With coffee shops seeing 70% of their revenue from 30% of their customers, introducing loyalty programmes among other digital initiatives is a way forward for the sector, Slerp and Crosstown founder JP Then told delegates at MCA’s Hostech conference.
Speaking during a panel session, Then discussed the importance of leveraging strong habitual users at coffee shops to drive loyalty and visits.
“We need to concentrate on those three out of 10 customers, because they’re the ones driving your business,” he said. “According to our research, 93% of people would spend more money when they’re rewarded.
“There are these insights, but we’re not using them collectively yet as a sector.”
Launching Slerp – an online ordering system for hospitality – helped in scaling Crosstown, the specialty coffee and doughnut brand, and reaching customers across touchpoints. However, coffee shops still face the challenge of embracing tech beyond the POS system, Then added.
“Crosstown was innovative for taking card payment when we launched in a market stall 10 years ago,” he said. “There’s an evolution in mindset, with so much of our sales now through digital. It’s a big change for the sector to digest but it’s already happening.”
Digital ordering comprises 15% of Crosstown’s business and has helped the brand navigate the pandemic after investing in tech initiatives for several years.
Panellist Will Kenney, commercial director at Nottingham-based chain 200 Degrees, agreed that the pandemic had accelerated omnichannel strategy for coffee shops.
“For us, it’s all incremental sales in terms of e-commerce, the app, retail, and wholesale,” he told delegates. “Customers who may be familiar with one or two elements of the business can transfer from one element to the other.”
200 Degrees has seen thousands of users take up the app and is now grappling with new data that will help it reward customers across touchpoints.
Roland Horne, founder and CEO of the London-based specialty coffee chain WatchHouse, similarly discussed the need to create a consistent approach across channels.
“We want to make sure we’re not replacing the experience but adding to it,” he said. “There’s a gap in the market when it comes to marrying e-commerce, hospitality, POS, and at-home into a seamless experience.
“We want to create something consolidated, so we’ve invested in a brand manager that ensures consistency in what we do across channels.”
While both 200 Degrees and WatchHouse have invested in maintaining the quality of the in-store experience, they agree that apps have helped improve it.
Kenney said that moving some sales to digital channels has allowed staff more time for interactions with customers that want a more traditional experience. The brand has also introduced activities and events to engage with customers further.
“We’re probably creating a better experience for that segment…it’s important to remember we’re not forcing people down that digital route. People can still go in and talk to their barista.”
WatchHouse implemented a digital payment-only system in 2017, but has been adapting its digital platforms as it prepares to launch in New York, where it is a legal requirement to be able to pay with cash.
Horne added: “The ecosystem moving forward has to be not just about ordering things, but also about engagement.”
Interaction with coffee shop customers has been primarily transactional, but apps can help provide more time for staff to talk about the offer, according to Then.
“The app can do the heavy lifting while staff can have a more engaging conversation with customers,” he said. “There’s also a gaping hole for hospitality-led CRM.”
The next challenge for the sector as a whole is to build a CRM experience that is “for the moment” rather than centred around emails, thus catering to hospitality customers, he said.
