Do random freebies create loyal customers?

Discussion
May 04, 2015

While releasing record earnings last week, Pret A Manger also revealed its simplified loyalty program: Associates are allowed to randomly give out a select amount of free coffee and food to customers.

The news sparked a story in The Guardian exploring whether such a policy was "discrimination or a nice gesture."

In a blog post, Clive Schlee, CEO of the London-based sandwich chain, said the program is a response to the popularity of loyalty cards. He feels the cards "are mechanistic and what they really offer is a chance for companies to study and influence customer buying behavior."

Such schemes work against Pret, which "prides itself on being straightforward and simple," avoiding discounting, charging the same price across any region, and not encouraging upselling by associates.

A few years ago, Pret decided to shift the money it would have used supporting a traditional card-based program into a fund for each shop to reward customers.

Pret A Manger freebies

Photo: Pret A Manger

"It was as simple as that," wrote Mr. Schlee. "We didn’t tell our team members whom they should favor. We let them decide. They could welcome a new customer, cheer up somebody having a bad day or recognize a regular. They could use it to solve a problem. Like everything in Pret, it’s just about lots of individual human relationships, day after day after day."

The giveaway fund, according to Mr. Schlee, has been "immensely empowering" to employees and "injects a random act of kindness into the day."

He estimated to the London Standard that 28 percent of customers in the U.K. have been received something free at some point.

Finally, Mr. Schlee particularly praised his U.K. associates, who saw a barrage of journalists last week trying to determine what it took to earn freebies.

"When put to the test by an army of different reporters they didn’t have a script, they responded with warmth and good humor as they do every day," wrote Mr. Schlee. "Above all, they were authentic, surely the most important attribute for any brand today."

How would you rate Pret A Manger’s random freebies as a way to drive customer loyalty and empower associates? How would such an initiative stack up against a card-based loyalty program for most retailers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Certainly this is a nice, simple approach to engendering loyalty. It is also one that is not likely to cost Pret A Manger a great deal of money, even if it doesn’t move the needle on sales and other loyalty metrics. Speaking of which, I would assume that there is some structure in place to measure the impact of the random free coffee program. If not, there should be."
"I’m a HUGE fan of this approach. Not only does it give customers a little surprise that shows them that they are cared about, but it also creates monumental good will and appreciation for associates."
"Laura Davis-Taylor sees the inside game. "It shows they care ... about you ... as an individual." I would qualify the definition of the "random" freebies. If it is totally random, I do not believe it has any value. But if it is in recognition of a customer, it has huge value."

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13 Comments on "Do random freebies create loyal customers?"


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Mark Heckman
Guest
7 years 20 days ago

Certainly this is a nice, simple approach to engendering loyalty. It is also one that is not likely to cost Pret A Manger a great deal of money, even if it doesn’t move the needle on sales and other loyalty metrics. Speaking of which, I would assume that there is some structure in place to measure the impact of the random free coffee program. If not, there should be.

I would add that this type of “feel good” activity at store level can be a nice way to involve associates in the loyalty process and promote an overall focus on customer service. But as a standalone loyalty program, free coffee is likely to fall short in terms of moving the needle.

Even if the random free coffee proves to be impactful, loyalty is a dynamic process, changing with customer’s needs, perceptions and the competitive landscape. Accordingly, I would recommend it being positioned as a promotion with an end date, working in tandem with other more measurable and valuable customer rewards.

Laura Davis-Taylor
Guest
Laura Davis-Taylor
7 years 20 days ago

I’m a HUGE fan of this approach. Not only does it give customers a little surprise that shows them that they are cared about, but it also creates monumental good will and appreciation for associates. The outcome can’t be anything but positive, and kudos to their management team for realizing that the soft stuff that can’t be quantifiably measured is often the stuff that creates irrational loyalty towards a brand.

Gene Detroyer
Guest
7 years 20 days ago

Laura Davis-Taylor sees the inside game. “It shows they care … about you … as an individual.”

I would qualify the definition of the “random” freebies. If it is totally random, I do not believe it has any value. But if it is in recognition of a customer, it has huge value.

“Nice to see you again. This one is on me.”

“Your smile made me feel good. Have a cookie on us.”

Nothing makes a person more loyal than the Cheers (as in the bar) effect. If the retailer recognizes you personally, you can’t help but keep coming back.

My very nice experience at Starbucks: The person in front of me in line was short 18 cents. I piped in, “I will get it.” She said “thank you.” I ordered my coffee, got ready to pay and was told, “it’s on us.”

Shep Hyken
Guest
7 years 20 days ago

Great concept — but it must be used properly. The idea that you can throw in a cookie, buy someone a cup of coffee or a soda, etc., just because you appreciate their business is powerful. It’s random and special. I recently was in one of my regularly frequented restaurants. On the way out the server handed me a bag of freshly ground coffee. She said, “We made a lot of our special blend of coffee and thought it would be fun to give some of it away to our favorite customers.” Like I said, random and special.

The key to making this work is training and empowering people to give the “freebie” away properly.

And finally, it shouldn’t or doesn’t take the place of your regular loyalty programs, which for most retailers aren’t really loyalty programs, but marketing programs.

David Zahn
Guest
7 years 20 days ago

A few thoughts:

  1. Why does it have to be an either/or situation (either a card or freebies)? Isn’t there room for both?
  2. How do you measure/protect against an employee inviting his/her friends to “come for lunch, on me?” (I know … this is a bigger problem than “just” loyalty and speaks to whether you have a hiring and/or management issue — but it still needs to be answered. How do you make sure it is being used as intended?)
  3. As far as empowering associates, I think that this is terrific (makes the associate feel like it is “mine” and I make a difference).
  4. Whether it accomplishes the goal of increasing loyalty remains to be seen. I think it is certainly worth doing to at least see what it does to sales (some variation on Mark Heckman’s point on measurement).
Doug Pruden
Guest
Doug Pruden
7 years 20 days ago

The randomness of this approach likely helps it to generate added goodwill and more positive word of mouth than a traditional loyalty card. While typical loyalty programs become entitlements that are part of a “contract” and can become nearly invisible, Pret A Manger is breaking the pattern with unexpected delights.

Assuming that the freebies are in fact used by associates to: 1) welcome a new customers, 2) cheer up somebody having a bad day, 3) recognize a regular, or 4) solve a problem before it becomes bigger, then it’s a great investment in customer lifetime value that also empowers associates and makes them feel part of growing the business.

Dan Raftery
Guest
7 years 20 days ago

Great idea. Reward cards certainly are mechanistic spend more/get more. This approach gives store employees the chance to make an impression. Does that lead to loyalty? Not sure we know what loyalty is anymore. One potential hiccup could be with the entitled ones. Will they feel gypped?

I liken this to golfing. The average weekend player only has a few great shots, if any, during a typical round. But it’s those really good ones that keep duffers coming back (loyalty?), eagerly hoping for another.

One of the reasons given for fewer golf rounds being played is an increase in entitlement mentality. So, will some Pret A Manger customers feel frustrated and give up for a more guaranteed reward at another store? Probably. All depends on the personal experience, which means the way store employees handle this responsibility.

James Tenser
Guest
7 years 20 days ago

Success of the lagniappe strategy depends heavily upon hiring customer-facing associates with the perceptiveness, training and innate good judgment to make on-the-spot decisions.

The bigger the chain, the harder this becomes. I think that may be why most retailers will tend to stick with more mechanized reward programs.

Arie Shpanya
Guest
7 years 20 days ago

I think this is a great approach to loyalty because it puts the power into the hands of the employees that are interacting directly with customers. It must help them foster positive relationships and, as a result, creates loyalty. Loyalty cards aren’t very personal, but have worked to some extent recently. I think Pret’s model is perfect because it adds a human element.

Peter Fader
Guest
7 years 20 days ago

Bad idea, Pret. It’s an admission that you don’t know how to harness/leverage your loyalty program data. “Random freebies” is a very flimsy band-aid to cover what might be a gaping wound of CRM incompetence.

Naomi K. Shapiro
Guest
Naomi K. Shapiro
7 years 20 days ago

I was thinking about the early days of FedEx, “when it absolutely positively has to be there” slogan and action that empowered its employees to do what it took to get it done. Pret A Manger’s gesture is nice—empowers employees and personalizes the customer relationship, which is really important, but it might also bring customers hoping to be on the receiving end of a random freebie than coming for the right reason or loyalty.

Peter J. Charness
Guest
7 years 20 days ago

Or it’s an incredible empowerment of your local staff to do the right thing, something that no automated system can achieve. Probably involves feeding a few of their friends, but that’s a small cost in the overall scheme of things.

Carlos Arámbula
Guest
7 years 18 days ago

It’s better than any card-loyalty program. It’s truly a personal experience, an unexpected reward, a moral booster (on both sides of the counter), and memorable.

wpDiscuz
Braintrust
"Certainly this is a nice, simple approach to engendering loyalty. It is also one that is not likely to cost Pret A Manger a great deal of money, even if it doesn’t move the needle on sales and other loyalty metrics. Speaking of which, I would assume that there is some structure in place to measure the impact of the random free coffee program. If not, there should be."
"I’m a HUGE fan of this approach. Not only does it give customers a little surprise that shows them that they are cared about, but it also creates monumental good will and appreciation for associates."
"Laura Davis-Taylor sees the inside game. "It shows they care ... about you ... as an individual." I would qualify the definition of the "random" freebies. If it is totally random, I do not believe it has any value. But if it is in recognition of a customer, it has huge value."

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