Subscription services are still a growing market within retail, and gourmet coffee roasting company illy has discovered new ways to expand on the model. In an effort to build longer-lasting customer relationships, illy is enticing consumers to join the “illy a casa” subscription program by offering an espresso machine for free with the subscription.
The program leverages AI, using algorithms to analyze billions of product and data points from millions of consumers through illy’s use of a platform from OrderGroove. Since launching the program with OrderGroove’s Relationship Commerce capabilities in June 2017:
- 44% of illy subscribers added in the U.S. during this period chose the “illy a casa” machine program;
- illy saw an 88% increase in customer spending, compared to one-time purchases of the coffee machine without the “illy a casa” program;
- The program coincided with a 10% increase in the web site’s overall Net Promoter Score (NPS).
“The customer satisfaction, via our NPS, was an additional benefit that I didn’t expect, so that was a nice surprise,” said Andrea Vitale, Senior Director of E-Commerce, North America at illy in an interview with Retail TouchPoints. “The current subscription program for machines is becoming a higher percentage of our total subscriptions, which is very good, because that particular program operates on higher margins.”
The “illy a casa” program is designed to reduce the barrier to entry for subscribers with the free espresso machine offering versus a standalone coffee subscription. Rather than checking out with only the machine, customers are presented with the opportunity to sign up for the program. Illy offers a selection of iperEspresso machines at a reduced or complimentary price with opt-in to an 18-month subscription for illy’s recyclable coffee or espresso capsules.
Upon selecting the machine of their choosing, shoppers also must select four or more coffee capsule options as part of the subscription. Shoppers will then receive the capsules every eight weeks for 18 months. New members have the option to select from a group of one of five “gifts” as part of the subscription: espresso cups, cappuccino cups, a travel mug or one of two pairs of collectible mugs.
“In exchange for getting a free machine, the consumer would need to purchase a certain number of our coffee capsules over a period of time,” said Vitale in an interview with Retail TouchPoints. “We worked hand-in-glove with OrderGroove to design the front end of the site where you actually enroll in the program. From that perspective, we were able to streamline the program and the enrollment process a bit. We’re finding that the program has a very high retention rate and also is one of the highest-generating revenue programs that we had.”
illy Begins Offer Testing; Is Predictive Ordering Next?
illy plugged the OrderGroove Relationship Commerce Cloud platform into Salesforce Commerce Cloud (then Demandware), enabling the coffee seller to launch the subscription program without having to start from scratch. Vitale noted that the companies have a consultative partnership, so the OrderGroove team can help them decide which features within the program to change or build anew. For example, illy tests offers on several programs to learn which discounts and products will drive greater customer acquisition.
illy has deployed the OrderGroove Relationship Commerce Cloud in eight countries, with plans to implement the platform’s predictive reordering, discovery and ordering capabilities across SMS channels.
“We will use our AI engine to anticipate when the shopper is going to need coffee again,” said Greg Alvo, founder and CEO of OrderGroove. “He might not commit to receiving it automatically but we’re going to send a text message where we have your payment and address on file and all you have to do is respond with ‘yes.’”