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Strategic Planning and Management Insights

Forget Customer Loyalty Cards - Join the disloyalty trend!

[fa icon="calendar"] March 16 / by Jenna Sedmak

As a coffee drinker living in a city, I have learned all about coffee loyalty cards. These cards are a great marketing strategy for customer retention by giving out a free drink after purchasing a certain number of beverages. While enjoying a coffee at one of my favorite local spots last week, I stumbled upon an article describing an evolved form of this concept. This same marketing strategy, combined with the concept of collaboration of local businesses is called the 'disloyalty program'.

Instead of one cafe offering a free beverage after a certain number of visits, many local businesses band together as a team, and offer a 'disloyalty' card that works at any one of their businesses. A few cities, beginning with Washington, DC, have coffee shops that use this marketing meets networking strategy. Calgary and Toronto are among the Canadian cities who have adopted this trend. The rules seem to vary in different cities or with different business circles (whether the customer has to redeem the free coffee at the cafe the card originated from, whether they can obtain the coffee at any of the cafes as long as they have purchased a drink at each of them, and how many drinks in total need to be purchased) but the concept is the same: collaboration between local small businesses to gain a strong customer base and develop a good competitive strategy against larger companies.

Each cafe in this instance has an opportunity to grow and expand. By participating in this program, each small cafe can focus on expanding upon what makes their cafe unique, instead of only competing with their rivals. The disloyalty card breeds a more cooperative business strategy that can help multiple businesses grow. Network with other local businesses will also take place: Both within the cafe industry and also with the new customers that come in. Instead of a customer becoming loyal to just one cafe, they might visit 4 or 5 other cafes that they may not have known about otherwise. Word of mouth travels fast, and this form of advertisement can help improve sales.

Large well known coffee businesses like Starbucks or Tim Horton's can afford large advertising campaigns for television, radio, and print. This can help them gain a competitive advantage in their industry. One local company may not be able to compete with a large corporation, but perhaps 6 can! I am not demonizing coffee chains, but I do support local businesses having an equal playing ground. The disloyalty program can be a better business strategy than one small company offering a loyalty card on its own.

Check out this short youtube video included in this post explaining Washington DC's version of this program! For more reading on this subject check out these links:

 

http://toronto.ctvnews.ca/toronto-baristas-reward-customers-for-disloyalty-1.504365

http://www.huffingtonpost.com/2014/01/10/disloyalty-card_n_4576048.html?ncid=edlinkusaolp00000003&ir=Business

Topics: Business management, Marketing, Business strategy, Customer Service

Jenna Sedmak

Written by Jenna Sedmak

Jenna is the communications and client partnership manager with SME Strategy. She spends her time building relationships with the public, clients and partners through web content and podcast production, industry research, customer relations, project management and strategic plan implementation.

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