Costa’s Welch Brews Brand Experiences To Every Customer’s Taste

The brand and innovation director of the U.K. coffee shop chain uses digital to understand “what customers want, where they want it, and when they want it.”

The U.K. has become a nation of coffee drinkers, gulping down an estimated 2.2 billion cups a year in almost 21,000 coffee shops.

With almost 2,000 U.K. shops, Costa Coffee is the leader in this market. Owned by the U.K.’s biggest hospitality company Whitbread, Costa also has more than 1,000 other outlets across 34 countries worldwide.

As Costa’s Group brand and innovation director, Carol Welch describes her role as “overseeing anything to do with brand, innovation, digital, customer experience, and brand experience.” Welch works at group level with a small team, focusing on the global brand, digital platforms, and innovation after joining Costa in 2013. Before that she worked in marketing and innovation for Associated British Foods, Cadbury Schweppes, and PepsiCo.

CMO.com: How is your approach to marketing changing to come to terms with a post-digital world?

Welch: Marketing itself isn’t changing. The basic principles are that you understand customer needs, how you can communicate and influence their behaviours, then deliver what they want through whichever channels are available in a profitable way for the business.

Digital is not just another channel, it’s a customer way of thinking. It allows you to communicate with customers in real time, in terms of both engagement and adding functionality. If you want to influence a customer as close to the point of purchase as possible, then a mobile phone is one of the most influential channels.

So I don’t think marketing as a function is changing. What is changing is what customers want and the way you are able to influence them.

CMO.com: Can you give some examples of how your approach is changing?

Welch: Digital has multiple applications. We’ve partnered with all mobile payment solutions—Google Pay, Apple Pay, and Samsung Pay—because customers want speed of service, so making the payment process very fluid is really important. We are also trialling added functions such as mobile payment, pre-order, and collect in London. If customers download our app, it allows the process at point of payment to be much more fluid.

In addition, once people are signed up to our Coffee Club Card, we understand where they shop with us and what they buy. That allows us to communicate product news to them that we think they might be interested in, or to have the opportunity to capitalise on our loyalty scheme in a way that might work better for them. Personalisation is something that mobile facilitates and, if you engage your customers in the right way, it gives them a much more personalised experience with the brand. That, in turn, builds our insight, to help us deliver the best experience for the customer.

CMO.com: Payment mechanisms were previously regarded as purely operational and not as marketing. It’s interesting that you talk about them in those terms.

Welch: If you define marketing as delivering the best customer experience—then the best customer experience is about finding solutions for all sorts of things that will enhance their view of the brand. That’s often forgotten by FMCG marketers because they have a retailer as an in-between and they’re once-removed from the brand experience in the home. When you’re a retailer or a hospitality marketer, then the brand isn’t delivered only in the advertising and promotions that you run. The brand is delivered in the environment that you offer it in, by the people who interact with the customer, and by the customer journey in the store. From my perspective, the process by which Costa customers pay for the product and how they interact with the barista is as critical a part of the experience as any other, because it’s all part of why they’re choosing to come to Costa.

CMO.com: Does that mean that you have a different relationship with your colleagues beyond the marketing department than you might have in an FMCG brand, for example?

Welch: It actually depends on what sort of marketer you are. When I was working in FMCG, it was important for me to understand how the packaging was delivering in homes. For example, I used to work in snack foods and it was important for me to understand how many packs a multi-pack should have, because will the customer run out before he/she gets to the end of the week?

Likewise, I lead digital development within Costa. Product management or brand management within digital is exactly the same as product and brand management should be within marketing. Understanding the capability of your IT function, or different IT platforms, to deliver different functionality that might resolve customer or team problems is as important as trying to write a brief about what you want your digital experience to be. Because you should be looking for more innovative solutions to try and meet your customer needs. From that perspective, you have to work hand in hand with your IT department, your sales team, your retailer, and your factory (in the case of Costa our roastery) to make sure you’re offering the right packaging, the right product, the right formulation at the right time.

In my role with Costa, I absolutely have to work with the property department on location and environment. I have to work with operations because they own the people that deliver my brand to the customer. I have to work with product development and digital to make sure the offer is right. It’s very cross-functional.

Marketing should never be siloed. Part of a brand leader’s job is to make sure the whole organisation is thinking about the customer and how you deliver the best experience for your brand to that customer right the way through the journey. That’s what marketing means to me.

CMO.com: The other thing I wanted to talk to you about is the innovation part of your job. How does Costa approach innovation and manage it within the business?

Welch: Innovation is also centred around meeting customer needs in a much better way. And you can’t innovate in a hospitality or retail company unless you work cross-functionally. I oversee a separate team that is outside the normal daily running of the business, who are still thinking about how to deliver the customer experience better, but are free to be able to test and learn. We try to encourage them to operate in the same way big tech companies work, which isn’t always easy. I encourage them to develop prototypes that allow us to understand whether the customer wants them, test them in a live environment, adjust them, test them, adjust them, test them. Only once we’ve found something the customer wants do we go into commercialisation and scale up.

For example, in December we launched a new food-led store, on Tottenham Court Road in London. We set that store up in order to allow us to experiment with different food products, different ranges, different types of service style. It will act almost as our lab until we get it absolutely correct. Then we’ll think about how we might apply it on a larger scale.

CMO.com: Where does the impetus for this come from? Does it come from customer need analysis or from elsewhere?

Welch: The wonder of customer insight is that it tends not to be a single fact or a single observation. It’s a number of facts, observations, opportunities, and challenges that, when you bring them together and ask why it’s happening, gives you an opportunity.

Costa has just over 2,000 coffee shops in the U.K, and a fantastic reputation. But in different locations, on different occasions, customers sometimes want something very slightly different. We have another sub-brand, Costa Pronto, that we tested earlier last year and are now scaling up, and that’s all about speed of service when you’re a commuter and you just want coffee very fast. We stripped back quite a lot of the seats and manage our labour so that you get a fantastic service very quickly.

It starts from what customers want, where they want it, when they want it, and then we try and see how Costa can meet that.

Digital breeds information and insight. As well as being as close to your customer as possible, you should never forget that digital also gives you an incredible source of insight about that customer’s behaviour, which, in turn, should feed back into how you better influence and tailor your offer to them.