Nespresso Is Delving Into Digital Technology to Find Out — and Deliver — What Its Best Customers Want

Three ways the pandemic changed how Nespresso targets consumers in its biggest growth market — the U.S.:

• For consumer brands, the pandemic accentuated the importance of seamless digital experiences that go hand-in-hand with higher consumer expectations.
• During the pandemic, Nespresso’s in-person tasting rooms were mostly replaced by virtual, customer-friendly tasting ‘master classes’ over Zoom.
• Via digital intelligence, Nespresso is in the process of identifying new ways to learn about consumers from their online habits, then ultimately use that learning to provide newfound value to the consumer.

No one says it’s simple to garner attention — let alone sales — in a U.S. coffee pod (or capsule) market so dominated by behemoths Keurig and Starbucks. But Nespresso, thanks in part to the Starbucks by Nespresso pods jointly developed four years ago with Starbucks, was growing in the U.S. market even before the pandemic, and has embraced new digital strategies to continue to expand its U.S. growth since the pandemic.

In fact, Switzerland-based parent company Nestlé reported in July that Nespresso’s North American sales posted double-digit growth in the first half of 2022, while sales in Europe decreased. Even before the pandemic, says Tammie Lee, head of enterprise partnerships at digital growth consultancy Webprofits, Nespresso was using savvy digital marketing moves to facilitate growth.

For years, Nespresso has made online repeat purchases ultra-simple. What’s more, the subscription service attracted customers with its discounts, free delivery, and the fact that it was so simple to set up online, Lee told CO—.

For Nespresso, it’s never been about its single-serve machines — but always about the profitable pods, said Lee. That’s why Nespresso never has hesitated to sell the machines at a loss when customers order coffee subscriptions.

Nespresso has always made understanding its customers a core tenet of the brand, says Lee. Not only does Nespresso know how to communicate with coffee aficionados, but it knows who to communicate with, such as signing on the hard-to-get movie star George Clooney as its exclusive brand ambassador.

At the same time, she says, Nespresso has wisely posted ads on Facebook (and other places) that address consumer concerns on social issues like environmental impact and fair deals for coffee farmers.

Here, Vice President of Marketing for Nespresso USA Justin DeGeorge explains how Nespresso’s digital strategy has evolved since the pandemic and how the brand plans to further tap into the needs of its best customers.

CO—: How and why is Nespresso digitally monitoring customer behavior?

JD: When you think about long-term loyalty, that starts with the very first interaction we have with the consumer from the very moment they purchase a machine. We designed an onboarding experience to educate them and to help promote rewarding purchases. So, we look across their responses and actions and purchases on our website as feedback. For example, at the beginning [of the interaction with the consumer], we will introduce information on the basics of using the machine and try to better understand the coffee profiles they like and set up recommendations that align with that profile. We might create easy ways for them to support sustainability. What we’re measuring is how they’re interacting with us and what actions correspond to strong lifetime value.

CO—: Can you give a specific measurement example?

JD: We know a lot of our consumers, based on their history, [how they] enjoy cappuccinos, lattes, and other cafe-style beverages. We might introduce early in the onboarding process a Nespresso Aeroccino milk frother that allows them to make them at home. If we know someone has purchased that offering, then our recipe suggestions can be tailored to that preference.

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CO—: This behavior measurement even extends to what they do after they’ve had their coffee, correct?

JD: We continue the conversation in a multitude of places. We try to identify more ways that we can tell meaningful stories and support their actions that are aligned with what we want to stand for as a company. If the consumer shows interest in our recycling program —all of our capsules are 100% recyclable — we will engage the consumer on recycling and ask them to explore the program. If we know they ordered a bag for recycling, we try to provide more details on their recycling impact and what that means to the sustainability journey.

CO—: Why did you partner with Contentsquare on this?

JD: They [digital intelligence platform Contentsquare] help us to better understand consumer behavior. They help us understand if consumers are finding things immediately on the website or going back and forth. We are looking at constant updates and changes to decrease customer friction and increase ease of use.

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CO—: Can you share one example of something you changed due to this measurement?

JD: We have an onboarding experience for new customers. We try to share information we think will be important for them but we saw it was happening over too long a time period. Customers had decisions they wanted to make sooner. So, we compressed the [onboarding] journey down from 90 days to 30 days.

CO—: What do you hope to measure in the future?

JD: We’re focused on continuing to build out more robust and personalized coffee taste profiles for our consumers. We have an opportunity to gather more information and preferences that could advance their taste profile. We want to identify coffees and recipes they would like. That’s a core focus for us.

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