I as at a Peet’s Coffee & Tea the other day. Not only is the coffee great (liquid mud) but it’s a San Francisco Bay Area favorite that has spread into nearly 200 stores.
While I was in a store, I noticed their email sign up card which was pretty enticing. Peet’s offers a free drink when you sign up for their email news.
Are you kidding me, a free drink?
My first thought was, wow! That’s a lot of revenue. But my second thought was, this is brilliant. For the cost of a drink, Peet’s:
- Gets to add you to their database — the cheapest form of marketing around
- Verifies they have the right info by mailing the free drink certificate to your house
- Brings you back into the store again with your free drink coupon (where chances are you’re going to buy something along with your free drink)
Pretty smart, right?
Not so fast.
THE REAL WORLD RETAILING TAKEAWAY
There are pluses and minuses to giving something to get something.
In my retail experience, we found that anytime we incentivized our customers to join our database, it compromised the integrity of our database in that these customers:
- Shopped less often than our regular database
- Had a lower average transaction than our regular database
- Were less likely to be loyal customers than our regular database
So where does this net out? In this economy, beggars can’t be choosers when it comes to customers.
With people shopping less and transaction counts down everywhere, anything a retailer can do to incentivize customers to shop is worth it.
As you know, database marketing is one of the least expensive marketing tools you can employ to get your customers to act.
Create your database, and give your customers something in return for providing their information to you. You’ll grow the base of customers you can pull from to increase traffic and sales.