Michel’s Wants Loyalty but Doesn’t Give It
Michel’s Patisseries, like probably most coffee bars, offer loyalty cards.
The first thing Sir Roger noticed was that although Michel’s coffee certainly isn’t less expensive than most others, and not any better than average, only your 8th coffee is free while others give you your free coffee after your 5th.
The point of loyalty cards is … loyalty. (This is relevant to any company that offers loyalty cards anywhere in the world.) The cost of the free cup comes from the profit on the 7 coffees you pay for (in Michel’s case) but profit is increased by people buying more coffee more regularly on the promise of the freebie.
But here’s what Michel’s does. They tell you they don’t trust you. No matter what sized coffee you buy the free cup is only a small one. At Michel’s you have to pay the difference. This came as a shock to Sir Roger who was told to check the fine print. Sure enough, there in faint letters, only about 1mm high, it says “Free coffee is small size only”. Now, sure, some people might try to rort the system and buy small coffees and then ask for a Jumbo freebie. Michel’s make a big deal about this and make you pay an extra $1 or $1.50 or something.
But it makes them look cheap, miserly and nasty. And it makes them look unfriendly. And most importantly it makes them look as if they don’t trust you. That is shocking customer service.
There are only two reasons to deliver good customer service.
The first is Repeat Business. People come back and buy again and hopefully buy more and more expensive stuff – that’s what the loyalty card is all about – generating return business.
The second is Referral Business. If the service is good you tell your friends and maybe they go to the same place and buy stuff too.
If the service is bad – you tell your friends and acquaintances. And these days you tell your Twitter followers, facebook friends and blog readers. For example, Michel’s only gives you a free coffee every 8th time and asks for an extra dollar for the privilege. But Rendevous Cafe at Hunter Street Parramatta (where Sir Roger sometimes goes when he ventures into the Wild West) gives you a free one after the first 5 and they’ll give you a Jumbo sized one whatever you bought before. Guess which coffee bar Sir Roger recommends to his thousands of readers, friends and followers … He recommends you either tell Michel’s what you think of this or go buy your coffee somewhere else. There are going to be at least six alternative coffee bars you can choose from.
But there’s a solution: Sir Roger’s
servants commercial staff has formulated a recommendation for Michel’s:
Make it policy to promise a kingsized coffee as your freebie whatever you bought before, and to publicise the offer everywhere, even on TV. They’ll look really generous, it will look as if they like, value and trust their customers. This will generate many more customers than they need to cover any slight extra cost – many more customers, in fact, to buy cakes, slices, croissants, sandwiches and all their other high profit margin offerings where they make the real money, even if they only came in to get their free coffee. In fact, customers will also be more likely to pay for larger coffees anyway, out of gratitude (aka “Reciprocation”).
If Michel’s take Sir Roger’s advice he’ll let you (and facebook and Twitter) know!
UPDATE: Sir Roger went to another Michel’s recently. He ordered 3 items totalling $10.50. He offered them his credit card, knowing that where there is a minimum card purchase qualification it has always been $10.
“Oh, sorry Sir. It’s a $15 minimum.”
“Ah, well, that’s too bad then.” [Shrugs. Walks away.]
What is the cost to them? Are their patisserie products on such a tight margin that the card handling fees obliterate them? Or did they just lose a heap of money? And how much money are they going to lose over the years from a potential “lifetime customer” that won’t be going back?
The overall subliminal message, Sir Roger felt, was that they just don’t like their customers.
Posted: 13 February, 2011 in Australian Values, Economics, Internet, Media, values.
Tags: Australian Values, barista, coffee, coffee bar, commerce, customer service, loyalty, loyalty card, Michel's Michel's Patisserie, Parramatta, profit, profit margin, reciprocation, referral business, Rendevous Cafe, repeat business, retail, return business, value, values