Nespresso just launched a new connected machine called “Prodigio”. This machine allegedly allows you to prepare a coffee with your smartphone and make sure you never run out of Nespresso capsules. This machine will however allow much more than that … but the customer will probably never get to know it. Let’s have a look behind the scene and discover the secrets of the Prodigio strategy.
Churn : the one metric Nespresso is concerned about
For a premium company like Nespresso there are a few KPI’s that are more important than the others. Retention is one of them. It has become especially crucial since compatible capsules came on the market and consumers started switching to cheaper products. The switch to competition happens quicker actually than you may expect. Here’s how it happens.
Here’s the main reason why consumers switch to Nespresso-compatible capsules
Study show that consumers are bad at anticipating when it comes to food or drink. That’s why you always run at the last moment to the supermarket because there’s one ingredient missing in the kitchen. The situation is just the same with Nespresso. You suddenly run out of capsules and getting new ones will take at least 2 to 3 days. You know it but won’t be able to resist that long without coffee. What you do is to go to the closest supermarket to get a few Nespresso-compatible capsules. That’s how the adoption process starts. Eventually you’ll find them not so bad as you expected and are more and more likely to re-buy. After 6 or 7 purchase the adoption process is finished and it becomes a habit.
That’s how Nespresso loses revenues. Prodigio is the answer to that problem. Here’s why.
How to avoid the adoption of Nespresso-compatible capsules
The only way to break that adoption process is actually to tackle it at the very beginning. In other words it should be avoided that the customer runs out of capsules. That’s the secret aim of Prodigio.
The app will remind you well in advance to order capsules. In a second step we can bet that an auto-ordering function will be implemented to make sure the last chance to run out of Nespresso coffee is eliminated.
Which data will Nespresso collect on customers’ behavior ?
Officially the answer we got was that no data is collected. Honestly, we don’t believe it. But that’s only an assumption.
What we believe is that Nespresso will be able to collect a wider range of data. This data is likely to help them sustain their market share against competitors.
In addition to how many capsules you consume per day, Nespresso will obviously also know when you drink coffee and establish consumption patterns from there. Going one step further and assuming that drinking coffee is one of the first things you do in the morning, Nespresso is likely to predict when you wake up and predict when you go on holiday.
Will Nespresso know if I use compatible capsules ?
Nespresso will probably not be able yet to detect whether you use capsules from the competition. However they will most probably be able to predict it; and this will be rather easy. Imagine you had bought 200 capsules and the machine records a consumption of 300 capsules. If this 100-capsule difference can be observed across time, you may have another source of capsules that Nespresso doesn’t know about. And don’t forget that unlike most B2C businesses, Nespresso controls 100% of its distribution. If you consume more coffee than you bought from them, it’s because you are consuming some other coffee.
The Prodigio coffee machine is an important milestone in the Nespresso strategy. It’s probably the basis of Nespresso’s counterattack against competitors. If this new generation of machine is being adopted, rest assured it will soon be rolled out to all the other machines.Tags: data mining, étude de marché, FMCG, market research