XM Review: Burger King Coffee Subscription
This is the first in a series of blogs where we will look at new XM initiatives and analyze their potential for success including the potential opportunity and possible pitfalls.
Recently, Burger King announced it was offering a coffee subscription that customers can purchase if they download the Burger King app and pay $5 per month. For this subscription they are entitled to a free coffee every day. Chris Finazzo, President, North America, Burger King Corporation said of this initiative, “We continue to leverage technology to enhance our guests experience in our restaurants”.
One could analyze any experience management initiative in the context of how it impacts the customer experience or in the context of how it impacts the business. They are actually one in the same. Long-term positive business impact is impossible if the customer experience is not improved.
For Burger King the opportunity has a number of obvious benefits. First, the breakfast daypart in fast food has been growing steadily over the last several years. Even modest share growth of this daypart can have a major impact on its business. So, getting customers to come in more often and buy a Croissanwich instead of a McGriddle or a donut could be well worth the free coffee. The other major benefit is having customers download and use their app. The direct relationship, transactional data and broader understand their activity patterns, provides Burger King massive value.
However, convenience and savings do not translate to improved customer experience in and of themselves.
The offer has a few indicators that suggest it may not be fully considering the program’s impact. The subscription comes with a full page of terms and conditions. It entitles you to one small coffee per day and does not apply at all to premium coffee drinks. This leads to several concerns:
Many people order a medium or large coffee each day, so for those people this may in fact present itself as an unwanted tradeoff. The promise of increased visits and the revenue and margin that comes with them, far outweighs the few pennies additional cost.
Why limit people to one per day? Sure there is a possibility people will guzzle coffee all day, but most of those people will buy something else when they do.
It is totally understandable that including premium coffee drinks as part of the coffee subscription is untenable from a cost perspective. However, what about offering a discount of $0.50 off any premium coffee beverage to subscribers?
The above issues may not stop this program from delivering benefit to Burger King, but they will cause frustration among some customers and may cause a portion of them to visit Burger King LESS often.
XM Considerations: Successful experience management (XM) does not happen through the activities of one functional team within an organization such as the marketing organization. It is achieved through a strategy that incorporates activities across all experience management domains (customer, brand, product, employee and digital). So here are a few things that Burger King could think about doing from each of the experience domains to increase success.
Employee Experience (EX): As currently constituted with the issues called out above, there is significant potential for coffee subscribers to be upset. Handling these issues effectively could be the difference between success and disaster. If not handled well, the program could have the opposite effect than intended and cause customers to stop visiting. On the flip side creating incentives tied to program success can align employees with the company’s objectives. However, just incentivizing sign-ups is not enough. The better incentive would be to reward sign-ups who stay on the program for at least 3 months and increase visit frequency.
Product Experience (PX): If successful, coffee subscribers will visit Burger King more frequently. It is naïve to think that a discounted price on coffee alone will foster long term change. This is where product and operations can make the difference. Whether filling gaps in the menu offering or identifying special items available only to subscribers, the ability to engage directly with subscribers through the app and the treasure trove of information that will come from customers having the app are invaluable.
Brand Experience (BX): The data from the app may be more valuable than the visits that are directly generated by the subscription itself. That value however, can only be realized if the marketing team is part of the equation and is prepared with data scientists who can use machine learning to generate personalized engagement and special offers.
Digital Experience (DX): Having the app brings a more direct connection between the brand and the customer. This is for the most part, brand new territory for Burger King. It brings with it the opportunity and increasingly the expectation of engaging with customers individually and demonstrating greater agility as it relates to the customer experience. If the app is fully integrated with the POS system, Burger King may have the flexibility to rapidly introduce and adjust offers to test and learn or respond to opportunities.
Customer Experience (CX): Success comes down to what the customer experiences and how the front line delivers. As such it is important to more actively monitor the customer experience and respond to issues as they arise. The app gives new data and new ways of measuring and monitoring feedback in real-time. New metrics can include: Visit patterns at the individual and unit level, star ratings after a visit collected in app a la Uber, as well as retention rates for the subscription.
Implementing experience improvement initiatives will raise expectations of your brand. Consumers will compare Burger King to other subscription services they subscribe to on their mobile device. Success with experience management relies heavily on the ability of the organization to adapt and evolve. A successful experience improvement initiative must start with determining how different functions within the organization will contribute to the future state experience.