I am a huge fan of the Panera Bread restaurant chain. I find the soups and salads fresh, healthy, and very well priced (the sandwiches are good, too, but I tend to shy away from the carbs). I like
the atmosphere, the staff, and the clientele. It is fair to say that I eat there at least once a week which, I suspect, makes me a "loyal" customer in some database at Panera's home office.
As such, when their "MyPanera" rewards card was introduced a while back I didn't hesitate at all. Why not get some additional benefits from what I am already happily doing? Since signing up I've received numerous on the spot surprises- a free pastry! A free beverage! A free dessert! All for doing what I had planned on doing already and with a company I know and love.
Last week my wife and I went to one of our local Panera Bread restaurants for lunch. Being the first chilly day of autumn, we felt that soup would just hit the spot. A for a bit of additional healthy eating, we added small salads. We ordered two "Pick Twos" - soup and salad for each of us - and I handed my MyPanera card to the cashier. After sliding it through the system she informed me that I had my choice of either a free espresso drink or a free smoothie beverage. We were pleased! I did not specifically want either and asked my wife what she would like. She replied that she would love to have a cup of tea.
Now's where it gets interesting. I asked the cashier if that was possible- instead of a hot coffee drink, could we please have a hot tea? She looked perplexed by this question and sought the counsel of a fellow associate. After conferring, the response was a disappointing "no". Our options were, as a reward for being loyal Panera Bread customers, between a free espresso drink or a free smoothie beverage... generous, yes, but neither fit the moment's fancy.
Let's do a little math now. The espresso drink menu's retail costs ranges from $3.19 to $3.99. As for the frozen smoothie menu, the cost is a constant $3.99. Our tea request? $1.55 per cup. Now, if you assume as I do, that Panera's costs per unit are related to retail price, any item on the espresso or smoothie menu it would have cost Panera more money if I had chosen it relative to a cup of tea. Assuming its costs are linearly consistent with price, it would have cost Panera between 206% and 257% more for me to consume an espresso or smoothie. Both, I'll remind you, I didn't want.
The goal of a loyalty program like Panera's is primarily to reward a customer for continued, loyal patronage. That's the marketing spin to it. It has other benefits such as tracking items consumed per customer, marketing various new or under-purchased products to customers, and driving incremental sales. The customer "wins" by getting free or discounted items, the company "wins" by tracking all the pertinent engagement data per customer over time.
My simple suggestion to Panera would be to allow a customer to select any item that is in the same category of equal or less than the specific item being offered/promoted. For example, if the offer is a free pastry and the customer wants a bagel or a baguette, both bread products like a pastry, that's fine as long as either is equal to or lesser in cost than the most expensive pastry option. If the offer is a smoothie and the customer wants a soda or a juice or a bottled water, as long as it's equal to or lesser than the most expensive smoothie it should be allowed.
You could argue that this approach fails to deliver a key element for the company- to promote a specific item. While true that it would allow a customer to select something other than what the company is promoting, I think it enables an even bigger, more critical goal of a loyalty program- to delight the customer. If I am offered an espresso drink of my choice, like I was last week, and am not in the mood or simply don't want an espresso drink, I do appreciate the generous offer but I am not delighted. If, in response to an the offer for an espresso drink, I ask for a different hot beverage of equal or lesser value and am given one, I am not only appreciative but I am now delighted. And the company saved on costs... a true win-win.
And that tea my wife wanted? We went to Starbucks.
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