Making it stick: Ben Goodale on Subway’s secret sauce

Given the success of Subway’s Subcard at the global Colloquy Loyalty Awards last year, where it won the Innovation in Retail category, it seemed fitting to write something about what made it different and what the implications are for smartphone applications in loyalty and direct marketing.

It’s worth pointing out all the international finalists in that category were from New Zealand, prompting Colloquy to quip “perhaps we should rename this category ‘Loyalty Innovation in Retail New Zealand’”. Other than Subway, Farmers and New World were acknowledged, so it was an amazing showing from our country’s leading retailers.

What distinguished the Subway entry was that it was about using the latest technology to make a difference to customer engagement. One judge’s comment was “Subway exemplifies a culture of innovation translating into loyalty leaps in their market”. 

In 2006, Subway New Zealand introduced Subcard to replace an old-fashioned ‘stamps’ programme, which was very popular with customers but which provided zero customer insight or contact opportunity. Innovation leaps since then include a lifecycle CRM programme of eDM communications; a sales promotion function meaning we can offer instant win at every Subway store in real time for those with a Subcard, delivered via the POS and the till receipt; and a built in research group of engaged customers to survey for the likes of customer satisfaction and product development.

The smartphone app has taken this to another level and this is what got the Colloquy judges excited. The app has become a digital wallet because value can be loaded against the Subcard account and customers can now order and pay using the app, and then walk instore, skip the queue and collect their sub just a few minutes later. The results, in terms of increased customer engagement, increased sales ticket value and sales growth, and improved customer experience have vindicated the investment. “Outstanding adoption of an emerging platform to create real business results,” was another judge’s comment.

Fundamentally, this app has been more than a marketing wheeze. It has reduced the cost to serve, but has actually improved the customer experience. What’s interesting is that as loyalty marketers we are facing challenges as we go electronic in terms of the plastic card (traditionally, the whole ‘front of wallet’ thing, a branded element our customers carry every day) being replaced with a digital solution which is easy to ‘lose’ in a plethora of phone apps. The threat that smartphones themselves, or clever app developers, can offer onboard loyalty card ‘wallets’ that aggregate our app offering to a swipe and rewards balance is real and is forcing us to think differently about what we do. As marketers, we want to create branded ‘zones’ on people’s smartphones, and effectively be ‘front of phone’.

What differentiates the Subcard app is it has rich engaging functionality, which means it is much more likely to be used regularly as a useful digital tool, rather than be aggregated and is not unlike Air New Zealand’s mPass, which is also excellent and incredibly useful if you are zipping in and out of the airport. Maybe this is why so many New Zealand marketers have held off from developing apps, and there of course is the app vs. mobile website debate too. However, it’s hard to imagine the mPass working in the same way as anything other than an app. 

So if the functionality and utility is right, then all the direct marketing goodies can be built around that core. The smartphone is very much a new frontier and really exciting for us all in terms of how it becomes a core 1-1 channel. Hopefully we’ll see New Zealand brands dominating the Colloquy awards for years to come. 

  • Ben Goodale is managing director of justONE. 
  • This article originally appeared in the Nov/Dec edition of NZ Marketing magazine

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