The two most powerful words in marketing are “free” and “sex”. Nothing grabs the attention like an offer that includes one or the other in the strapline – although no one has yet linked the two together in a promotional campaign. Such is their power to elicit a response, both words are handled with kid gloves by the advertising regulators, whose job is to issue guidelines about what the industry can and can’t get away with.
A “free” offer has to be demonstrably free, even though in marketing terms what passes for free is perhaps not as obvious as it is to the rest of the world. So called “loyalty programmes” are often cited as examples of free stuff being given away in return for customer fidelity. But “free” in this case comes at a price. The data that companies gather about people’s buying habits from schemes such as Tesco’s Clubcard more than outweigh the cost of any rewards.
Indeed, Tesco arguably achieved its position as the UK’s largest retailer on the back of its hugely successful loyalty scheme. Such was its success, loyalty schemes are now the “must-have” accessory for any upwardly mobile and ambitious retailer.
By any definition, the British supermarket Waitrose is a hugely successful brand. Over the past 20 years it has gone from being a niche grocery store to a leader in the premium supermarket sector. The success was based on a very clear understanding of their customers and the values of the brand – refined undoubtedly by the introduction of the “myWaitrose” loyalty card in 2011.
In keeping with the aspirational nature of their targeted demographic, myWaitose differed from supermarket loyalty schemes like Tesco Clubcard and Nectar by giving cardholders access to exclusive competitions and offers instead of allowing them to collect points. It later began to give cardholders 10% off selected products, as well as free hot drinks in store. And, as the company has recently discovered, it is very easy to give things away – but much less easy to take them back again.
The problem with “free” promotions is that they can quickly lose their intrinsic value. Consumers start to look at them in a different way and see them as a right, rather than a reward. Companies always need to be mindful of the way their marketing activities are perceived, and clearly Waitrose came to believe that the offer of a free hot drink needed a bit of repositioning.
Perhaps it was that they felt too many people were taking advantage and that the hurdle of paying for something would deter some of that behaviour. However, there is nothing to suggest that Waitrose was heading for a Hoover-style promotional fiasco, where thousands took advantage of an offer too good to be true. Most people will still see it as a very good offer, but perhaps look at it in a slightly different way.
Waitrose has found to its (slight) cost that you mess with your loyalty scheme at your peril. Changes to the myWaitrose programme apparently created uproar among some of its customers. At least, that is the story the newspapers have been promoting since Waitrose announced it would be “refining” its free tea and coffee benefits from the beginning of April 2017.
Now myWaitrose members will be asked to confirm they have made a purchase before picking up their “free” hot beverage. True, it means that the drinks will no longer be free, but thanks to social media, Waitrose’s indefatigable members have already worked out that because there is no minimum spend requirement, it is possible to spend just a few pence in-store and still qualify for a free drink.
Wake up and smell the free drink
So is this just a storm in a teacup? And will it harm the Waitrose brand? First, it appears that the media were far more interested in creating the resulting uproar than the members were. A quick scan online suggests that a few die-hard Tweeters were outraged by Waitrose’s decision, but the majority were tweeting about how to buy a mushroom for three pence and still qualify for a coffee.
And will it harm Waitrose the brand? Unquestionably not. Brands such as Waitrose are not built through one-off promotions. They are created by building long term emotional bonds with their customers. So long as the company continues to provide quality, choice and a clear value proposition that aligns with their customers, there is no reason to say it won’t keep on growing.
But one word of caution. Brands are built on trust and once that trust is lost, it is very difficult to win it back. The market is littered with companies that lost the trust of their customers (Hoover and Ratners to name but two) because they misunderstood that important message. “Refining” the free beverage offer will not harm Waitrose’s hard won reputation, but it should remind even the most esteemed brands that once the customer has developed an expectation, it can be tricky to take that expectation away.