As Dan Ariely has demonstrated, consumers find it nearly impossible to pass up a free offer. Tapping into that has proven to be a stroke of marketing genius for Panera Bread.
Panera Bread, introduced its unlimited coffee service for $8.99 a month in February, an amount that reduces the cost of a daily cup of coffee to just 30 cents. As cheap as that is, though, nothing beats free. And that’s exactly what Panera offered members of MyPanera this June through Labor Day.
It certainly is a winning strategy if the goal is to sign up more subscribers. Eduardo Luz, chief brand and concept officer, told FastCasual that the company has added over 800,000 members, an impressive gain even for a brand that leads the industry with 40 million members in its loyalty program.
The Key to Panera’s Pandemic Success
Luz pointed out that the coffee promotion was planned as part of the brand’s strategy to increase membership and drive more sales, though the timing was actually advantageous in terms of giving it a competitive advantage when the pandemic hit.
“The coffee subscription service model put us in a position to both maintain and grow our customer base with socially distant behaviors in mind by way of both the summer-long free coffee promotion and this refer-a-friend model,” Luz noted.
Panera does offer customers various safe options like Curbside Pick-Up, Drive-Thru, Delivery, or Rapid Pick-Up® order to obtain their free coffee. The refer-a-friend program rewards members and their two (minimum) friends who subscribed through their unique code with free membership through October.
“The free service itself is relatively low overhead for us to fulfill and holds a lot of value in terms of high future earning potential,” Luz said.
As Ariely’s experiments have demonstrated, what free represents to people goes far beyond money savings. It arouses a feeling of happiness, and certainly when the free item is coffee, there’s even more incentive to feel the benefit of a mood lift.
Making your customers happy is good business, and happy customers will likely also treat themselves to something to eat at Panera, as well.