Strategic Research Nespresso overview

NESPRESSO OFFICE SOLUTIONS OVERVIEW April 2013

Elevator pitch We help companies engage and retain employees. Research shows that when it comes to satisfaction and loyalty, employees place higher value on “soft” factors, such as how much they enjoy their work, how connected they feel to the organisation and their relationship with their colleagues, than they do on “hard” factors like pay.

Employee loyalty is important because disloyal employees cost the company money. Not only that, but loyal employees are proven to be more likely to recommend the company and its products to friends, thereby increasing sales and profits!

P2

Elevator pitch A key way a company can influence its employees’ perception of the company, and increase their loyalty is through provision of fringe benefits. These can include anything from subsidized mobile phones, to car parking spaces and a workplace canteen.

Of these benefits, providing high-quality coffee demonstrates the highest impact at a relatively low cost. Our research shows that three quarters of employees think that providing high-quality coffee shows a company cares about its employees.

With Nespresso, you can be sure your employees appreciate the effort you’ve made to improve their day. Our brand is recognised by 9 out of 10 consumers and is synonymous with quality.

By providing Nespresso coffee to your employees, you are showing you value your people and pay attention to quality. With a small investment in an important detail, you can gain greater loyalty and more sustainable sales growth.

P3

01

EMPLOYEE LOYALTY A TANGIBLE IMPACT ON COMPANY SUCCESS

Focus on employee loyalty to drive success Employees are the core asset of a company Recruiting and retaining the right people is key to company success

Companies are increasingly focusing on strategies to motivate employees to generate appreciation and loyalty

Talking points

Focus on employee loyalty to drive success § Employees are the core asset of a company and their attitude towards their employer can have a significant impact on the company success.

§ Competition, regulations and laws force companies to constantly seek for

financial optimization, recruitment and retaining talents becomes a critical aspect of the business.

§ To increase the employees motivation, appreciation and loyalty will have a direct impact on the companies results.

Why is employee engagement so important? Ø GFK/Bain study shows that on average, 40% of the workforce feels unmotivated, doesn’t feel appreciated and are disloyal towards the company Ø These represents a huge cost and a loss of revenue for companies

Ø 5-10% of direct and indirect HR costs are generated by disloyal and unmotivated employees. Ø The main cost drivers are voluntary turnover, presenteeism and absenteeism

Ø The attitude of employees has a significant impact on company’s success. Ø This is proven by the so-called loyalty-effect calculated with the NPS (Bain & Co)

Talking points

Employee motivation and loyalty: high stakes § A large proportion of employees are disengaged. This represents a cost to the company.

Talking points

The cost of disloyal employees § It used to be a given that employees would stay with the same company for a large part of their careers. This is no longer the case, with many employees almost permanently on the look-out for the next opportunity.

§ Why should this matter to companies? Personnel costs represent one of the largest costs for a company. A study by international management consultancy Bain & Company shows that disloyal employees add up to 10% to overall personnel costs. This is not just about costs incurred in hiring and training new employees: demotivated employees are less productive and more likely to call in sick.

§ An improvement in employee loyalty therefore has a positive impact on the bottom line.

Talking points

Employee loyalty drives commercial success § The same study by Bain used quantitative research to calculate scores for employee loyalty and customer loyalty, then mapped the scores against company revenue growth. It found a notable correlation. § This is not surprising. Employee appreciation has a significant impact on motivation and loyalty § Employee loyalty has a direct impact on customer loyalty: loyal employees are more likely to recommend the company and its products to friends § Employee loyalty therefore has a significant impact on company success

02

WHY INVEST IN COFFEE? A POWERFUL AND COSTEFFECTIVE LEVER

Talking points

Benefits rank among the top reasons to stay with a company § Surprisingly, pay is not the top factor. § Some of these needs – how well the job fits with an employee s life for exampledepend on personal circumstances and the specific job performed by the employee.

§ But most factors cited by employees relate to a very simple concept: they like coming to work.

§ A logical conclusion of this is that if a company ensures its employees enjoy

coming to work, those employees will be more likely to remain with the company

§ This chart highlights in brown the motivating factors that can be influenced by the policies of a central HR department.

Coffee is highly cost-effective as a fringe benefit High Support for sport and leisure activities

Subsidised meals

Employee impact

Parking space

High quality High quality coffee coffee Cold drinks Subsidised mobile phone

Vending machine coffee

Snacks

Tea

Low

Number of people reached

High

Low

Relative Cost

Medium

Low

High

*Only includes employees not receiving fringe benefit currently Note: Relative costs and impact scaled to 100% based on absolute difference; Impact on motivation as "share of most appealing fringe benefit from survey" Source: 2010 Employee survey (n=10,177); Expert interviews; Nespresso , Literature search

Talking points

Coffee is highly cost-effective as a fringe benefit § Employees interviewed as part of the Bain study stated clearly that more fringe benefits would increase their motivation, appreciation and loyalty. § The biggest impact is on loyalty: nearly 60% of respondents said that additional fringe benefits would increase their loyalty to the company. § Companies can offer a range of fringe benefits, ranging from parking spaces to mobile phones. But many of them come with a large price tag. § As this chart demonstrates, high quality coffee is highly cost-effective as a fringe benefit: for a relatively low cost, it has a major impact.

…and the coffee break is at the heart of the working day

Satisfied employees

Productive employees

84% 79% of employees describe their coffee break as “important” or “indispensable”

think the coffee break is the most effective way of building team spirit

91% consider the coffee break the ideal time to build relationships with colleagues and managers

84% discuss work matters during their coffee break

81% think their coffee break plays a vital role in improving their efficiency

Source: IFOP, 2013. Based on an interview sample of 1004 people working in companies with more than 20 employees

Talking points

Coffee: at the heart of the working day § It’s hardly surprising that coffee is considered a key fringe benefit by employees. More than 8 out of 10 employees consider their daily coffee break to be extremely important. § But these breaks are not just about relaxation: they play a pivotal role in the life of the company. Employees say their coffee breaks improve their efficiency. Not only this, but the 10 minutes are not “wasted” from the point of view of the employer, as employees generally discuss work matters during their break. § Coffee is a facilitator: by providing a reason for people to get together, it encourages discussions between people and breaks down barriers, whether hierarchical, or departmental.

03

NESPRESSO HELPING YOU BUILD EMPLOYEE LOYALTY

Exclusive research into employee motivation § Nespresso commissioned an extensive research project into employee habits, motivation and perception

§ Carried out by Strategic Research, an independent marketing research and consulting firm between November 2012 and January 2013

§ Research provides a representative view of employees in large corporations (Microsoft) and small-to-medium size companies in Australia

§ Exclusive study providing an objective and quantified view of: • Importance of coffee at work • Role coffee can play in impacting motivation, performance and the employee’s perception of the company • Additional benefits to the company of providing Nespresso for employees

Talking points

Exclusive research into employee motivation Note on methodology Strategic Research carried out quantitative research at Microsoft Portugal, covering 128 employees.

The same survey was then carried out at 3 SMEs in Australia, representing a sample size of 106.

This research is complemented by a second survey carried out by GK. The company interviewed 109 employees of Orange in Switzerland.

Nespresso has a proven positive impact on employees Ø Drinking Nespresso coffee at work helps employees enjoy breaks more, and develop better relationships with their colleagues. As a result, it has a proven impact on their motivation and performance.

% of Agree completely

Ø Making Nespresso available to employees significantly improves their perception of the company.

Ø Compared to other coffee solutions Nespresso is considered much better by 70% of employees on average.

A strong impact on both motivation and relaxation Impact on performance

Impact on relaxation

Rather posi*ve impact Source Strategic Research, 2012

Very posi*ve impact

Talking points

An strong impact on both relaxation and performance… § Respondents thought that drinking Nespresso coffee at work helped them enjoy breaks more, and develop better relationships with their colleagues. However it also had a significant impact on their motivation and performance. § Nespresso is therefore not just a loyalty-driving fringe benefit: it can impact the bottom line through improved productivity.

…and an overwhelmingly positive impact on perception of the company Proportion of respondents agreeing with statements relating to Nespresso coffee and how it impacts their perception of the company

% of Agree completely

Source Strategic Research, 2012

Talking points

An overwhelmingly positive impact on employees’ perception of the company… § Respondents said that the fact the company provides Nespresso significantly affects their perception of the company. § Interestingly, the perceptions are not solely focused on the company’s attitude towards its employees. Employees credit the company with being more innovative or aiming for excellence

Nespresso outperforms other coffee solutions Globally…

97%

More specifically…

Net Much or somewhat be7er

% Nespresso be7er vs other coffee solu@ons

Sources Strategic Research, 2012 and GfK, 2012

Talking points

Nespresso outperforms other coffee solutions § The study by Strategic Research shows that 70% of employees interviewed who had several types of coffee available to them at work considered Nespresso to be much better than other coffee solutions. An additional 27% thought it was somewhat better. § The second study by GfK in 2012 confirms that Nespresso ranks better in the 4 main areas: taste of coffee, brand reputation, types of coffee and machine design.

How can we help you?

By supporting your strategy to increase your employees’ motivation, appreciation and loyalty

By providing the best quality coffee, simple-to-use and attractive machines and best-in-class customer service

By offering you a personalized solution which will have a positive long-term impact on your employees and company results

Talking points

How can we help you? § Summarise approach

Thank you for your attention

Some of the companies serving up Nespresso

Talking points

Guide to preparing a case study slide § You can prepare a case study to illustrate these benefits. § Case studies should be structured around a client need / Nespresso solution format, and provide concrete evidence of success. § The following slide provides a suggested layout, with elements for completion.

This is intended as a guide only: as solutions and results vary from client to client, you should adapt the slide to your needs.

Case study : XXX § Partnership set up with XX in DATE § Responds to desire by XXX to [increase employee loyalty / promote employee wellbeing / boost external image]

§ XXXX machines installed in XXX offices § Excellent results including: Replace with logo of company

• [NPS score rise] • [Increased employee satisfaction score recorded in annual employee survey] • [Highly positive comments by employees] • [Highly positive comments by both employees and clients] [“Providing our employees with Nespresso really helped boost our image as an employer. Our employees are happier, more relaxed, and more productive” HR Director, XXX]