Caribou Coffee debuted its Caribou Perks loyalty program this week, meant to reward customers’ frequency with freebies or upgrades from the Minneapolis-based chain’s beverage and baked-goods menus.
Michele Vig, the company’s vice president of marketing, said while coffee is a habitual purchase for many Americans, consumers are not necessarily locked into their loyalty to one coffee brand over another. Caribou Perks was designed to build loyalty in new and existing customers, she noted.
“There definitely is a group of consumers who go to the coffee shop and stick to it day in and day out, but the reality is there are more consumers who shop around quite a bit,” Vig said. “The purpose of this program was twofold: to reward our really loyal customers with perks and to give customers who don’t see us as their No. 1 shop a reason to put us in that spot.”
The program expands upon the chain’s prepaid Caribou Card. Users either text “enroll” to a special number to register their cards for perks or fill out a profile linked to the card at the caribouperks.com microsite. From there, the chain can track users’ purchases when they use their Caribou Cards or give cashiers the mobile phone number linked to their accounts.
Users earn a free medium drink for registering. Caribou notifies loyalty club members when they are approaching spending thresholds for other rewards by text or email.
Customers will know when they are eligible for a reward from Caribou, but they will not know what perk they get until they receive their text messages for redemption, which will keep the program interesting for users, Vig said.
“We look at a lot of different competitors and wanted to differentiate from our biggest competitor, which is Starbucks,” she said. “Their program is really good; we just wanted to be able to do something different. We wanted this to be tailored to our guest, so something more similar to the airline model [of loyalty programs] doesn’t give us that flexibility to tailor it to what our guests want. Some want that free latte after so many purchases, and some don’t.”
Caribou consumers in the brand’s core markets are “ecstatic” about the Perks program, Vig said, adding that 65,000 people have signed up in the seven days since the club had its soft launch on Jan. 2. Currently, Caribou Perks is operational in 254 company-owned units and 17 franchised locations. The remaining 90 franchised locations in Caribou’s domestic system will add the program in February.
For now, the program is chiefly about boosting traffic and frequency in the brand’s more than 360 coffee shops in the United States, Vig said, but the chain might incorporate purchases of its consumer-packaged goods in grocery stores into the loyalty club in the future.
Caribou Coffee is about nine months into a strategic transition with sibling brand Peet’s Coffee & Tea to shutter about 80 Caribou units and convert another 88 to Peet’s locations. The two chains became joined in the same portfolio when parent company Joh. A. Benckiser, a German holding company, acquired Caribou in a $340 million transaction to go private in December 2012.
But in core markets like Minnesota, where Caribou will remain and further expand, customers have maintained their loyalty and purchasing patterns, which Vig hopes to bolster further with the rollout of Caribou Perks.
Several coffee chain competitors, notably Starbucks, offer a smartphone app for their consumers to track loyalty rewards or pay, but in this first version of Caribou Perks, the brand is running things with a loyalty card or with simple text messages.
“We talked to our consumers to find the best opportunity to engage them,” Vig said. “The tech-savvy consumer doesn’t have to hold a card and could just give the cashier a phone number. Most of our customers still see the benefit of having a card, and until we have mobile payment, their card is their usual form of payment. … Those folks were telling us, ‘Whatever you do, don’t give me two cards.’”
Caribou Coffee operates and franchises more than 460 locations in eight states and 10 international markets.