With a coffee shop, maybe two, on every street corner, coffee has become the ultimate takeout commodity. Yet despite coffee shop proliferation and fierce rivalry between branded chains, British-owned Costa Coffee says it’s building deep emotional connections with its customers through clever use of data.
Increased sales, increased per-customer spending, and increased frequency of visits are just a few of the rewards that have come from Costa Coffee Club, the Whitbread-owned business’s three-year-old U.K. customer loyalty program.
“Four years ago, we conducted research to understand levels of customer loyalty in our marketplace and were surprised at the high level of cross-brand use,” Costa U.K. marketing director Kevin Hydes explains.
“We thought we had a hard-core set of consumers, but the findings showed this was only partly true–5% of our customer base drove 46% of our customer transactions–so we set out to find a way to build loyalty and create active brand preference.”
Launched in spring 2010, Costa Coffee Club, which secured Costa the Grand Prix at the recent Marketing Week Data Strategy Awards in the U.K., is a free card-based reward program enabling customers to earn points with every purchase that they can spend on any product in Costa stores nationwide.
The mechanics are simple: Users get five points for every pound sterling spent. Points can be “spent” on Costa products when the total passes certain thresholds.
This is where the brand’s sophisticated e-CRM strategy kicks in. By combining an understanding of where, what, why, and when registered Costa Coffee Club members buy with personalized e-marketing, Costa is motivating customers to consume more and to engage and interact more intimately with the brand.
These key principles shape the Costa Coffee Club’s plan and contributes to its’ huge success:
• Stay relevant to the product. It’s only and all about Costa’s quality coffee for coffee lovers.
• Keep it simple by not overcomplicating club mechanics or messaging.
• Get personal by sending only relevant and timely e-marketing communications.
• Be democratic. Rather than demanding all club members share personal data, extra points are offered to those who chose to do so.
• Encouraging club members to redeem points is key; if they don’t, interest can lapse.
• Personalization powers engagement and keeps e-communication timely and relevant.
• Get it right and actively engaged customers visit more frequently, spend more per visit, and promote Costa more actively among their peers.
Do you think active brand preference can be achieved–even in the highly competitive takeout coffee market?