A Missed Opportunity for Nespresso
I am a big fan of coffee and drink it throughout the day. Some people suggest that I drink too much coffee, but I am comforted by the latest research that suggests coffee reduces the risk of dementia.
We have a Nespresso machine here in the marketing department here at Northwestern University’s Kellogg School of Management. Kellogg recently stopped providing free coffee in the faculty lounge, so my coffee purchase rate is going up dramatically.
An Appealing Offer
When ordering some replacement Nespresso coffee pods today, I came across this appealing promoted offer on Google: “Nespresso: Buy 8 Sleeves, Get 2 Free.”
So, I clicked the link, logged on and ordered 120+ coffee pods.
The only issue: I couldn’t locate the promo link for the two free sleeves, so I reached out to Nespresso.
The response:
“After reviewing the details, it appears the specific offer you found through your search has already expired.”
I thought that was odd because it was a promoted link on Google.
So, I asked again and received this response:
“To ensure you have access to the most accurate and active offers, I recommend visiting the Promotions page directly on our website. Searching through external engines can sometimes display outdated or sponsored links that are no longer valid in our system.”
Another follow-up discussion led to this:
“I hear you completely, and I apologize for any confusion caused by outdated search results. This usually happens because search engines “cache” or index pages from previous campaigns that linger even after we have deactivated them on our end.”
I asked if Nespresso would offer anything in light of the situation and they replied no, but did say this:
“Customer satisfaction is very important to us, so if there is anything else I can assist you with before you go, please do not hesitate to let me know.”
Observations
What can we learn from all this?
One thing: be careful of old web offers. It can indeed be difficult to manage promotional links. But an outdated offer can still create customer unhappiness. Just because an offer tecnically expired doesn’t mean a customer won’t be disappointed and frustrated when they try to use it.
This is just one more reason to avoid aggressive, limited-time discounts.
Another thing: a misleading offer on the web isn’t the customer’s fault. The offer I saw had no expiration date or anything suggesting it wasn’t a legitimate promotion. I logically assumed it was valid and then I was disappointed when it wasn’t. This isn’t a big issue, of course, but it is still slightly frustrating.
And perhaps the most important thing: prioritize service recovery. When you disappoint a customer, come up with something to try to make things right.
The data on service recovery is quite striking: done well, it can lead to higher long-term customer loyalty. It sends the message that the brand values the customer and will take steps to address concerns. This message is positive in many different ways.
Now a brand like Ryan Air doesn’t need to focus on service recovery. That is the Ryan Air proposition: a low fare and little customer service.
A premium brand like Nespresso has to take a different approach.
In this case, Nespresso could have simply honored the offer that I saw. That would have cost, well, perhaps $4 in cost of goods expense? My customer lifetime value to Nespresso is dramatically more than this. If I order 500 coffees a year at $1 each, that is $500 in revenue. With perhaps a 60% gross margin, I’m worth $300 in just one year. Over a lifetime?
I didn’t order those coffee pods and now I’m rethinking my entire approach. Getting a simple drip coffee machine in my office would be a much cheaper long-term solution.
The overall result is that Nespresso is missing out on thousands of dollars in margin by not addressing a disappointed customer.
I don’t fault the customer service agent; they apparently didn’t have anything to offer. This is a bigger issue for the customer service team at Nespresso and its corporate parent, Nestle.
Brand Loyalty
Loyalty is a fleeting thing. It takes time to build it, but it can vanish quickly. It is important to pay attention to things like old links and to prioritize service recovery when customers are disappointed.
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