Thursday, 13 February 2014

Does free coffee in the supermarket foster loyalty?

Supermarket chain Waitrose has described the traditional points-based loyalty schemes of rivals such as Tesco as ‘meaningless’.  Customers, they say, derive little value from collecting points over time.

Instead, Waitrose claim they’re all about affinity and creating a social hub for the local community.  Under their My Waitrose scheme customers are eligible to collect a free cup of tea or coffee every day and, if they spend more than £5, a free newspaper.  The result is that Waitrose now brews around one million cups of free coffee a week.

According to Mark Price, Waitrose MD, speaking to Marketing Week : “We want to say to our customers ‘welcome to our shop, have a cup of coffee, read a newspaper, we’ll look after you’”.

If my local Waitrose is anything to go by, the offer is mostly taken up by individuals who pop in to claim their free coffee, buy some ciggies and pick up a free newspaper before decamping to their local Aldi.  Whereas the target yummy mummies seem to be too preoccupied dealing with little Hugo and Jemima, wrestling with a trolley and/or buggy to want to hold a Styrofoam cup of hot coffee as well.

Waitrose say they have no problem with this.  I’m not so sure.  I admire their distinctive approach in stepping aside from the competition and their desire to create a better shopping experience (I’ve argued for this recently in my piece on short-term sales growth v loyalty).  But I do wonder whether they have missed something in the execution.

Would it not have been wise to set a spend threshold for membership of the scheme? Membership is currently unrelated to spend, hence the free coffee brigade. Setting a qualifying £5 or £10 initial spend for membership would seem to be a more commercial approach to rewarding genuine customers and creating affinity. Rather than attracting visitors who have no intention of grabbing a basket and conducting a weekly shop.

Footfall in Waitrose may be on the up and its traditional ‘posh’, and possibly inaccessible, reputation may be under question, but I wonder whether Waitrose can reasonably argue that they are fostering greater levels of affinity and brand loyalty with their target audience?

But then Waitrose might be happy being the UK’s largest purveyor of coffee. At their own expense.