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Subway are a profit seeking company with benevolence? Watch

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    Subway offer SubCards, a card which gives you free sub for every 17 that you buy. Clearly the cost to Subway of doing this will outweigh any gains made by offering this reward so why do they do it?

    Are the really a franchise who actually want to selflessly reward their customers and thank them for their purchases without expectation of getting something in return or do they just have terrible business sense?
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    (Original post by theonefrombrum)
    Subway offer SubCards, a card which gives you free sub for every 17 that you buy. Clearly the cost to Subway of doing this will outweigh any gains made by offering this reward so why do they do it?

    Are the really a franchise who actually want to selflessly reward their customers and thank them for their purchases without expectation of getting something in return or do they just have terrible business sense?
    They're dirt cheap to make, and you've got to spend £50 before you get a free sub, so it's like an incentive to buy more
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    They don't have terrible business sense, but I think you may have. They offer the points as an incentive for customers to keep coming back to them to earn enough points to get their reward. That's how loyalty points work, whether it's the Tesco Clubcard, Nectar card or a Boots Advantage Points car.
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    It provides an incentive to buy 17 subs, the profit from which would presumably far outweigh the cost of producing one extra sub.
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    Loyalty cards are a pretty sound move. They lock you into buying from one company.
    To give you an example; my local supermarket is a Sainsburys, hence I have a Nectar card. If I go to another town with a choice I'll naturally seek out a Sainsbury's even if Tesco's or Asda offers the same products for cheaper.
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    Subway is just a glorified sandwich roll
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    "outweigh any gains made by offering this reward so why do they do it?"

    They'll do it in the belief that it helps to ensure return customers, which would make them more money. They'll obviously make money on the 17 that you do buy to cover the cost of the one they give you for free. I'm pretty sure the margins that Subway operate are huge considering that it's a glorified sandwich sold for a lot of money.
    Also if you were going to go to subway fairly frequently, they'd hope that the card encourages you to go more than you normally would so you can get your free food faster. Which then means they can give you a fresh card sooner, and the cycle repeats.

    They will be making money from this scheme.
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    why would anyone need an incentive to buy 17 subways?
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    (Original post by Fusion)
    Subway is just a glorified sandwich roll
    Agreed! :yep:
    And the prices are just ridiculous...
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    The amount of naive comments and bad business logic thst I've encountered on this thread is staggering and I look forward to explaining to you why the SubCard and indeed Loyalty cards are terrible from a business perspective (don't worry, I will ) but right now I'm just too tired to it will have to be tommorow that I help you rid yourselves of a false belief.
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    (Original post by Hustler-1337)
    They don't have terrible business sense, but I think you may have. They offer the points as an incentive for customers to keep coming back to them to earn enough points to get their reward. That's how loyalty points work, whether it's the Tesco Clubcard, Nectar card or a Boots Advantage Points car.
    Just do me a favour and never take a business course ok? Your unchallenging belief in the validity of things just because they exist and at face value... have value because people actually use them is bordering on silly. I cba right now but ill go into why loyalty schemes and especially the SubCard make terribleeeeee business sense tommorow and hopefully do so without you even attempting to refute what I said out of a sense of loyalty to general internet debate/argument standards.
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    Surely the margins made on the 17 sandwiches would cover the cost of the free one? Plus odds are that in the time it takes to have 17 sandwiches from Subway, lots of people will lose their cards before the 17th one and have to start over.
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    (Original post by theonefrombrum)
    The amount of naive comments and bad business logic thst I've encountered on this thread is staggering and I look forward to explaining to you why the SubCard and indeed Loyalty cards are terrible from a business perspective (don't worry, I will ) but right now I'm just too tired to it will have to be tommorow that I help you rid yourselves of a false belief.
    Let's make a wild guess and assume that the top management at Bridgeport, Connecticut, reviewing the methods they use in their $16bn turnover company with 40,000 restaurants may be in a better position than theonefrombrum to figure out the utility of their points card scheme. I mean, it's a long shot, but let's make a wild guess.
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    (Original post by theonefrombrum)
    Just do me a favour and never take a business course ok? Your unchallenging belief in the validity of things just because they exist and at face value... have value because people actually use them is bordering on silly. I cba right now but ill go into why loyalty schemes and especially the SubCard make terribleeeeee business sense tommorow and hopefully do so without you even attempting to refute what I said out of a sense of loyalty to general internet debate/argument standards.
    Lol, what's with the aggressive attitude? :eyebrow:

    If people don't use a loyalty card such as the SubCard then there is no loss to Subway.

    A loyalty card does have value to a business if customers use them. They're not giving things away for free and making a loss. The profit they make from selling, say, 18 subway sandwiches probably far exceeds the cost of one subway sandwich they are giving away to you for free. Like others have said, the margins they make is more than enough to cover the cost of giving away a free sandwich.

    For example: say they make a profit of £2 per sandwich sold. If they sold 18 sandwiches, they would have made £36 in profit.

    Of that £36 they made, they give you a free sandwich that costs the company only £1 to make. They've still got £35 of profit left, a happy customer, and repeat business as the customer will probably keep on coming to get that free sandwich. The real winners are the company, they're getting repeat business and rewarding the regular customers with a free sandwich that costs them peanuts.

    Obviously, this would not make economic sense if they gave away a sandwich for free for every 2 sandwiches the customer buys, as it'll significantly reduce the amount of profit they make from sales as the free sandwich will cancel out how little they've made from selling 2 sandwiches. Only then will it make poor business sense due to the risks of giving away a free sandwich so frequently.


    Even if people didn't use them, the only potential loss to the company is the customers going to someone else as they don't have enough of a reason to come to Subway. That'll mean Subway will need to work on something else to make the customers come back to their stores (like improving taste, customer service, price or anything else that customers may find attractive about buying from Subway).

    You don't need a business course to understand the basic idea of a loyalty system and when it will make money, just common sense and some basic arithmetics.
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    (Original post by Harley)
    Surely the margins made on the 17 sandwiches would cover the cost of the free one? Plus odds are that in the time it takes to have 17 sandwiches from Subway, lots of people will lose their cards before the 17th one and have to start over.
    I did that with my proper pasty company card It had eight stamps on it so I only needed one more before my free pasty.
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    (Original post by RibenaRockstar)
    I did that with my proper pasty company card It had eight stamps on it so I only needed one more before my free pasty.
    I thought I'd lost my Mr Pretzel card but I found it
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    (Original post by Fullofsurprises)
    Let's make a wild guess and assume that the top management at Bridgeport, Connecticut, reviewing the methods they use in their $16bn turnover company with 40,000 restaurants may be in a better position than theonefrombrum to figure out the utility of their points card scheme. I mean, it's a long shot, but let's make a wild guess.
    I think you're wrong. I hear that Samsung, KFC and Kraft Foods are in a three-way bunfight to have theonefrombrum consulting for them after hearing his guest lecture to MBA students at Harvard.
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    (Original post by theonefrombrum)
    The amount of naive comments and bad business logic thst I've encountered on this thread is staggering and I look forward to explaining to you why the SubCard and indeed Loyalty cards are terrible from a business perspective (don't worry, I will ) but right now I'm just too tired to it will have to be tommorow that I help you rid yourselves of a false belief.
    I'll remember this one for court.

    "My Lady, I have compelling argument in this matter but I regret that I am too tired to present it,"
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    (Original post by Patriot Rich)
    Loyalty cards are a pretty sound move. They lock you into buying from one company.
    To give you an example; my local supermarket is a Sainsburys, hence I have a Nectar card. If I go to another town with a choice I'll naturally seek out a Sainsbury's even if Tesco's or Asda offers the same products for cheaper.
    Any gains that Sainsburys makes from you shopping there because you have a nectar card are negated by them not getting what they could have made if Tesco didn't also have a Loyalty scheme. Make sense?
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    (Original post by Manitude)
    "outweigh any gains made by offering this reward so why do they do it?"

    They'll do it in the belief that it helps to ensure return customers, which would make them more money. They'll obviously make money on the 17 that you do buy to cover the cost of the one they give you for free. I'm pretty sure the margins that Subway operate are huge considering that it's a glorified sandwich sold for a lot of money.
    Also if you were going to go to subway fairly frequently, they'd hope that the card encourages you to go more than you normally would so you can get your free food faster. Which then means they can give you a fresh card sooner, and the cycle repeats.

    They will be making money from this scheme.
    They're not going to be making money THAT THEY WOULDN'T HAVE ALREADY. No one is going to think 'oooo, ill spend £3 on a Subway because £50 down the line ill get a free sub'. They'd have to actually really like Subway anyway as its not cheap and spending £50 to get £3 back (so essentially £47 for 18 subs) on something that a person isn't really into would make no sense whatsoever. When contemplating their decision on where to eat, what people think about is what's nice and not a far off reward for it.

    Point is, people would buy that same Subway even if they didnt have the SubCard, the card doesn't incentivise you to buy one to the point that its your sole reason to spend £3 on your lunch or dinner. Because even if it was perceived value for money that someone was after they would surely just go to KFC, Nandos or whatever food place is offering a deal and get £47 worth of food (which will be more in amount,mass and actual meal counts than Subway for most people) and not on a Subway deal.

    Believe me I know what I'm talking about and not just through my own analysis but because I worked in Subway for a while and you wouldn't even believe how many repeat customers didnt have a SubCard because they either couldn't be arsed or didn't even know much about it. That shows clearly that these people come to Subway and spend money because, and only because.... they like Subway.
 
 
 
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