Customer loyalty and the fine art of balancing

Keeping regulars, seducing prospects: the age-old customer quandary

I’m a big believer in online grocery shopping. Not for me the tedium of trawling the aisles and schlepping bags in and out of the trolley, in and out of the car. Forget it. Give me the online supermarket experience any day. I don’t need to press the flesh (fruit, that is) or kiss babies (tomatoes, that is) to have a good time. No, give me a website, a mouse, and a debit card, and I’m happy as a pig in shiitake mushrooms, with a honey glaze on a bed of rice. But which website? Which supermarket? There are so many to choose from, and often not much to differentiate them. I used to be a supermarket tart, changing from one to the other as the mood took me. Who had better offers? Better delivery slots? An easier checkout process? But in the end, of course, it was swings and roundabouts. Save on delivery, but lose out on price. Save on price, but lose out on convenience (two-hour slots instead of one, for example). Still, it didn’t stop me shopping around. That was half the fun. Then, Tesco did something really clever. They introduced Delivery Saver, where you paid up-front for six months, and could pick any delivery slot, any day, for free. Well not free, you understand, but for no extra charge. So a midweek £3 slot could be swapped for a prime position at the weekend which normally comes in at a whopping £6. Hook, line and sinker, since you ask. Of course I bit – what wasn’t to like?

Give and take

But loyalty is a two-way street, in life as in love. Each side has to come to the party – preferably bearing gifts. And the marriage of convenience has to continue making sense. Otherwise, when the honeymoon is over, you could be heading for a separation. Which Tesco knows, of course. And they had another trick up their sleeve. But more of that in a moment. Let’s walk out of one store and into another. From the blue, white and red of Mr Cohen to the green of Mr Schultz. To Starbucks, that is, for a grande skinny sugar-free hazelnut decaf extra-hot wet latte. With an order like that, you can tell I’m a regular. So naturally, I have a loyalty card. It gets me free shots, free wifi, and if I’m very loyal (and I am, believe me) a free drink here and there along the way. And it’s not just a card. It’s an Android app too, which has a pole position on the home screen of my shiny new Nexus 4. So it’s a highly detailed order, with a high-tech way to pay, for a highly valued customer. Or so I thought. For I recently read that Starbucks may be taking me for granted.

A regular mug

Loyalty card customers are loyal (no surprise there), so Starbucks have worked out that they don’t need to woo them as much. They trek into store, order the same thing, sit in the same place, and do it again and again. A free syrup now and then, and they’re anyone’s. New customers are what they’re really after, apparently. Or more specifically, those customers who are less than loyal. Coffee-drinkers who like to play away, and sample forbidden fruit at Costa, Pret or Caffè Nero. They get texts offering them free coffees when all I get a measly shot of vanilla syrup. So they’re being courted, and loyal customers are being quietly ignored – predictable, reliable and always there. Or so they hope. For loyalty works both ways. And in two ways: being seen to be loyal, and being really, truly loyal. Not an easy trick to pull off, when you’re balancing keeping existing customers and winning new ones. But one you have to tackle if you’re to keep the base and grow the business. I won’t abandon Starbucks. Not because I want a free shot, but because I like the cosy armchairs, the funky music, and the wifi. I like buying into their story, and basking in the reflected coolness of the Seattle thang they’ve got going. No such coolness with Tesco. They need to make sure, in that time-honoured phrase, that every little helps. After all, when my ‘free’ delivery honeymoon comes to an end, I might just explore the singles scene again. I know that. They know that. Which is one of the reasons they’ve just offered me free delivery on Tesco Direct forever. Well, forever as long as I’m a Delivery Saver customer for groceries. Clever. Very clever. It’s enough to make a person…loyal. I’d bet my bottom latte on it. Find out more:

Coffee capers: Starbucks’s ‘disloyalty’ card ignores regular customers. Are UK supermarkets playing a similar game? (I hope not) at The Daily Telegraph.

Kevin Ideas, Marketing.