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The Benefit Of Unlimited Offers: Dollars Or Data?

You’ve just paid $100 for a bottomless bowl of pasta. When it comes to measuring the return on that investment, however, the formula is more likely to involve an accumulation of bytes than bites.

Photographer: Daniel Acker/Bloomberg

This is what some merchants may be betting on as they turn to unlimited offers to increase their market share. So far, shoppers are biting:

  • Olive Garden in September reissued its $100 Pasta Pass, which allows holders access to unlimited bowls of pasta for eight weeks. It sold out of 22,000 passes in less than one second.
  • Smashburger’s 45-day Smash Pass is a ticket to $1 entrées once a day every day from Jan. 1 to Feb. 14. It follows the 54-day Smash Pass, introduced in October, which offered the same from 15 through Jan. 9 (except Christmas and Thanksgiving). Shoppers have to pay in advance, so the total cost could be $90 or $108.
  • Starbucks has since 2011 offered an annual Coffee Refill Tumbler at varying prices. In late 2016 it introduced the $40 refill tumbler, which buyers could fill up daily with coffee and tea during January at no additional charge. The tumbler returned in 2018 in select stores but may have sold out — some are available at third-party outlets such as Amazon and eBay, but for higher prices.
  • GameStop in October announced a $60 PowerPass, which would let customers rent an unlimited number of used games for six months. It suspended the program during a soft launch in mid-November, however, due to “program limitations” that may involve its computer systems.
  • And the company MoviePass, which is built on a model of selling $9.95-a-month passes for unlimited pictures, in mid-November offered a limited-time, one-year plan for $6.95 a month. The cinema chain Cinemark responded with an $8.99 monthly pass called Movie Club that’s good for one movie per month plus a 20% discount on concessions, as well as other benefits (unused tickets roll over and never expire).

These brands join a number of others, from car washes to theme parks, that are banking on unlimited offers to improve perceived value and encourage more frequent visits. And with each offer, the size of the bargain escalates to double-take proportions.

How can brands make money by giving so much away? It’s likely they have a clear view, supplied by their shopper data, that while, sure, a few customers will be money-losers, there will be an overall gain in net sales, profits and customer activity. Let’s explore how.

Scratching the Surface of Bottomless Deals

Unlimited offers attract customers through value deals that seem crazy — on the surface. Smashburger, for example, estimates that just 10 burgers would cover the cost of one full Smash Pass (at an average burger price of $6.70). The Starbucks Refill Tumbler, at $40, would more than pay for itself with 20 drinks.

And the limited-time MoviePass, at $6.95, is less than the cost of one admission at many theaters.

But below the surface is a second revenue stream upon which these brands are counting — the related purchases that would otherwise not be made, such as for concessions at the theater, dessert at a restaurant and added meals or tickets for friends and family. Each organization’s data could indicate how likely their customers are to buy adjacent categories or bring companions into the stores or restaurants. It’s like a BOGO, but the plus-one adds profitability.

As the brands parlay these insights into more targeted promotions and communications, a virtual cycle of understanding will ensue. It all starts with consulting their data to assess the full value of such seemingly crazy offers.

Unlimited Data Returns, in 3 Steps

Which brings us to the essential point: If brands follow the basic rules about working with data, they will gain a sharper awareness of how such bountiful offers will play out among their customer base. Even test runs should be harmless if the data is used as a guide. Here’s how:

Collect only the data needed. Big data does not mean more data; it means using the right data. The brand should determine exactly what it wants the data to accomplish. Is it to grow the customer base, test a new service or improve overall marketing investments? Once the purpose of data collection is determined, the organization’s analytics team can localize the specific information required to realize that goal.

Be transparent. From the start, the organization should share with its offer members the data it collects, how it uses the information and why. The “why” should include how the customer will benefit. If it is that their choices will help the brand make future menu decisions, they’ll likely want to know that. If the benefit is they’ll receive fewer unwanted email ads, just say so. Shoppers value honesty.

Respect the data. Brands should use the data they collect only as described, and hold on to it only as long as needed. In the interim they could share it across the organization so each department can find ways to maximize the ROI for the customer, because they know their data is an investment in a brand. Shopper data can help an organization more accurately determine better price points, identify pain points and refine its services.

It all comes down to aligning the brand’s priorities with those of its best customers. People like a good deal, but they do not come with unlimited quantities of trust or patience. Brands that offer bottomless offers will succeed when they believe the price of that deal is long-term loyalty, not limited-time transactions.

This article originally appeared in Forbes. Follow me on Facebook and Twitter for more on retail, loyalty and the customer experience. 

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