Clients are always seeking that special sauce. That one thing that will make them so amazingly different from the competition that they are a guaranteed success. Well, there are two reasons most businesses never get there… lack of willingness to risk investing entirely in a new direction, and of course, lack of a good idea.
Ironically, most businesses can come up with a. Great idea. It’s not always the absolutely newest idea. But it can be that one tweak to a business practice, product packaging, or service offering, that makes consumers behave differently.
Let’s talk Panera. Sure, tons of companies have strong loyalty programs, and many have created subscription models for their products. But Panera made it an unquestionable value when they offered Unlimited Coffee for $8.99 a month.What are they thinking? Are they trying to attract new customers to Panera? Encourage the existing customers to visit more frequently? Or, do they think this move will entice customers to arrange more frequent social encounters with non-Panera customers at one of these great local bakeries?
Perhaps they have enough data to do it all. From the outside, we can only venture a guess. Let’s look at some likely influences on this decision:
- Panera doesn’t have drive-thrus. Their main business is not coffee. They don’t promote their coffee and barristers or specialty coffee drinks.
- They started as a bakery – great breads, pastries, cookies, and other delectable, scrimptious treats that cause you to spend another 10 on the treadmill.
- Their expansion over the years has been into many more full meal products. The lunches, salads, soups are all great mid-day healthy choices, and the Mac ‘n cheese, noodle bowls, and various test meals are presented as dinner choices.
- Unlike most coffee shops, Panera does not tend to have patrons dining alone. Sitting in any of their bakeries, you will notice it is mostly friends, couples, and social groups.
There are behaviors that can be leveraged to drive success. In Panera’s case, what’s important? People like to be comfortable in where they go, what they do. A great number of people lie familiarity and routine. This is also evident at any Panera. Spend one Sunday morning in a Panera and you’ll clearly see groups who are frequent visitors – same day, same time, same group.
We like to spend money. When we get something for free through a loyalty program or better yet, a subscription program, we tend to mentally feel comfortable reaching for our wallet to spend more. Because, in our minds, it’s not really more, it’s what we initially intended to spend. If my coffee is free, I may as well buy a pastry.
Need referrals? Brands are constantly asking customers to introduce their product to their friends. Well, welcome to the incentive. Hey, let’s meet at Panera. For any subscriber, there’s not question where they’ll meet if the question is – care to grab a coffee? The subscription program is an instant referral program.
Creating consistent behavior is equally important. Go to Panera. That’s the thought that a subscription model creates!
What’s the end game? Well, you don’t see much coffee served with a lunch sandwich, and certainly not with a Mac ‘n cheese bowl. The low hanging fruit is to have people show up, buy food, more food, at their regular morning time. And, with this new behavior, have that same person visit more frequently at other meal times. Now the business is selling higher priced meals to a new-ish customer.
Watching the staff interact with customers regarding the new program is equally interesting. They know the regulars, and they encourage them to join. That doesn’t always happen, and when it doesn’t it’s equally educational about why. I watched a customer who is there almost daily, according to the conversation, say no to the subscription model. Was it because of the privacy concern? Comfort level with the model? Lots of potential reasons.
Data can actually be the new currency even in the coffee world. And, If you have a reputation as a bakery, but you really want to be a restaurant, data may just be your best asset. Sign-ups to a loyalty program that’s disguised as a coffee subscription gives you instant feedback on menu items, habits and key behaviors.
At the end of the day, it’s hardly ever about that special something. It’s always about the cause. Uber causes people to enjoy the experience of calling a cab. When did you ever imagine calling a cab in a rural town? Fandango avoids the challenge of getting tickets. A coffee subscription makes me feel like I belong here, and I’m your guest. Cheers to a gracious host.
