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Nespresso is the new King Gilette
King Gilette invented a new business approach. Disposable razors. He started making money with a non-durable good, something you need to renew on a regular basis. The containers .. he gave them away for free. Or practical free. An approach Gilette is still following today. Cheap containers, expensive blades. Their product innovation is based on that: new blades (mostly by adding an extra blade), new container. Get the brand new container in a promotion that’s practical free (or at least less expensive than a new package of blades) and be stuck to new and more expensive blades. This happens on a regular basis.
This post isn’t about Gilette. We know the new king in razor town is Raz*War – quality blades at an honest price. I’ll use them, check it out. Not much left to say here.
Let’s talk about Nespresso, they top this business model.
It’s been almost a year since I got my Nespresso machine. I got it as a farewell present when changing jobs. Still much appreciated, ex-colleagues! Together with the machine, I got some accessories and obviously coffee pads. Great gift!
Almost a year later, taking into account I had a decent stash to start with, this is what I spend on Nespresso products:
- 650 coffee capsules
- Extra cups
- Spoons (which I never use myself because I drink my Nespresso black)
- Some random capsules in a Nespresso store
The price of a normal Nespresso capsule is 0.33 euro, a lungo (larger cup) is 0.37 euro. I drink both, so if you take 0.35 euro as an average I spent > 227 euro on coffee capsules alone. Together with the extra accessories the sum total will be around 280 euro.
I’m telling this because this is substantially more than the actual price of the machine. Especially when you take the semi permanent 50 euro cashback promotion into account.
The great thing is I don’t feel ripped off. This is where Nespresso exceeds Gilette. I’m happy to pay. Every cup of coffee is worth it’s 35 cents.
What’s more, when I place an order of about 80 euros, the only thing I can think is: man, I wish it was already here. New flavors! When they actually deliver, I’m happy as a little child. This is a business model based on use and added value. Every cup adds value!
Seeing this numbers, Nespresso would do a good job giving their machines away.
Nespresso is everything you can wish for as a brand. Kevin Roberts would call this a love brand. It’s the whole atmosphere, the full experience. As a customer, I can only conclude they have a very effective CRM strategy. They possibly have to, since you can’t buy the capsules in a random store. You need to go to a Nespresso store (rare, but fun) or order by phone / internet / fax / whatever. But the program works, you don’t feel left behind. They give you the message to contact them for anything. When it’s supposed to be time to decalc your machine, you get a set for free. It’s in the details. It feels fun. It feels premium.
The best thing? Literally any client is a brand advocate! You can’t wish for this, but in case of Nespresso it’s true. I guess I’m personal responsible for at least 5 new clients, on 1 year time! And they all love it, and bring in friends themselves.
How can this happen? Most important, the product is good. It’s premium, and worth what you pay. You never feel ripped off. The coffee is good as well. There’s quite some flavors (They’re icons! They have facebook fan pages!) so chances are you easily find yourself a favorite. I personally believe it’s the best confection coffee out there. I can imagine some fresh roasted, carefully selected, home brewed coffee melange can be better .. but seriously, how realistic is this? How likely is it that you personally are able to mix something that’s better than a coffee specialist? I’m a coffee lover, no coffee technician .. And the Nespresso coffee is kept fresh in the closed capsules, pretty important.
So the product is good, and the communication is in line. It creates some expectations, expectations that are empowered by actual use. No bloody lies!
This said, there’s just one thing they can improve, and that’s the online experience. I firmly believe, putting this in line with the general promise of the brand, use the same quality, enforce it really .. could be a very good step in expanding the brand.
Yes I’m a fan .. and proud of it. BTW, a Nespresso machine would make the ultimate x-mas gift in my mind. Not for me though, I have my machine.
That rounds it up very well, Steven. You said it like a real Don Draper.
Nespresso must be one of my favorite brands too. That said, from my point of view the customer experience was better in Belgium than it is in the US. The chic magazine, the free shipping when you order a large number of caps, fast response times. None of that here (yet). And the coffee is slightly more expensive as well. Just 5 cents, but it adds up.
Different countries, different standards I guess. But although there’s a Starbucks screaming for my business on every corner of the street, I know I’ll have the best cup of coffee, for a fraction of the price, at home. Nespresso, what else?
Thx for your POV Pieter. I didn’t knew you moved to the states! nice
btw: I started watching Mad Men as well; only just, but it’s great!
And inspiring, yes 
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