Web Exclusive | January 2011 | By Robin Van Tan

4 a Key Number for Cold Stone

The company is launching a frozen yogurt line and three other innovative strategies in 2011.

Cold Stone Creamery president Dan Beem will tell you that 2010 treated the company pretty well.

“We had our best October in about four years,” he says. “If you look at our year overall, we’re trending much better than the industry.”

In an attempt to replicate that success in the coming months, Cold Stone will revisit some of the initiatives that were most successful in 2010—and introduce a few new ones it hopes will be similarly well received.

Here, a look at four areas the brand will focus on in 2011.

1. A Frozen Yogurt Concept

Beem knows that, as consumers become increasingly health-focused, Cold Stone risks being “vetoed” by calorie-conscious customers.

“We don’t want them to direct that visit away from Cold Stone,” Beem says.

To combat this, the brand has plans to launch a standalone concept this year that serves self-serve, weigh-and-pay frozen yogurt with a full toppings bar. In addition, Cold Stone franchisees will soon have the option to install similar frozen yogurt stations in their stores.

So far, Beem says a “high percentage” of franchisees have expressed interest.

“I think in the beginning it’s going to be regionalized,” he says. “[There’s] stronger yogurt play right now in California and the Southwest.”

Test stores in Arizona and California are scheduled to get the frozen yogurt bars in mid-February, and other stores can install them by spring.

Of course, not all franchisees will decide to incur the expense of bringing a yogurt bar into their stores.

“Our proprietary yogurt can be used in the batch freezer, so they’ll still have a sweet and creamy line of healthy, hard-packed yogurt they can offer the consumers,” Beem says.

2. Marketing Goes Local

This year, Cold Stone will redirect half a percent of its national marketing funds back to each individual store level.

At the same time, the brand took the 4 million members of its nationwide birthday club and converted those customers, for whom they already had e-mail addresses, into loyalty club members for individual stores. At this point, each store has an average of about 3,800 loyalty club members.

“When franchisees go into their databases, they’ll see all the names, and they can talk specifically to those customers as to what is going on in their store,” says Suzanne Schutz, vice president of marketing.

The brand plans to use this strategy to increase the frequency of communication with loyal Cold Stone customers.

“Whereas we might have had 15 touch points per year previously, now we’ll have 52,” Beem says.

Along the same lines, franchisees will be able to launch new store Web pages to publicize in-store promotions and events.

“One of the challenges I think companies like Cold Stone have is … [we’re] viewed as a corporate company,” Beem says. “I think people forget it’s still hard-working franchisees and you’re supporting members of your local community when you visit a Cold Stone.”

3. Online Cake Ordering

For five years, Cold Stone has attempted to implement online ordering. But in Q4 2011, the brand finally plans to offer the service for its petite cake platters.

“We’ve always tried to do it in house, and we realized we need to look for a partner,” Schutz says.

So Cold Stone teamed up with the online ordering developer OLO, the company behind similar sites from Panda Express and Subway, to launch www.coldstonecakes.com.

“You can purchase your cake online, pay for it there, and send someone to the store to pick it up, where it will be ready for you,” Schutz says. “None of our competitors have that.”

Each store has an average of about 3,800 loyalty club members.

The service will launch in phases in different parts of the country and will be live nationwide in time for the holidays.

“I think it’s important to note we were able to set that up for our franchise community for no cost,” Beem says. “The only time [a franchisee is] charged is when someone orders a cake online, and at that point staff members won’t have to answer the phone.”

4. Gold Cone Flavors

Cold Stone launched its monthly LTO flavors last April to drive the frequency of customer visits. In the summer of 2010, the brand created a marketing strategy around the collection, hosting a contest to see which of its Facebook fans could create the best new flavor. (Cold Stone now has more than 1.1 million Facebook fans.)

In June, Cold Stone stores will serve the winning entry: Chocolate Hazelnut.

Also on the menu: Chocolate Dipped Strawberry for February, Pistachio Jell-O Pudding for March, Peach Iced Tea for April, and Lemon Poppy Seed for May. Each of the flavors was developed by Ray Karam, Cold Stone’s senior tastemaster.

“Inspiration for these flavors can come from anywhere,” Karam says. “Two years ago I went on a cruise with my family, and we were drinking mojitos like they were going out of style. I thought, ‘This would make a really good sorbet.’”

The brand will serve Mojito Sorbet as its August Gold Cone flavor.