Does brand loyalty matter when it comes to increasing sales in Coffee Shops?

Loyalty is a difficult thing when it comes to Coffee Shops. Do customers simply have too many loyalty cards these days?

It literally is the battle of the brands in the Coffee Market, Caffe Nero, Costa Coffee and Starbucks are all key competitors in the UKS coffee market. Loyalty within Coffee brands is hard to determine as consumers tend to fluctuate between brands to search for the best deals.

No matter what anyone says Coffee now means big business, big money and bigger market shares. The UK has seen a dramatic change within purchasing trends of consumers. For a nation who supposedly drinks tea, coffee seems to be everyone’s favorite accessory.

Even during the recession, Coffee has surprisingly remained a luxury product. As retail clothes shops were closing coffee stores were opening. With consumer spending habits changing, a discussion over a cup of coffee has become an international tradition.

Coffee houses are now on every street corner. Younger people are starting to shop more at coffee shops with Starbucks introducing ' the ice drink trend' the coffee brands are now offering variety to the younger market segment. The UK coffee houses are places that offer a relaxing atmosphere, a place where people can socialize after a shopping trip, and a business meeting point offering WIFI facilities.

The UKS most successful coffee brand today is Whitbread Brand Costa Coffee. Figures released by Whitbread in 2014 showed that £648 million British pounds were spent in Costa Coffee and £419 million pounds was spent at the competitor Starbucks. These figures show the UK Coffee Market really is booming. A massive part of the success of the Whitbread brand is down to the 'Coffee Club' loyalty card scheme.

The Scheme is giving something back to customers. The idea of the scheme was to initially attract new customers by introducing money saving offers. However, Costa found it was increasingly more difficult to retain customers. With Coffee shops now in every location possible. Your going to go to the closest coffee shop right? The harsh reality within the coffee industry is that if your customer isn't happy its easy for them to go elsewhere.

The UK is renowned for having a society full of busy workaholics. Costa noticed this important change in the market. Coffee is in such high demand and people are always in a rush therefore there is little brand engagement. This is why it is now so important for coffee chain retailers to remain customer focused. By offering deals and 5 Star customer experiences. Your retaining a customer’s loyalty.

Costas clever CRM system analyses customer buying patterns. Once the Coffee Club Card is swiped in store the system tailor’s emails with a personalized approach encouraging customers to grab the latest coffee deals, or to simply thank them for their recent purchase.

Their clever marketing techniques looked into four simple factors:

1. What did the customer buy?
2. Where did the customer buy their coffee?
3. Why did the customer buy their product?
4. When did they buy? (date/time)

According to coffee critics in order for a loyalty scheme to be successful the retailer must stay ahead of the curve. It is important for retailers to understand that every customer is different. The elder generation may be quite happy to swipe a loyalty card where as the younger generation are now more evolved by the shifts in technology. i.e.: scanning bar codes via the app store.

Costa is offering two methods of gaining points. Its making adaptions for different types of generations and targeting different audiences depending on their needs. That’s the key to loyalty success remaining totally customer focused.

But the real question is where loyalty is concerned. Do loyalty card schemes really work?

This is where journalists look to 'the commuter in the coffee situation'. Typically when commuting Costa is everywhere whether its at a train station or at the airport.

The problem with coffee shops is that every retailer offers the same incentive. 'The free coffee'. It is proven that consumers will fluctuate from store to store depending on where they are going to get the best deal.

There’s no doubt consumers will have two loyalty cards; this is a problem within the coffee sector as this could help trick retailers into giving the customer a better deal if they are seen to be shopping less frequently.

With Costa still remaining the UKS number 1 coffee brand, it shows part of their success comes from focusing on customer experiences with marketing campaigns and emails asking customers for feedback. 'Had a bad experience, let us know' This shows the brand values opinions. This is key within the service sector as we all know the public love their feedback to be valued.

By Costa listening to its customers shows this was key to the success of the brand, by the club remaining focused on their database full of rolling customer feedback it enabled the coffee brand to hold their competitive advantage. If you go where the customers are going you will succeed.

Whitbread owner claims since the introduction of the Coffee Club in 2010 members are seen to spend more on transactions and to visit more frequently. So the key to loyalty success is simple listen to the customer, build emotional connections and remain focused.

Want to know more about the coffee industry? This BBC documentary is really interesting to see how things have developed over time!

‘Its about getting it right for the customers, its not always about over taking the competition’