Too many retailers wait for a category to get big, running the risk of losing their competitive advantage.
Besides product innovation, we recommend a willingness to adopt social technology to boost loyalty. Coffee retailers can have conversations with customers via social media such as their Facebook page and implement loyalty programs through options like Punchh.com or SCVNGR.com. Social technology is also a great tool to gain customer insights, which in turn can shape products and loyalty programs. How well the dots get connected, however, depends on the organization’s commitment to both understanding the data and earning customer loyalty.
In summary, start with the basics. Know your customer. Serve products in an appealing atmosphere staffed by great people. If you do these things well, you will be on your way to creating an enduring brand that you can expand in multiple ways, supported by social media, loyalty programs and new technologies.
As Vice President of Marketing for Insight Beverages, Andrew Dun is responsible for charting the future growth for the company through innovative products and services.