coffee coins

Would you use coffee coins in your shop?


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Miss Java

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Feb 13, 2007
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Washington
I recently ordered some coffee coins for my drive thru. Coffee coins are small plastic or ceramic coins used in place of punch cards, gift cards, free cards etc, you can see there website here: http://www.coffeecoin.com/servlet/StoreFront

I'm wondering if anyone else has seen them or used them in their shop? I thought they were pretty cool and could serve as a number of different things plus they're reusable. Any thoughts? :)
 

John P

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Jan 5, 2007
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They've been out at the CoffeeFest the past several years.
It always sounded to me like something a beginning, bottom of the class, marketing student would come up with for a class project.
Can't say much more.
 
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Miss Java

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Your point is well taken and definitely considered; however, I actually talked with the owner of Coffee Coins as well as the general manager at Coffee Fest Seattle this past weekend and they were extremely helpful and had some great marketing tips as well. Why do you think they seem "like something a beginning, bottom of the class, marketing student would come up with for a class project?" The company is small but deals well with start up shops/stands. They also are willing to work with individual companies on unique designs and custom promos. I'm definitely curious as to why you think they are inferior! I received nothing but the best of customer service, the owner actually gave me his personal cell phone number so I could talk with him exclusively about my order. Have you seen them used or distributed through a local coffee house? What was the customer feedback?[/u]
 

davidwhatley

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Mis Communication

I may be wrong, but I think J was saying the "idea" not the company was junior level.
But, heck, if it fits the budget, adn more importantly, works, who cares.
IF it helps you move more cups, it doesnt matter a Hoot, does it?
David
 

John P

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Miss Java,

There are several distinct reasons why I contend this fails as a program, and each of these involves some basic understanding on the marketer's end (yours).

There are many loyalty and reward programs out there. Many are similar in their methodology leading to the "If it isn't broke, don't fix it." argument. But it's not the method of the program, it's the method of the data collection and what is the end result of that data--how is it used, how does it benefit your business.

Pretty pictures do not create a good program, and neither does the reaction of customers nor the friendliness of the seller (of the program). In fact, customer's "loving it" is either an indication of a successful gimmick, in which case the customer will abandon you as soon as another "catchier" gimmick comes along-- or, it is an indication of lack of positioning and/or quality and this "program" is the only thing the customer has to cling to and all the business can hang their hat on.

As a student of marketing (not a marketing student) I ran this same question and comment by Les Roka, (a Marketing P/R professional and former professor), and during our conversations, he echoes my thoughts in a much more thoughtful way and offers some of the following in his response.

Ask yourself these questions:

1) Where is the data that shows that customers would have been less loyal without this particular program vs. with it?

Les says, "As we high falutin' academics like to say, pay attention to causality and incrementality. Often, too many places overestimate the revenue impact because they failed to establish a connection between the program and measures of increased sales and customer satisfaction. So, the causality requirement means tracing clearly that link. Otherwise, not knowing what caused the behavioral change in customers is pretty much a useless exercise. How does one know how to improve the program then.

Incrementality is knowing whether the campaign is delivering the right outcomes. For a loyalty program to show real results, it must show that the results being measured are incrementally better than those generated without the program. Would the consumer have behaved the same way ( e.g., recommended your program) and driven similar benefits (e.g., attracted a new member) if he were not a member of the program?"

2) Are customers loyal to the program or loyal to the product?
Les says, "What matters is the RELATIONSHIP. Loyal customers don't look for discounts.They look for things that bring more value to the business-customer relationship ( e.g. first offerings).Neumeier suggests that if you continue to remain focused on the price/money pit, you will never be able to extrude yourself without major loss or costs.

Loyalty is not programmable. And most of the astute say that it never suffices as a long-term strategy."

Dr. Roka also points us to Marty Neumeier,
http://www.amazon.com/exec/obidos/s...pe=ss&index=books&field-author=Marty Neumeier
who offers this excerpt in his book.
""1) Loyalty programs are based on discounts, which 'train' existing customers to expect low prices and wait out normal prices, 2) They attract loyal customers who would happily pay a premium, 3) they discourage new customers by making them feel punished or excluded, 4) they encourage competitors to retaliate with me-too programs, 5) they reduce profit margins, which 6) reduces the company's ability to serve customers at formerly high levels.

The truth is, loyalty can't be programmed. As soon as customers begin to feel 'stalked,' they choose 'fight' or 'flight.' They either figure out how to game the system, or else they run to another brand."
"

This particular program is more "gimmicky" than most, and from one professional to another I would think of your long term gameplan if this is the route you choose. These coffeecoins say a lot about positioning--none of it positive--and as you are establishing yourself in the marketplace, it's something to step back and think about as part of the Big Picture.

My cent.
 
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Miss Java

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update!

Just wanted to give everyone an update since it's been awhile... we've been using the coins for a few months now and they are working really well for us! We have actually worked with the owner and developed a "grab bag coin" that has let us eliminate punch cards entirely! This costs us half as much as the punch cards do but our customer base really seems to like them. Surprisingly the guys really like them too, they have referred to them as "poker chips." This has really been a good addition to our business, especially during Christmas we sold a lot as pre-paid coins for stocking stuffers. :D
 

davidsbiscotti

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Oct 4, 2007
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John P obviously put a lot of thought and study into this topic. His argument against gimmicks is valid and apparently, there is a lot of marketing data to prove that he is right in this case.

However, what do you propose one should do in order to separate themself from their competition? If two coffee shops in the same general area serve equally great coffee and offer equally great service, then they will ultimately compete, either with pricing or specials of some kind in order to attract a loyal customer base.

I often order a large pizza from Pizza Hut, but never without mentioning my coupon discount. Otherwise, I never order from them, it's too high priced for me. It's mostly just bread and cheese, give me a break.

Any thoughts on this?
(No comments on my diet please) :D
 
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Miss Java

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I think it's cases like this where businesses should use marketing strategies like coffee coins to distinguish themselves and get people in their door. We include them in community raffles and donations as a kind of gift basket with a coffee mug, a few "free drink" or free purchase ceramic coins and other goodies with our name on them and this has worked well for us because people like to give (and get) the coins and it's great advertisement in a small town. The coins also tend to be purchased and passed around among our regulars (birthdays, valentines, Christmas) and no one around here has ever seen them before so it's eye catching and gets our name out there. For a new business that is important. Like I said, it's a way to get people in the door.
 

John P

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The quality of your product should both capture and retain the customer. Discounts always lead to the 'leaky bucket' syndrome (your business 'leaking' customers). A greater number of people through the door does not lead to a greater long term customer base. As in the pizza example... they are notorious (Papa John and Papa Murphy) for having the highest 'leaky bucket' syndrome of any food business. You need to think long term. Think buying Cisco, holding, and reinvesting the dividends vs. Daytrading some weird bio-medical penny stock.
 

davidsbiscotti

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Sticking to long term goals and reinvesting dividends is certainly good advice, when it comes to real estate or the stock market.

But for a small business, the mind set is on short term gains. Like you said before, apples and oranges. So few small businesses survive that it's difficult not to just focus on the short term.

Funds are usually the limiting factor when thinking long term. Packaging materials could be purchased at a much better price per unit if I were to invest in a ten year supply, thereby lowering my COGS. I'm afraid that if I go out of business next year, I'll be stuck with fifty thousand dollars worth of packaging materials, so I just buy in what I can afford and will need for the next few months.

Maybe short term thinking will be the demise of small business....
 
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Miss Java

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John P said "discounts always lead to the 'leaky bucket' syndrome" and I can see how this might be true in most businesses. But when virtually all of your competition runs specials or discounts (I'm thinking punch cards or daily specials) you have to do something that is comparable but at the same time will not cost you a fortune and will stand out to your customers and (hopefully) get people talking. The coins do this well for my business. Davidsbiscotti is absolutely right in that funds are usually the limiting factor when thinking long term for a small business. I don't know.. I just feel like the coins have worked really well for us.. we're a tiny little business and we don't want to dominate the market in this area, we just want our share. And when the market changes we'll adapt. But for now we are thinking month to month - quarter to quarter. That's just what a small start up has to do; make it through the first three years and then think about the long term. :D
 

John P

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MissJava,

what I said is true of all businesses if it is used as a long term solution. If discounts are what you use to capture customers, it will never work long term. If this is used for some other purpose--i.e. data collection, so you can market specifically based on purchases--or something like that, then it can be a good program for a set amount of time.

Discounts, and that's what they are, only work for "discount" people. Your REAL customers won't need, nor will they expect them.

You aren't competing based on gimmicks (punch cards, BOGO, coupons...). Compete based on your coffee/espresso/tea.
 
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Miss Java

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*sigh*
I don't think you get what I am saying in the least. Use whatever you can to get new faces into your place. THEN let your product speak for itself. We are very competitive and aware that the best way to beat the competition is through a great product. However, while our REAL customers don't need discounts (punch cards) they do expect them. This is just the reality in any drive through coffee stand in my area that is not a Starbucks. I can see how a cafe would be different. But I maintain that the coffee coins can and do work for some businesses. You seem so ... against this idea. And maybe for your establishment they didn't work; but they are popular with my customers.
 
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