The next frontier for Loyalty and the “Third Place” – Part 2

Published on July 1, 2016 by Eric Swecker

The Third Place Frontier

Bars and Pubs: Anyone who watched the iconic sitcom Cheers would instantly recognize that bar as a Third Place (the tagline was “Where Everybody Knows Your Name”). Food and (mostly) drink were obviously central attributes, as were the collection of regulars (Cliff, Norm, and Frazier) and “new friends” (guest actors and actresses, bar visitors, etc.).

TGI Friday’s is launching a new initiative to try to create a Third Place for night owls and the AfterParty. From new menu offerings (Chicken and Waffles, Hangover Burgers) to late-night events (Lip syncing, trivia, etc.), they are trying to evolve from a place where people come to eat a burger at the bar or to hook up, to a late-night Third Place. Their stated goal, according to internal documents, is to drive late night and weekend lunch sales upward by 15%.

Fast-Casual Restaurants: Companies like Panera fit this profile. Panera stores are clean and inviting, with relatively inexpensive food and drink. All stores feature free WiFi, and they are open for all three dayparts. Customers can come in at any time of day with their laptop, phone, or newspaper and enjoy comfortable seating without the pressure to buy (as one might encounter in a bar). Panera seems well positioned to threaten Starbucks’ chokehold, with 22 million loyal members*. And over 50% of all transactions are linked to the “My Panera” loyalty program**. With loyalty participation benchmarking at about 20%*** across other industries, Panera’s success is simply astonishing. They truly are a Third Place.

Convenience Stores: The traditional thinking in a C-store environment has been to cajole customers to come into the store from the forecourt (gas pumps) and then to get them out as quickly as possible. Of course, the convenience stores of the past did not offer seating; most did not offer a prepared food offering, and frankly, did not usually enjoy a great reputation for cleanliness, either in the stores or in the restrooms. The one thing C-stores have always had is LOCATION. They are easily accessible, and most offer plenty of parking as well as 24 hour convenience.

Can the C-Store evolve into the next Third Place? They have the elements in place: Availability of inexpensive food and beverage, proximity, and the potential for regulars to congregate there. What is needed going forward to create a place that Millennials can call their own? A laid-back vibe, like a Starbucks), quality food and beverage options, free WiFi, music, access to AC power, and indoor and outdoor seating options. The seating must be “restaurant comfortable”. The stores must be clean and well lit, and the parking lot must be well lit and secure. In other words, the C-store must build the foundation that allows for the creation of the Third Place experience.

The Third Pace and The Bottom Line

Trying to figure out how much impact a Third Place initiative may have on your business could be very complex. Obviously, as with TGI Friday’s, the overarching goal is lift – they are looking for 15%. How can a C-store operator, for instance, measure incremental sales? We recommend running some analytics exercises, such as an RFM (Recency, Frequency, Monetary Spend analysis, to determine impact. In-store analytics (where shoppers are going, how long they are staying, etc.), traffic analytics (people counting), and of course, performance analytics, where the rubber meets the road, and when data becomes actionable.

Conclusion

Starbucks’ success as a Third Place can be attributed to its laser-focused commitment to the in-store experience, combined with its status as an upstanding and altruistic corporate citizen. Moreover, Starbucks forges an even more intimate bond with its customers by offering experiences and services that most competitors do not, such as mobile payments, free WiFi, and free music.

Starbucks is truly the pioneer and the pace-setter. Who will be next to seize the opportunity? Will it be you?

* Andrew Robbins, CEO Paytronix

** ibid

*** Mitch Morrison, CSP Magazine

---

---