TPass, the most popular and the first mobile pick-up service app dedicated for boba shops. We’re on a mission to help our local and independent boba shops thrive. Order ahead, earn rewards, satisfy your cravings, and discover new shops and drinks near you.
TPass launches a TPass membership and offers their users the option to redeem 2 drinks for $5.99 per month. What a great deal for all the boba drinkers out there!
But, is this a rip off to the business? Let’s find out!
Let’s get started with the detail of this TPass membership program — this is a monthly subscription service to allow TPass users to subscribe and have two quotas to redeem qualified drinks with redeem-cap at participating stores. There are a couple of key constraints about this subscription program:
- Two codes each month: TPass users have only 2 redeemable quotas each month across the entire network of stores on TPass.
- Qualified drinks: TPass users can only redeem qualified drinks that selected by the stores. The stores can select their specific categories to participate in TPass membership.
- Redeem-cap: Stores can set their cap limit for the redemption, TPass user needs to pay the extra beyond the cap.
The subscription fee is $5.99 monthly — $5 will break even to two redeemable codes, shops will receive $2.50 for every redeemable drink order. $0.99 is to cover the transaction cost for the subscription service.
From a business owner’s perspective, you may ask many questions:
Why would I offer a discount to my existing customers to help TPass acquire their users when my customers are already willing to pay full price?
We argue that is a false conclusion. Let’s dive into it. We first need to define our TPass users and see how they behave with TPass membership:
Group 1: New user — New user has a higher possibility to visit the store and try out drinks at full price. But with TPass membership in hand, they will have a much stronger incentive to visit. After they’ve used their redeemable quotas, they will either become a returning user or churned user.
Group 2: Returning user — Returning user is the core of any local businesses. You have to acquire them and retain them to have robust businesses. To retain them, you want to give them rewards to be loyal to your business — which means you might give them free drinks and discounts from time to time.
Group 3: Churned user — This group of users are the users who are not in a favor of your items, or not willing to pay full price for your drinks, nor they are just the visitor of the area.
Our statistic shows that TPass help to engage customers to spend more money and order more frequently with TPass built-in reward program and TPass membership. New users are using TPass membership to explore and discover boba shops and drinks who potentially become your customers; Returning users are using TPass membership to get a better deal and more likely to stay loyal to you; and churned users helps the store to understand their potential problems with a statistic to backed up the findings.
Either way, this already brings foot traffic, guarantee success marketing strategy to your business, collect data to better understanding your customers’ base and rewards your loyal customers.
But $2.50 per drink doesn’t even meet my gross margin.
We understand a drink is more than just a drink. This includes rent, labor costs, day-to-day business expenses, food waste expenses, and the list goes on.
According to Shaich, about half of all order errors happen when orders are entered into the system, a task performed by a human. If 50 percent of the problem is human error at the point-of-order entry, then one way to reduce the rate of order errors is to find a way to automate the process and remove the human from the workflow.
Our study shows that boba shops who fully integrated with TPass ordering system and work flow have reduced order error significantly. With the TPass merchant app, customer names and orders will be printed on a label to help reduce human error by baristas who take or make the orders. Mobile ordering helps reduce crowding at the location, and allows more capacity for walk-in customers. It also cuts back on human interaction and frees up employees’ time for other important tasks.
In additionally, TPass membership allows the stores to set their drinks redeem cap limits and drink selections. This ensures all participated drinks are meeting the margin threshold without losing money.
What if the customers exploit the discount? Using all their TPass membership quotas at my store?
TPass users need to have a phone number sign-up with TPass membership, it prevents users to sign up for subscriptions more than one time. They can only redeem 2 drinks every month, and they have the option to choose their drinks at the entire TPass participated stores network. If you see a TPass user redeem more than 2 drinks at your store, it only explains to you that this user has saved up more than two to three months of quotas for your drinks.
However, TPass is bringing new stores up on the platform weekly and users are never running out of options to use their TPass membership. They either carefully select how to use their quotas or they are your die-hard customers at your stores.
In short, TPass membership is an effective marketing and engagement channel for acquiring attention in minimum time and cost. With a stable and growing customer base on TPass, this helps boba shops to drive more traffic and orders from the users’ groups above. TPass membership helps you better understand your customers’ base and maintain a good relationship with your existing customers.