Maggie, Jacob, Rishab, Nathan, and I will be exploring the idea of loyalty programs for bars that people are able to trade for other bar-points. This idea would ideally be applicable to any loyalty program, informing our TAM. However, we need a tight-knit and more niche customer base first, so we’ll be targeting people who frequent bars, launching this feature in SF. Though this does not reflect on our market sizing, we think a good place to start is the bars on Valencia Street in the Mission District of San Francisco.
As for my own interviews, I talked to two people:
David
David, 22, who transferred to Stanford from Vanderbilt and is in his final year of college. He has lived in Maryland, New York City, and the Bay.
I first asked questions about what types of companies he most often purchases food and/or drinks from. He gave a very decisive answer: Chipotle. David told me that he doesn’t drink coffee, and that he frequently orders on DoorDash. I asked him if he ever used any food-or-drink-related points, and again, very decisively, he said Chipotle.
When prompted on points he had and DIDN’T use, he talked about Uber and airline miles. “What if you could trade those points for Chipotle points? Would that influence how much you spent at Chipotle?”. The answer was a definite yes.
I turned to ask him how often he goes out to drink and how much he spends on drinks. He said it was something within a $30-50 range, and that he didn’t go out often by virtue of being on Stanford campus. I asked him if being able to get points for drinks, that would influence his spending. He said no, but that that was also because he didn’t drink much. Here are some snippets from the interview.
Do you use points for any food/drink purchases, or anything similar?
- Yes, the Chipotle app.
Can you tell me about a time that points were very useful?
– Booking my flight back from Maryland.
How convenient do you find your Chipotle points to be?
- Easy to use, I just scan.
As in, are you glad you have them? Why?
- Yes, but I’d still buy Chipotle if I didn’t. I’m glad because I’m very loyal and would buy them anyway.
How often do you get to use them?
- Once every 10 purchases.
Are there any points you don’t get to use?
- Uber points, airline miles. I never redeem them.
If you could convert any of your points into Chipotle points, what would you convert?
- United, Uber, credit card points
What do you wish you could use points for?
- Doordash, Amazon, food is a big spending, transportation
How often do you purchase drinks?
- Pretty rarely on campus, over the summer, once a month.
- I’m not interested in paying for drinks, I don’t really go out.
How much would you spend on a night out?
- $30 in a night per bar.
If you have points at a place to buy drinks, would that encourage you to go back?
- Yes, definitely.
Even to a bar?
- Yes.
What percent of the money spent would you want back?
- Biggest factor is the vibe of the place: $5 out of $50 would definitely be compelling.
Say you had 15% back in points, would this influence how much you’re willing to spend
- Probably not.
Why not?
- I’m not used to spending a lot on drinks.
Why WOULDN’T you spend those points at any bar?
- Thinking: for Venmo card, you get 6% cash back on the top category but that didn’t influence his spending
Joe
Joe’s a software engineer at Amazon and in his early twenties. He says he goes out for drinks 2-3 times a week and sometimes goes out to bars, but prefers marijuana. Since alcohol and marijuana are high-priced and niche consumer goods that have some parallels between them, I thought he made a very interesting interviewee. He also had an insight into how bars could differentiate themselves through “vibe” and the types of drinks they serve, whereas weed services often delivered the same brands of weed. He said the appearance of a bar and the creativity behind the drinks largely influenced his spending. He said that if he were part of a loyalty program, that would incentivise him to spend more.
Are you part of any loyalty programs?
– Yes, but only weed ones. Does that count?
Drinks? Food? Coffee?
– Have Starbucks points, United miles.
How often do you use them?
– Whenever I’m broke. I save them for a rainy day.
Any points you don’t use? Why?
– Everything but the stuff I talked about. I just don’t need them or know they exist.
Say you had points you don’t use— what points would you convert them to if you could?
– Weed.
When you go out for alcoholic drinks, how much do you spend on average per bar?
– $60
What a price in SF that you’d be willing to pay for drinks?
– Depends where I am. If it’s a sit-down bar, $12-13.
What would justify paying more than that?
– A drink that’s creative, out-there, or with higher alcohol content.
If you got points back at that place that you could use in the future, would that incentivise you to spend more?
– Yes, but I have to stop drinking before I’m too drunk as well.
If you got points back and could spend it anywhere else, would that incentivise you to spend more?
– 100%. Way more compelling.
If there were bars that offered this and some that didn’t, would this influence your decision regarding which ones you go to?
– Yes. I would definitely go to the ones that offer it.
How much would you have to get back?
– 1 free drink for every 5 drinks to be heavily incentivised.
Why would you pick one bar over others?
– Price, but mostly vibe. I don’t really care if the drinks are that good.
Why do you think bars don’t have the same loyalty programs as weed?
– Because the weed is delivered, it’s not sit-down.
Why would that make a difference?
– Bars can differentiate themselves more. Weed delivery sends me the same weed even if I switch services.
Would a system like this encourage you to try new bars?
– Yes, definitely.
Why?
– Because that way I’m more loyal to the bars that are in that loyalty program. There’s also a brand reputation at that point.
