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Improving coffee loyalty schemes

Hold up!

See that little date above?

This post was published years ago.

My opinions have changed over time: I think it's quite fun to keep old posts online so that you can see how that has happened. The downside is that there are posts on this site that express views that I now find offensive, or use language in ways I'd never dream of using it today.

I don't believe in airbrushing history, but I do believe that it's important to acknowledge the obvious: some of what I've written in the past has been crap. Some of it was offensive. Some of it was offensively bad. And there's may be some brass among the muck (you can make up your own mind on that).

Some of what I've presented as my own views has been me—wittingly or unwittingly—posturing without having considered all the facts. In a few years, I'll probably think the same about what I'm writing today, and I'm fine with that. Things change. People grow. Society moves forward.

The internet moves on too, which means there might be broken links or embedded content that fails to load. If you're unlucky, that might mean that this post makes no sense at all.

So please consider yourself duly warned: this post is an historical artefact. It's not an exposition of my current views nor a piece of 'content' than necessarily 'works'.

You may now read on... and in most cases, the post you're about to read is considerably shorter than this warning box, so brace for disappointment.

There are few things that are further from my area of expertise than coffee retailing, but here’s a thought that occurred to me last week, and that’s been festering ever since.

All the major coffee shop chains and many local coffee shops have loyalty schemes these days. These are often of a particular type: buy X coffees and received the Yth coffee free. The generosity of such schemes varies widely: X=5 at McDonald’s, X=9 at Caffe Nero, and X=15 at Starbucks. Some chains do something slightly different – Costa, for example, gives points equivalent to 5% of the customer’s spend to be redeemed on future purchases, but let’s set those alternative schemes to one side.

The thing that links all of the common schemes is they are effectively fixed ratio reinforcement schedules. That is, they entice customers to buy more coffee by promising a freebie every X visits. But a wealth of literature from psychology reveals that this isn’t really very effective in getting people to form habits, not least because their motivation to consume drops off immediately after claiming free coffee Y.

A far more effective method of getting people to form habits is to build a variable ratio reinforcement schedule. As with gambling, this means that the punter / customer never knows when the win / free product is going to materialise. This keeps motivation consistently high.

In practice, what I’m suggesting is that the ratio of visits to free coffees is kept the same (X+1:1), but that the free coffees are dispensed at random. This would appeal to me: I’d love to come to pay for a coffee and be unexpectedly told that this one’s free. An infrastructure change would be necessary for some coffee shops – stamp cards wouldn’t really work well for this – but, for example, Starbucks already uses swipe cards which could be made to work this way fairly easily.

Alternatively, instead of randomising at the individual customer level, the tills could be set to randomise across all customers. Or, to make it even simpler, with every coffee purchased, each customer could be given a scratchcard with a 1 in X+1 chance of winning a free coffee. The latter might even be preferable, as there would then be two “special” visits: the one in which the customer wins, and the one in which they redeem their winning scratchcard. The customer would feel rewarded for their loyalty twice as often at no extra cost to the vendor.

If judging on cost alone, why would I visit retailer A, where there is no chance of getting my drink for free on a particular visit, when I could visit retailer B, where there is a 1 in X+1 chance? Economic discounting would probably play against traditional schemes: I’d probably rather have the chance of a free coffee today than the certainty of a free coffee after X visits.

Of course, retailers would have to be careful about how they presented this scheme: it would likely be to the detriment of any brand to associate themselves with gambling. Yet this seems like it should be a minor point, which should be easily overcome.

So here’s the thing: this idea appeals to me as a consumer, a wealth of literature suggests that it could increase trade, yet (to my knowledge) no-one uses it. Why not? Where’s the rub? What have I overlooked in my assessment? Tell me why I’m wrong!

This post was filed under: Miscellaneous, , .

My shocking retail predictions

Hold up!

See that little date above?

This post was published years ago.

My opinions have changed over time: I think it's quite fun to keep old posts online so that you can see how that has happened. The downside is that there are posts on this site that express views that I now find offensive, or use language in ways I'd never dream of using it today.

I don't believe in airbrushing history, but I do believe that it's important to acknowledge the obvious: some of what I've written in the past has been crap. Some of it was offensive. Some of it was offensively bad. And there's may be some brass among the muck (you can make up your own mind on that).

Some of what I've presented as my own views has been me—wittingly or unwittingly—posturing without having considered all the facts. In a few years, I'll probably think the same about what I'm writing today, and I'm fine with that. Things change. People grow. Society moves forward.

The internet moves on too, which means there might be broken links or embedded content that fails to load. If you're unlucky, that might mean that this post makes no sense at all.

So please consider yourself duly warned: this post is an historical artefact. It's not an exposition of my current views nor a piece of 'content' than necessarily 'works'.

You may now read on... and in most cases, the post you're about to read is considerably shorter than this warning box, so brace for disappointment.

A little over twelve months ago, I was asked on a discussion forum to make predictions about the retail sector in 2012. I’d forgotten all about this until today, when somebody pointed out my prescience!

On 30th December 2011, I posted the following (forgive the reformatting!):

M&S is going to have a bad year: They seem to be doing everything humanly possible to disassemble the formula that brought them back from the brink a few years ago. On the other hand, WHSmith’s profits are up, even if their sales are down – I reckon they can ride out the storm for a while. My predictions for chains that will collapse are JJB (frankly surprised they’re still around); Past Times (feels like it’s had its day, so to speak); and Mothercare / ELC (already pulling out of town centres, doesn’t bode well).

And, indeed, M&S had a bad year, WHSmith did reasonably well, Past Times closed, JJB closed, and Mothercare is on the brink.

You might think I’d feel proud of my amazing predictive abilities, but in fact, I feel mainly freaked out – especially since my history with predictions isn’t great. It’s also weird to think that I correctly predicted thousands of job losses – it gives me a creepy sort of guilt, as though I’m somehow responsible.

So given the discomfort I’ve inadvertently caused myself, the only prediction I’ll make for this year is that the economy will fully recover with no more companies folding, and unemployment will hit record low levels. Though if that turns out to be true as well, I might displace Mr Soult as the media’s favourite north east retail analyst!

This post was filed under: Miscellaneous, News and Comment, , .

It’s Crimbo!

Hold up!

See that little date above?

This post was published years ago.

My opinions have changed over time: I think it's quite fun to keep old posts online so that you can see how that has happened. The downside is that there are posts on this site that express views that I now find offensive, or use language in ways I'd never dream of using it today.

I don't believe in airbrushing history, but I do believe that it's important to acknowledge the obvious: some of what I've written in the past has been crap. Some of it was offensive. Some of it was offensively bad. And there's may be some brass among the muck (you can make up your own mind on that).

Some of what I've presented as my own views has been me—wittingly or unwittingly—posturing without having considered all the facts. In a few years, I'll probably think the same about what I'm writing today, and I'm fine with that. Things change. People grow. Society moves forward.

The internet moves on too, which means there might be broken links or embedded content that fails to load. If you're unlucky, that might mean that this post makes no sense at all.

So please consider yourself duly warned: this post is an historical artefact. It's not an exposition of my current views nor a piece of 'content' than necessarily 'works'.

You may now read on... and in most cases, the post you're about to read is considerably shorter than this warning box, so brace for disappointment.

20130105-114410.jpg

Here’s me with Crimbo, the smallest of the Metrocentre’s oversized reindeer! It’s almost twelfth night, so I guess they’ll have to be dismantled soon!

This post was filed under: Scrapbook, , , .




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