Even great brands make mistakes. A few years ago Waitrose installed hot drink dispensers in their stores. Anyone with a “myWaitrose” loyalty card could help themselves. Money-saving websites flagged the offer on their freebies lists. MyWaitrose membership grew from 4m in early 2014 to 6.5 million three years later. But not everyone was pleased. Aside from concerns about careless trolley-drivers with a hot drink in one hand and their phone in the other, regulars were troubled by the queues of “irregulars” around the machines. Nearby coffee shops were upset at the loss of trade. Growing myWaitrose membership seemed to indicate success, until it transpired that many people were coming in just to pick up a coffee, buying nothing. Waitrose found itself giving away about 1m cups of tea and coffee a week. Incidentally, the dominant Dutch supermarket Albert Heijn has done the same thing for years, and has been criticised by its shoppers for attracting vagrants into the stores.

Waitrose had to take action to reclaim the offer for genuine customers, and to cut down footfall that was only cluttering up stores. They declared that you could only have one drink a day, and had to show your loyalty card in order to pick up a cup from the customer service desk.

Roll forward to 2018, and everyone’s feeling bad about single-use plastic and packaging waste. Now the problem is the 1m cups being handed out every week. Another rule change. You can still have your free hot drink but you have to bring your own cup.

That will have cut down both spurious visitors and overall use of the machines. But at a price in management time and customer goodwill. Every change has to be worked through, communicated to stores, implemented and supervised. Disgruntled customers have to be advised that “we don’t do that any more” – or worse, “you can’t have that any more”. This one bright idea has generated at least two subsequent rounds of bad news to be dispensed by email and by unfortunate “partners” instore.

One wonders how this came to be top of their list of ways to reward customers in the first place. Who chooses a grocery store based on getting a free hot drink? Indeed, who wants coffee with their shopping trolley? (There’s nowhere to sit.) If you think about what Waitrose stands for, this feels dissonant and always did. Yes it offers some value, perhaps countering perceptions of being expensive. But value that is peripheral to the core isn’t worth much. If it were, taking it away would be a lot harder.

Three take-aways for brands

  1. Prioritise the things your business does which matter most to customers. Paradoxically, we tend not to notice when brands get it right, as Waitrose usually does. It’s more important to deliver the basics well, and consistently, than to offer flashy add-ons. It’s usually harder, though, as it is enterprise-wide, whereas promotions can be dreamed up and delivered from the marketing department. But when the add-on becomes more valuable than the core, trouble follows. Ask Hoover.
  2. Check the fit between brand and promotion. Waitrose’s free hot drinks stood out in part because even having an extrinsic rewards scheme feels anomalous for them. Businesses have to keep pace with market expectations, like rewarding loyalty. They don’t have to offer loyalty schemes. Laddering up to higher-order benefits will help identify brand-appropriate ways to deliver rewards. Priority booking is a big draw for arts memberships, yet costs theatres and galleries nothing.
  3. Offer added value in ways that are accessible to customers only. Avoid instant rewards, unless linked to spend. Waitrose’s free newspapers are linked to a minimum spend instore, so have never had the profile or the problems of the hot drinks offer. Most retail loyalty schemes, like Boots Advantage or Waterstones plus, offer points that take time to accumulate to a worthwhile level. They’re of dubious value to occasional customers, but they capture share of wallet, and prompt discretionary spend.
Thought leadership | December 2018