Caribou Coffee Takes Starbucks Turnaways

Posted on by Chief Marketer Staff

Caribou Coffee is taking a competitive swipe at Starbucks, saying it will honor thousands of free-drink coupons the coffee rival sent via e-mail to employees last month, but later voided, citing abuse by consumers.

The Starbucks coupons will be accepted in exchange for a medium-sized Caribou’s Cold Press iced coffee, Iced Americano (a cold espresso-based drink) or iced tea on Sept. 8 from noon until the close of business.

“It was a great opportunity to thank our customers and to generate trial [with new customers],” Kathy Hollenhorst, Caribou Coffee’s senior VP-marketing.

The effort marks the first time Caribou Coffee has formally accepted a competitor’s coupon. On Aug. 23, Starbucks sent employees in the Southeast an e-mail for a free grande beverage. The e-mail contained a printable coupon and asked recipients to forward the message to friends. Days later, Starbucks withdrew the offer, saying the e-mail had been “redistributed beyond the original intent and modified beyond Starbucks control.”

Caribou Coffee tracked news surrounding Starbucks’ decision to yank the coupon offer. The chain, which operates 416 stores in 16 states, wanted to use the opportunity to reward loyal Caribou Coffee customers and give new users a reason to try the chain. It got the word out through p.r.

To further drive traffic to its stores, Minneapolis-based Caribou Coffee sent its own e-mail to tens of thousands of customers last week in the Midwest and southeastern U.S. with an e-coupon for a free medium-sized iced beverage on Sept. 8, the same day it accepts the Starbucks coupons. The e-mail describes Starbucks e-mail offer, but doesn’t mention its biggest competitors by name and instead labels it as the one that “has a big green logo.” It says the chain issued a coupon for a free iced-coffee beverage and decided not to accept it. “Although they won’t honor the coupon, Caribou Coffee will!” the e-mail reads.

And like the Starbucks e-mail that went virally out of control, the offer tells recipients to send the message on to a friend. “Feel free to forward this on to your ‘green’ friends,” the email says. “We’re happy to honor their coupons and welcome them to Caribou.”

Asked whether the company is concerned that the e-mail will be abused, Hollenhorst said the stores are ready for the masses. The free offer is Caribou Coffee’s message to loyal customers that “we appreciate your business,” she said. “Some people might not have gotten a Starbucks coupon. So, here is one for you.”

Starbucks officials said the company does not comment on competitors’ efforts.

Starbucks coupon offer came amid the chain’s July posting, its weakest monthly same-store sales increase since 2001. Starbucks cited demand for cold drinks (i.e., Frappuccinos) caused a slow down in service during the morning rush, prompting customers to seek a caffeine fix elsewhere, according to The Associated Press. The Seattle-based chain is celebrating its 35th anniversary with a series of events (PROMO Xtra, Aug. 31, 2006).

Caribou Coffee, however, is using the coupons to generate trial of Caribou’s Cold Press iced coffee. The product steeped in cold water for 12 hours unlike competitors, which offer brewed coffee over ice. Hollenhorst said Caribou Coffee’s method loses the bitterness and acidity commonly found in other iced-coffee products.

“This is a huge opportunity for us,” Hollenhorst said. “By generating trial we’re hoping customers will get to experience Caribou Coffee. We are different than the common set and this a great chance to get people to see that.”

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