Marketing (over) coffee

mugHere in Prague we’ve got 3 players in the ‘Starbucks style’ coffee shop market (and some pretty decent small ‘classic’ cafes, and a fair few ‘grand cafe’ type places too). Personally I’ll have a coffee anywhere that serves a decent cup, but some of the smaller places are losing out to the chains. It would be a shame to lose some of these places but inevitability is knocking at the door.

There are a number of reasons why Starbucks, Costa and Coffee Heaven are always busy and the independent are not.

Reason one: to-go

The big guys will all serve you coffee to go in a big takeaway cup. The smaller cafes don’t even have a serving size equivalent to the Venti or Massimo (extra large!). That just doesn’t fit with the image of a coffee to go that we see on TV – business person drinking from an oversized coffee cup like it’s a baby’s bottle.

Reason two: comfy chairs and sofas for those who drink ‘in’

Reason three: an array of pastries and snacks on display, some that you can pick up and go to the counter with

Reason four: consistent, basic service – sure table service is nice (well, in Prague it sometimes isn’t) but walking up the counter and ordering your beverage of choice, in the knowledge that it’ll be ready in around 2-3 minutes, is comforting in an odd ‘hanging around at the end of the coffee counter’ kind of way. And you know what the score is there, you don’t think ‘is it table service or counter service? Do I pay when I order or after?’.

If you’re in Prague the following names will be very familiar to you: Dobra TrafikaKaaba and Kava Kava Kava (so good they named it thrice).They were all here before the chains arrived and they do OK but they’ve not expanded as much and don’t have a presence in malls, like the others.

The chains have innovated – they’ve expanded the product line – you’d get odd looks asking for a ‘tall soya latte with caramel’ in Ebel. They’ve innovated with branding – creating brands that are instantly recognisable, stamped all over the china and paper cups, on bags, loyalty cards and merchandise. They’ve innovated experientially – it’s a comfy chairs, spend a few hours kind of place. They deliver an experience in the same way that McDonalds and Coca-Cola do – with coke it’s not about the taste it’s about the advertising, the smell of the burgers that reminds you of your childhood, the ‘hand-embellishment’ of the can or bottle.

Whilst they’re a little less personal, the chains are winning out because they’ve got the money to spend opening branches. They’ve got the brand that says ‘you’ll get decent coffee, and pre-packed sandwiches here’.

How could the independents fight back? Loyalty cards? Start selling factory-produced sandwiches and overpriced microwave-warmed muffins?

Here are a few simple ideas that might help:

  1. Bundle – none of the chains are doing this, in Prague at least. None of them are doing the simplest thing McDonalds did to boost revenue – the ‘extra value meal’. It’s all about share of customer. You’ve already got them in the door, why shouldn’t you try and make the most you can by serving them? Coffee and cake are meant for each other – give a small discount and make the customer’s decision easier. Do I spend $3 on a coffee and another $3 on a cake? How about $5 for coffee AND cake. Their cakes are usually better and fresher than the chain ones anyway!
  2. Loyalty mug – have some mugs made with your logo on, buy a sharpie. Your staff recognise your regulars – you don’t need to tempt people with expensive-to-run loyalty cards. Write the regular’s name on the mug with a sharpie, along with the details of their favourite coffee. Hang them up behind the bar – others will want one for themselves. (And yes, I did take this idea from the local pubs that do the same for their regulars.) For extra points (we’re out of the realms of simplicity here but this is where it gets good) barcode it and match the barcode up on your point-of-sale system – and every now and again (randomly, maybe every tenth or twelfth visit) comp their coffee and say ‘this one is on us’, you’ll also be able to see how effective this strategy is, with real numbers. Record how often that person comes in. Really regular customers get a mug to take home too (just give them their old mug and write on a new one).
  3. See what the big guys are doing well and neutralise their competitive advantage as much as you can. Offer free wi-fi if you aren’t already. Make it obvious that you offer to-go, put the to-go cups on display and on the large menu board you have above the bar (you do have one of those don’t you?) have a section that says ‘place to-go orders at the bar otherwise have a seat and we’ll come take your order’ – and put menus on the tables so people aren’t straining their eyes to see the menu at the bar. Don’t have comfortable, welcoming seating? Get some.
  4. Be thoughtful. You should really clear your palette after drinking a coffee, but after paying $4 for a coffee at a chain, you’re not that enthusiastic to spend another $2 just to clear your palette. Some but not all places do this – serve a small glass of water with the coffee, it doesn’t have to be expensive bottled water (for environmental reasons it shouldn’t be), but use a water filter and make sure customers know it’s not just tap water.
  5. Celebrate your differences – as an independent you’re not bound by ‘corporate think’. Encourage your staff to be creative in their work and test out new ideas. Involve yourself in your community, have local artists hang their work on your walls. You’re not an impersonal chain, you are your customer’s very own coffee sanctuary.

What ways would you suggest an independent cafe differentiate itself from the Starbucks of this world? Comment here.


Photo credit: MezzoBlue, Title: Marketing Over Coffee

Loyalty Cards – How Many is Too Many?

loyaltycardsWe all like to be treated well by companies we use frequently and the loyalty card is the simplest tool at a marketer’s disposal to identify your best customers. Used well they’re very effective – they keep a customer using your airline, even when the others are more expensive, they allow you to track customer behaviour and target your marketing efforts more effectively.

There’s just one problem – they’re a huge pain to carry around. In this image there are cards for a restaurant, a cinema, a coffee chain, a drugstore, an airline, a hotel chain… It’s all very well for marketers to assume that a customer will only have their airline’s loyalty card in their wallet, but what about all the other companies? Supermarkets, petrol (gas) stations and every other loyalty card scheme are all vying for space in your already over stuffed wallet/purse/pocketbook.

Some supermarkets have figured this out, they give you a different piece of plastic with a number on – a small card to go on your keyring, so of course you can’t leave home without it – that works fine until you end up with 10 of them on your keyring and your bunch of keys won’t fit in a pocket any more.

As Guy Kawasaki says ‘never ask someone to do something you wouldn’t do yourself’. Loyalty marketers need to consider this: would you carry around a wallet full of plastic just for the, at best, 10% benefit the card earns you, if you remember to show it?

If only there was a universal card that everyone carried…

All a loyalty card does physically, at best, is carry a unique identifier. You usually have to fill in a form when you get it, parting with various pieces of personal information. There should be an option on these forms for you to enter the number from a piece of ID that you always carry. A National ID card in a lot of countries serves this purpose. For Brits or Americans, it would be the driving license. Make the hardware that’s used to scan the loyalty card also capable of reading the various types of ID card in use. Oh, and tell people ‘you don’t need to bring this piece of plastic with you providing you’ve got this other piece of ID you’ve registered with us’. The tinfoil hat brigade are happy – this is optional – and the rest of us don’t have to carry around a huge pile of plastic cards.

What are the potential pitfalls in doing this?

1. Customers may forget they have a ‘loyalty card’ and spend their money elsewhere instead

2. No analogue backup to enable you to check someone’s account if your database goes down

Point 1 is easily dealt with – if the only thing that enables you to retain a customer is a piece of plastic then you have bigger problems; you’ve clearly not been marketing to them effectively and your service is lacking too. As for point 2, that’s an internal systems issue, nothing to do with your customer. If someone says they’re entitled to the top level of discount offered by your loyalty programme, give it to them. Your clerk can always take the customer’s details and enter it later. If it doesn’t check out, so what, you’re still making a profit on your best customers aren’t you?

This problem’s going to get worse as it gets bigger but if you’re a loyalty marketer I implore you to consider this as an option to provide to your customers.

UPDATE 2009-05-30: An iPhone App by CardStar, profiled by Mashable, looks to solve the problem, for iPhone users at least – providing the merchant can scan your barcode (or will accept typing the number in) – sounds like till operator training is required more than anything. One of the commentators on the Mashable piece said that he just took pictures of his cards and saved them in an album on his iPhone.