Marketing Crash Investigation: Pret a Manger and Krispy Kreme’s subprime subscriptions
The Drum draws on major research carried out by EY – which was recently unveiled at Possible Miami – to gain insights into subscription struggles at Pret a Manger and Krispy Kreme.
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The subscriptions & slip-ups:
The introduction of subscription models in retail and food service industries is a strategic move aimed at enhancing customer loyalty and ensuring a steady revenue stream. However, the recent debacles surrounding the Krispy Kreme and Pret a Manger apps demonstrate that even well-intended initiatives can falter disastrously if not executed correctly. Here we examine the unfolding controversies and the lessons that can be learned.
The promise of subscriptions
The subscription model has revolutionized industries by providing customers with convenience and value, while offering businesses predictable recurring income. Krispy Kreme and Pret A Manger, sister companies under the JAB Holding Company, ventured into this model, anticipating a boost in customer engagement and sales consistency. Pret’s Coffee Subscription, for instance, offers unlimited hot drinks for a monthly fee, and Krispy Kreme recently introduced a similar scheme for doughnuts.
The downfall begins
However, what was supposed to be a smooth rollout turned chaotic. Technical glitches and operational mishaps plagued both companies, frustrating customers and tarnishing brand reputations, culminating in a lot of negative press. The subscription model, which relies heavily on an app’s functionality, stumbled due to underestimating the technical challenges involved. Customers experienced app crashes, incorrect billing, and issues with redeeming subscriptions, which led to widespread dissatisfaction.
According to reports from The Telegraph, both companies faced backlash as customers took to social media to vent their frustrations, revealing the scale of the operational shortcomings. The chaos was not limited to customer experiences; it also exposed flaws in internal communications and staff preparedness, with employees struggling to handle the surge in subscription redemptions and technical queries.
Key lessons: the crucial nature of loyalty schemes
The Drum turned to a study EY has conducted on loyalty strategies – which it recently unveiled at Possible Miami – to gain insights into what apparently has gone wrong.
There are several critical areas where Krispy Kreme and Pret faltered. First and foremost is the underestimation of the infrastructure needed to support such a subscription model. EY emphasizes the importance of robust technical solutions that can handle increased loads and complex data interactions. In this instance, both brands likely failed to align their IT capabilities with the ambitious scale of their subscription offerings.
Secondly, EY points out the significance of customer experience management in loyalty programs. Any loyalty scheme’s success heavily depends on the seamless integration of technology, staff training, and clear communication. Missteps in any of these areas can lead to customer dissatisfaction, which is particularly damaging in a social media-driven market where negative experiences are quickly amplified.
Consumer trust and brand damage
The backlash from these operational issues extends beyond immediate customer irritation. EY’s presentation underscores the long-term implications of failing at loyalty programs. Trust, once broken, is challenging to rebuild. For consumer-facing businesses like Pret and Krispy Kreme, the impact of such failures can translate into a loss of loyal customers and a tarnished brand image that dissuades potential new customers.
Moreover, the financial repercussions can be significant. While subscriptions are intended to smooth out revenue fluctuations, the costs associated with rectifying these failures – through refunds, additional customer service resources, and potential legal challenges – can negate the anticipated benefits.
Recovery and rebuilding
Recovering from such a setback requires a multifaceted approach. Companies must address the immediate technical issues and ensure that their app platforms are robust and reliable. Equally important is retraining staff and revising internal communication protocols to better manage customer expectations and responses.
Proactively engaging with affected customers is also crucial. Offering compensation, such as extended free subscription periods or direct apologies, can help mitigate some of the immediate damage to customer relationships.
The road ahead
For Krispy Kreme and Pret, the path forward involves not only addressing the current crisis but also taking proactive steps to ensure such issues do not recur. This might include investing in advanced technology infrastructures, revising operational procedures, and continuously monitoring the execution of their subscription models.
Furthermore, these experiences offer lessons for other companies in the consumer sector considering subscription models. The key takeaway from EY’s insights is the critical importance of planning, testing, and readiness – elements that must be thoroughly evaluated and implemented to avoid the pitfalls experienced by Krispy Kreme and Pret.
Conclusion
The unfolding situation with Krispy Kreme and Pret a Manger serves as a cautionary tale for all consumer-facing businesses. Loyalty schemes and subscription models, while potentially lucrative, require meticulous planning and robust execution. Companies must ensure they are not only attracting customers with promises but are also fully prepared to deliver on them consistently. As these companies navigate their recovery, the broader industry watches and learns, hopefully leading to better implementation strategies in the future.
In conclusion, while Krispy Kreme and Pret’s intention to innovate customer engagement through subscriptions was commendable, the execution was flawed, underscoring the delicate balance required in the design and deployment of new customer loyalty schemes. The lessons drawn from their experiences will shape how businesses approach similar strategies in the future, with an increased focus.