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Opinion / Digital doesn’t have to be a grind for coffee chains

In an increasingly competitive coffee shop market digital visibility at the local level matters more than ever says Mike Fantis, Vice President & Managing Partner UK at DAC Group

“It’s all very well ranking high at a national level, what’s equally significant is local keyword rankings” | Photo credit: CardMapr.nl

Although the cost of a cup of coffee has risen by £0.33 in the UK over the past 12 months – and with an average cost of over £3 – coffee still safely falls into the category of affordable luxury.

Coffee may be recession-proof and the UK coffee shop market is now valued at £4.9bn ($5.9bn), but the competitive set is growing and this presents a problem for major branded coffee chains.
Rising inflation coupled with a fall in high-street footfall means a recognisable brand isn’t necessarily enough of a draw. There are over a quarter of a million searches every month for generic coffee shops from users with no particular brand loyalty.
This means independents operating from a single location are now able to win on digital. Despite the far greater budgets at the disposal of coffee chains, these are typically funnelled into national campaigns. This approach misses a fundamental truth of the smartphone era – visibility at a local level really does matter.
As such, many established brands need to up their game. This starts with rethinking digital marketing strategies.
The value of where
Marketers only really need to fulfil a single objective – to give a potential customer what they want, when they want it. However, what often gets missed is where – a store visit can start from a non-branded search such as “coffee shop near me.” 
Mass market brand advertising drives consideration, but taking care of the more mundane elements, such as search and a reviews strategy, can be what ultimately drives the conversion.
The ubiquity of smartphones and low cost of entry for search marketing means national franchises are in direct competition with independents for local share of voice. While traditional advertising campaigns certainly have their place in the marketing mix, a billboard or TV ad isn’t going to direct footfall to a specific store when someone fancies a latte.

“Coffee chains can be more ambitious than their less data-rich competitors could ever hope to be”

Smartphone users are 67% more likely to convert into a customer if an advertiser has customised their ads by postcode. Search is equally important, and relevance defines how far up the Google results your store ranks as most people tend not to look further down the page than the first few search results. It’s all very well ranking high at a national level, what’s equally significant is local keyword rankings.
This includes within Google Maps results, which also integrates customer reviews data to rate local outlets – so it is worth encouraging satisfied customers to leave a Google review and to engage with those who are less so.    
Getting it right means identifying what search terms are most significant and most searched at a postcode level. Typically, these will align to the product categories, but also generic terms like ‘cafe’, ‘coffee shop’, ‘food’, ‘sandwiches’, ‘lunch’, ‘breakfast’, ‘seating’ and so on.
It’s not rocket science. In fact, it’s so simple that any local vendor could ‘own’ local rankings and divert potential customers away from your stores at a time when they are actively looking to visit a branch and make a purchase.
However, being able to capitalise on local advertising to direct customers from a digital search to a particular location is contingent on Google being able to access individual websites for local outlets.
Research DAC conducted last year revealed that 67% of UK Food & Beverage chains do not do so, and instead opt for i-frame pop-ups from their national, or worse, international website. While this approach is undoubtedly the easier option, it prevents those businesses from reaching customers at a local level.
I can understand the reticence to invest in signal-led local strategies, at least to some extent. Unlike e-commerce, where there’s a very clear, trackable (but admittedly imperfect) path to purchase, it’s less easy to prove these budgets are making an immediate impact, at least at a level beyond gut instinct.
Attribution – making the link to the reason why someone decided to visit your shop over another – can be hard to prove when there are so many physical and digital signals to account for in a crowded environment like a high street.

However, it’s straightforward to discern just how successful your efforts have been over time by running discreet tests to compare store footfall pre and post a campaign targeted at postcode level. 
An app does not constitute a digital strategy
While pretty much anyone with a broadband or 4G signal can set up search marketing and local ads. The advantage held by the chains lies in all the first-party data they hold from their digital loyalty schemes.
High street coffee chains have made significant investments in digital loyalty and by now most will have amassed significant data on customers’ food and drink preferences, where and when they purchase. Not using it to tailor communications to audience segments with location as a consideration is a significant missed opportunity.
Collecting this data is just the first step. This investment is effectively wasted if it isn’t put to use with active audience segmentation and proactive marketing. Speaking as a performance marketer, it pains me to see any business not making the most of such a wealth of data riches.
With this insight at their disposal, coffee chains are well-placed to better understand customer priorities and behaviours – when they are in a particular area and whether they are likely to be in commuter, or leisure mode.

From here, it is possible to group customers into segments based on their demonstrable preferences and market to them proactively. For example, with weekend food offers at their home store, rather than when they’re at work and convenience is the priority.
Digital doesn’t need to be hard, and it can be incremental, so start small to build a proof of concept to get the basics right first, then widen the strategy to those areas that need most help. Even keeping it simple will have a discernible impact on the bottom line and this can be significant – just ask your competitors.

Once the playing field is level with regards to search, coffee chains can be more ambitious than their less data-rich competitors could ever hope to be. 
The greatest opportunity is that there is an audience ready and waiting to be sold to. Brands don’t have to work hard to convince the average commuter that a coffee is anything but a good thing!

However, even the biggest coffee chains need to be visible to drive footfall to the right locations.

Mike Fantis is Vice President & Managing Partner UK at DAC Group

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