Why is 7-Eleven Giving Away Free Coffee?

It’s no secret Australians love their coffee. On average, they consume an average of nearly 2kg of ground coffee each per year, and the Australian coffee market exceeded $2 billion in 2017 alone.

Of the 1 billion disposable coffee cups that Australians use every year, approximately 92% of them end up in landfills because these cups cannot be recycled due to the plastic lining that keeps them waterproof.

Generally, it is too difficult to separate the plastic from the fibre to recycle the cup.

7-Eleven has recently launched a promotion in Australia, whereby customers are rewarded with FREE COFFEE when they bring their recyclable plastic, ceramic or glass cups from home over a 28-day period.

Image Source: 7 Eleven

This promotion is clever marketing on a number of fronts.

First and foremost, the promotion is intended to establish a habit and reward the desired behaviour. It is only through repetition that a behaviour can be changed.

I drink a lot of coffee and I’ve owned a reusable cup for some time – ideally, I’d prefer to drink out of it. Whilst having the best intentions to recycle, the reality is that I usually forget to bring the cup into the store.

It has always seemed much easier to take a new disposable cup than bothering to wash out a cup and bring it into the store.

7-Eleven has offered a cup recycling program in the past. On the few occasions I have brought my used disposable cups back into the store, I was told that the store does not have a cup recycling bin.

The stores can be small, and presumably there are costs associated with the logistics of removing the waste, as well as space issues caused by offering in-store recycling.

However, only a couple of days into this promotion, I’m already changing my behaviour to wash out my reusable cup and carry it into the store.

Image Source: The Conversation

According to 7-Eleven Australia CEO Angus McKay, it takes 21 days to make or break a habit. At three days in, I’m not sure if I will reach the 21-day mark to break an old habit and form a new habit, but it is worth a try.

There are also a number of commercial benefits for 7-Eleven with this promotion.

From a marketing perspective, 7-Eleven’s offer of free coffee for a month makes sense. It is great PR for the company to be seen actively supporting a greater environmental cause.

We are regularly seeing images in the news of recycling material being stockpiled due to lack of local recycling facilities (and occasionally, even being set alight by mistake!). With this initiative, 7-Eleven is tackling the environmental problem head-on by trying to reduce the amount of cups used.

7-Eleven is in the business of convenience… and coffee drives store traffic. Coffee is a great lure. Bring people in to buy coffee and you have the ability to upsell additional convenience products with higher margins.

As well as incentivising us to change our habits, the promotion is also encouraging coffee drinkers that may have previously shunned their product (call it coffee snobbery!) to try their product. I have paid $4.50 for a cup of much worse coffee!

The economics are also very good from a cost perspective. 7-Eleven has around 600 stores, each selling up to around 800 cups of hot drinks per day. For argument's sake, let's say each store sells an average of 400 cups per day (city stores typically have higher throughput than suburban stores).

If each disposable cup and lid costs 20¢, that’s $80 per day and over $29,000 per year for cups in each store.

Spread the cost of disposable cups across a network of 600 stores, and 7-Eleven is spending an estimated $17.5 million on cups annually. If the “Free Coffee” promotion can convince just 10% of its customers to bring in their own cups on an ongoing basis, that’s an annual saving of approximately $1.75 million.

We have our keep cups! Do you have yours?

Overall, the promotion is about establishing and reinforcing a habit to bring in your own cup.

It’s a win for the environment. It’s a win for the company in that it has the potential to grow sales and reduce costs in the future. Finally, it’s a win for the customer, who gets to enjoy a free coffee.

Good call!

Interested to check out some more loyalty program case studies? How about reading how McDonald's master digital engagement, agriculture giants Ridley surprise and delight customers and how coffee masters Starbucks keep customers feeling like VIPs.