For student marketers, perhaps some of the most exciting insights imaginable have come from Nespresso. Originally launched in 1986, long before premium coffee had become one of the world’s most popular drinks, Nestlé in Switzerland created a concept so compelling that it eventually took the world both by surprise and by storm, but at first, it nearly failed!
Recently dubbed “the Apple of coffee”, few brands boast anything close to the level of glamour and exclusivity of Nespresso, achieved at least in part by the irresistible charm of its global brand ambassador George Clooney – the iconic star Nespresso says was chosen its by Club Members as “the perfect personification of the understated elegance and authenticity.”
This article discusses the role of innovation and loyalty in Nespresso’s inspiring evolution becoming a $7.5 billion brand, as well as its clever use of the increasingly popular subscription model to continually delight its customers.
Lessons in Loyalty
With the benefit of hindsight, it’s incredibly surprising that Nespresso barely survived its first decade in business. Originally designed for restaurants, the product was failing and only its then CEO Jean-Paul Gaillard realised its potential to delight coffee-loving consumers. Even now, there are few individuals who can match his achievements having personally created a “multi billion worldwide market segment” which still leverages the best of Swiss ingenuity and sophistication.
Gaillard’s strategy was to create the concept of “Le Club” – an exclusive community of loyal advocates that continues to this day. From those humble beginnings, the programme has evolved to a three-tier programme with benefits extending from free delivery for all purchases over 100 capsules and a coffee masterclass for “Connoisseurs”, up to exclusive products and experiences for “Ambassadors”.
While Amazon Prime is perhaps the world’s best-known subscription programme worldwide, for coffee-lovers, the programme launched by Nespresso must surely come a close second. Customers subscribe to one of two packages depending whether they simply need a regular stock of capsules or also a Nespresso machine.
For Machine Owners:
For customers who’ve already invested in a Nespresso machine at home, coffee capsule plans range from £17 a month to enjoy one cup a day, up to £50 a month for those who indulge in four or five, with the £30 plan suggested as its “most popular” capsule plan. As well as free delivery, subscribers enjoy a 10% credit “thank you for subscribing” bonus each month, as well as the flexibility to cancel at any time.
With Nespresso machines costing anywhere from £89.99 to £649.99, it was clearly a bold but essential move for Nespresso to provide free machines to coffee lovers who needed one, in return for their long-term loyalty on capsules. A “£1 Nespresso machine” concept was launched in the UK in July 2017 with three subscription packages to choose from, at a time when the patent had expired on the design of Nespresso capsules, bringing unprecedented competition for the product and brand.
Suddenly cost conscious consumers could save up to £95 a year using non-branded capsules with their Nespresso machines – a tempting choice that must have tested the brand’s true strength. And the strategy seems to have worked. The “£1 machine offer” now boasts thirteen options, ranging in price from £20 per month up to £70 per month depending on the desired machine, and the number of capsules needed each month.
With intense competition inevitable in such a profitable industry, Nespresso is still relying on both innovation and its customer relationships to stay ahead. In the words of Vincent Leroudier, its Digital Customer Innovation Manager, the company is using digital technology to “share the Nespresso experience, build stronger relationships with people…. offering them new products…. and innovative ways to access them”. This has resulted in the launch of the “Nespresso Assistant” on Facebook Messenger in 2018 – a chatbot that advises customers on special offers, ways to recycle and an eCommerce option we are promised will enable users worldwide by 2020 to order their caffeine fix without ever leaving the Messenger app.
Nespresso first started selling online twenty years ago and has continued to build its brand, designing beautiful boutique stores in premium worldwide locations while also embracing the beauty of subscriptions as a compelling business model.
In our increasingly complex and often frantic lives, subscribing to a favourite brand offers customers a real solution and one less thing to remember in the grocery store. For a brand like Nespresso, it offers the perfect combination of customer commitment and also a valuable connection to the community.
While the original brilliance of Nespresso has been to successfully enable any of us to create a perfect cup of coffee, along the way it also created a new consumer culture and became the global reference point for an entire industry. It’s truly inspiring to see this iconic brand using the concept of an exclusive “Club” and now subscriptions to drive loyalty and advocacy and ensure its enduring success in our coffee-loving culture.
Liquid Barcodes is a leading global loyalty and digital marketing technology company specialised in the convenience store and foodservice industries. Our proprietary cloud-based technology platform allow retailers to create and manage their digital marketing campaigns with a proprietary process we call the “customer connection cycle’ to engage, promote and reward customers activities in real-time across digital and media channels.
How we do it:
We have developed the most advanced loyalty and digital marketing technology platform specifically for convenience store and foodservice retailers globally.
Retailers use our self-service dashboard to create and manage loyalty driven marketing campaigns that increase purchases with their existing customers, as well as effectively target and acquire new customers through partners or paid media channels.
One core component of live loyalty is gamification. We have gamified branding, loyalty and promotions. We believe this approach is essential in order to get customers’ attention and ultimately truly engage them with repeatable actions thereby winning their loyalty.
Check out some of our exciting/proven results here:
Chief Content Officer, Liquid Barcodes and Independent Loyalty Consultant
With over twenty-five years marketing experience, I specialise in loyalty marketing consulting, managing consumer loyalty propositions, strategy and operations. In addition to working with Liquid Barcodes, my clients have included Telefonica O2, Three Mobile, Electric Ireland, Allied Irish Bank and The Entertainer Group, as well as Avios – the global points currency for some of the world’s top airlines. I am also a former judge for the Loyalty Magazine Awards.