BrainTrust Query: The Disloyalty Card

Discussion
Apr 12, 2010
David Dorf

Commentary by David Dorf ,
Director of Technology Strategy, Oracle Retail

Through a special arrangement, presented here for discussion is an excerpt
from a current article from Insight-Driven Retailing Blog.

A few months back, James Hoffmann reported that Gwilym Davies, the 2009 World
Barista Champion, had implemented a rather unique idea for his cafe: the disloyalty
card. His card lists eight nearby cafes in London that the cardholder must
visit and try a coffee.

After sampling all eight and collecting the required
stamps, Gwilym provides a free coffee from his shop. His idea sends customers
to his competitors.

What does this say about Gwilym? First, it tells me he’s confident in his
abilities to make a mean cup of java. Second, it tells me he’s truly passionate
about his trade. But was this a sound business endeavor?

Obviously the risk is that one of his loyal customers might just find a better
product at a competitor and not return. But the goal isn’t really to strengthen
his customer base – it’s to strengthen the market, which will in turn
provide more customers over the long run.

This idea seems great for purveyors of frequently purchased products like
restaurants, bars, bakeries, music stores, and of course, cafes. It’s probably
not a good idea for high priced merchandise or infrequently purchased items
like shoes, electronics, and housewares.

Nevertheless, it’s a great example of thinking in reverse. Try this: Instead
of telling your staff how you want customers treated, list out the ways you
don’t want customers treated. Why should you limit people’s imagination and
freedom to engage customers? Instead, give them guidelines to avoid the bad
behavior, and leave them open to be creative with the positive behavior.

Instead of asking the question, "How can we get more people in our stores?" try
asking the inverse: "Why aren’t people visiting our stores?" Innovation
doesn’t only come from asking "Why?" Often it comes from asking "Why
not?"

Discussion Questions: What do you think about the concept of a "disloyalty
card" that encourages customers to try competitors? How applicable is
such a program for retailers outside coffee shops? What other counterintuitive
strategies work for retailers?

Please practice The RetailWire Golden Rule when submitting your comments.

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21 Comments on "BrainTrust Query: The Disloyalty Card"


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Dick Seesel
Guest
11 years 1 month ago

The “disloyalty card” strikes me as a stunt rather than a viable marketing idea. It serves the purpose of drawing attention to the Prufrock Cafe, but how likely is it that Mr. Davies’ competitors are going to “stamp the card”? If they’re smart, they will leverage the opportunity by sampling their wares for free, and who knows? Several of Mr. Davies’ customers might just discover a better cup of coffee. Bottom line: I would not advise marketers to drive loyalty by being so openly negative about the competition.

Bob Phibbs
Guest
11 years 1 month ago

There’s thinking in reverse and then there’s just stupidity. I’m all for being confident but you are also intentionally advertising competitors. I’m sure the panel will be split on this but my vote–do your job and present your business; otherwise, it’s just so much ego.

Joel Warady
Guest
Joel Warady
11 years 1 month ago
The concept of the Disloyalty Card is an interesting one, although I’m not sure I would name it as such. The coffee shop owner is smart to invite his patrons to try the competitors’ products. First, it shows how confident he is with his own product. Second, it takes the wonder away from his customers who might always wonder if there is a better cup of coffee down the street. But inviting them to try the competition, some will do so, but most won’t, yet they will never wonder if there is something better out there. The owner is stating that there isn’t. Finally, it is smart from a competitor relationship point of view. This Disloyalty Card, which invites customers to visit the competition, will be seen as a positive by his competitors as well. It will drive traffic into their coffee shops, and there is no cost to them. What a great way to disarm the competition! There are some great lessons learned from this simple, yet very smart promotion. Thanks to James Hoffmann… Read more »
Charlie Moro
Guest
Charlie Moro
11 years 1 month ago

The logistics of handling and what the offer would be in a supermarket environment may be clumsy and may be harder to do than it should be…but there is a bigger issue. The whole concept of visiting competitors for store staff should be focused on what is being done well or better than yourself.

I remember too many times store managers coming back and telling me and others how messy, dirty, bad their competitor was. But the question would always be pushed back to…”So why do you think they have all those customers in there?” Those customers must have a reason to shop there rather than your store. The key is to find out why.

David Livingston
Guest
11 years 1 month ago

He will get a lot of attention but not sales. This really isn’t an idea for his business but rather a personal experiment. Therefore it really isn’t applicable for retailers. My gut feeling is his place isn’t that great and his competitors are not that bad. Bad idea.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
11 years 1 month ago
Interesting concept, but it does not run across all retail as a solution. Like car dealerships that surround themselves with competitive car dealers to build a market place, he is focused on building a market and earning his fair share (or hopefully more). In fact, it would be interesting to see a car dealer use this approach. Test drive three vehicles and then come and buy a car from us and we will give you 1 year of oil change service for free (or some other value). Chevy is currently running ads that highlight their vehicle side by side with a direct competitor pointing out line by line the differences. Maybe they could add this to the campaign. This approach would be much more difficult to try in traditional grocers unless you focused on a department like bakery or a store Private Brand. The example might be, buy a loaf of bread at XYC grocer and then come to our store and we will give you a loaf free. If you try this approach, be… Read more »
David Biernbaum
Guest
11 years 1 month ago

I do like the idea of the “disloyalty” card as an attempt to intercept new customers from competitors, however, I think it is only effective for the first retailer to play in the game; once it becomes customary for all retailers, it will lose its effectiveness.

Nikki Baird
Guest
Nikki Baird
11 years 1 month ago

Why do affiliate loyalty programs work? Multiple restaurants, coffee shops, etc, all very close to one another, find it beneficial to lump together to capture consumer spending, because they know that they’re not going to win every customer every time, but there is value in the “network.” I think this is the same principle, just branded a little differently. I am surprised that competitors would participate, even when they get the benefit of an opportunity to steal customers, because he is basically saying that he’s so confident his experience is better that he’s willing to send people to competitors to prove it. If it was positioned more as a cooperative–“we know you don’t always want the same thing from the same place”–and there is sufficient differentiation in menu and experience, then you have an opportunity to build on a sense of “local” and “community” instead of a competitive beat-down.

Warren Thayer
Guest
11 years 1 month ago

Nice publicity stunt, which will pay off for him, since he was the first. Interesting thinking. Not something I would try.

Steve Montgomery
Guest
11 years 1 month ago

As noted by many of the above, this has definitely generated buzz for his business, but I agree, few if any customers are likely to attempt to actually use the card. Great for generating brand awareness and therefore increasing his sales. I doubt that it will “strengthen the market” as he is in essence stating their product is not as good as his, so why try theirs.

Christopher P. Ramey
Guest
11 years 1 month ago

This is an example of the very worst of “reverse” thinking coupled with poor judgment and arrogance. All boats may rise in high tide. But, that doesn’t mean you help your customers jump aboard a different ship.

Doug Fleener
Guest
11 years 1 month ago

I’ll give him credit. Whether it works or not, it clearly helps his business stand out from his competitors. We’re not talking about his competitors are we? Don’t see it working with other retailers, but I do like the idea of turning left when everyone else turns right.

Martin Hoffmitz
Guest
Martin Hoffmitz
11 years 1 month ago

LOYALTY IS A CROC – AND I DO NOT MEAN THE UGLY SHOES!

Let’s examine the real “map” for consumer purchasing. Our experience with millions of consumer research insights and survey tools demands that retailers stop fooling themselves.

Consumers and customers are not loyal, they choose, and prioritize among a range of options in each category, based on a “map” of preferences that they create in their minds. The key to retail success, is to understand what drives their decisions on a day to day basis and then make sure that you service the priorities of your key groups. Matching actual purchase behavior to the emotional and rational triggers for, decision to use your service, amount to purchase, frequency of visit and share of spend, has made my clients millions of dollars.

Dan Raftery
Guest
11 years 1 month ago

One thing no one has mentioned yet. Remember that this guy has face time with his customers. I’ll bet his true loyalists come back with competitive information that he applies to his offering. A question like — “What do they do that I should do?” — is best answered by a customer.

Doron Levy
Guest
Doron Levy
11 years 1 month ago

I give it points for innovation and creativeness but customer attention spans are so low, do you really want to give them yet another distraction? This exercise can only help in the customer experience department and one bad day at the either of the stores can skew the results. If it’s all about pricing then the iPhone has taken care of that for us.

While I was in the trenches at Blockbuster and Toys R Us, there were always provisions for calling competitors to check stock. As a manager, I have no problem involving the competition in the transaction. My goal is for my brand to satisfy this customer. And that should be the goal for any associate working the floor. It’s a little off topic but it shows that you can involve your competition to better your brand in other ways.

Craig Sundstrom
Guest
11 years 1 month ago

Missing from this discussion is how–or if–he got competitors to go along with this; anyway, I’ll score with most here: Creativity 1, Utility 0.

Now for the questions we’ve all been thinking: is there really a “World Barista Champion” and if there is, how did he end up in England, of all java-deprecating places?

James Tenser
Guest
11 years 1 month ago

This is an entertaining little story brimming with bravado and clever word play, but not a steaming hot marketing concept as far as I can perceive.

Reminds me of a scavenger hunt, but one that drains cash out of the customers’ pockets before they return to the home bar. I wonder, how did he convince his competitors to cooperate in stamping the cards?

In my view, all frequent shopper card programs become “dis-loyalty” cards when the retailer delivers an experience that is below expectation. Which is pretty often.

Kai Clarke
Guest
11 years 1 month ago

This is an interesting concept that would only work within a limited industry base and with specific customers. However, it does create a negative analysis focus that many companies should use not only for their critical reasoning, but also as an assessment tool. When determining our next steps, as well as our goals, our business objectives, or of a product should be introduced, we should be asking the inverse of the “5 Ws” as a standard part of our SWOTT analysis in our assessment. This includes the biggest question of them all…the exit question (should we really be in this business?) or (should we really introduce this product?). If more companies took this approach, we would have fewer failed businesses, stronger new product introductions and a more efficient business landscape.

Ed Dennis
Guest
Ed Dennis
11 years 1 month ago

Gee, this really is a burr under the saddle of all you consultants. I guess you can’t survive without gimmicks. If nothing else, I totally agree with Gwilym Davies distaste for conventional “loyalty” cards. If there were a better way to “diss” the “loyalty industry” I would certainly like to see it implemented. As for now I will wish Gwilym all the luck in the world. I don’t think he will need much as his accomplishments indicate he doesn’t mind working. It is amazing what can be done when one separates their rear from a desk chair and actually does something beyond pontificate. I bet Mr. Davies has never paid a consultant one dime, and guess what–he is successful in spite of this great failing. Go Gwilym!

Bill Hanifin
Guest
11 years 1 month ago

Even if a retailer did not execute such a tactic, it would be a good test of confidence in a retailer’s customer experience, product quality, and overall competitiveness.

One could conduct the exercise in mock fashion without taking the risk.

Seems to fit the smaller niche player and I wonder if corporate marketing types would be convinced to assume the risk on a larger scale.

Cool idea, not so practical.

Debra Templar
Guest
Debra Templar
11 years 1 month ago

Seriously, who has the time to schlep over town, trying out different coffees for the reward of one free coffee? Can’t stand these cards – (a) who has room in their wallets for all the cards you’re offered and (b) I’d rather be surprised by the off-the-cuff recognition of me as a customer when someone says “It’s on us today. We appreciate you.”

And why on earth would you send your customers elsewhere?

No thanks. If a customer has taken the time to come to me, then I’m going to delight them, thanks; not send them elsewhere.

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