Customer Growth - common mistakes and solutions

Author's Note: Many new shops come and just as quickly as they come, they are gone. 
Nearly all failures can be attributed to poor planning, but improper strategies can be almost as fatal. This short piece is for all new and prospective owners. Dismiss this at your own peril.

You have navigated through all the hoops, attended trade shows and seminars, traveled here and there to gain perspective, and now you've opened your doors. The one issue that sends many new owners in the beginning months into a panic, and a panic that often leads to poor decisions; is "How do I get more customers RIGHT NOW?"

There are several responses to this state of panic. I will talk about the most common, when they can be good, and when they are likely a road to failure. There are a few major metropolitan areas in the country that are also coffee-centric, so it is possible to blindly stumble through a successful run just based on pure numbers. For most of the country, it's a much more precarious balancing act.

The three most common (and misused) responses to "How do I get more customers right now?" are: Punch Cards, Coupons, and Changing the Menu.

Let's look at these.

Punch Cards:

This is perhaps the worst thing you can do in terms of a long term strategy. Can they do some good? Yes. IF you have a strategey in place ahead of time. The strategy is data collection. The end result of a long-term punch card program is not customer retention... it doesn't work that way. They are not loyal to you, they are loyal to the discount.

If Punch cards are brought into play, a better strategy is to use them as a one time thing. One new customer, one punch card. And the card can only be redeemed by having X purchases, and filling out name and email legibly on the back. Now the drink should be "one on us" not FREE.

Words matter. FREE says, "This drink has no value" but if it's "on us", it has a value, and you are gifting it to them. So, you're not exchanging the drink for the purchase of nine drinks. You are exchanging the drink for their information. The other drinks just get them to form a habit. But no second card! Just enough to "thank" the newcomers, and to collect their data. Now you can direct market to each of them. No, don't send them coupons. Interact. Include them on inside information about what you are doing, what coffees you have coming, and pass along a little education. Let them know that you are their Jeeves when it comes to questions about coffee and espresso.

Coupons:

The most often used is the infamous BOGO. Again, not good as a long term strategy, and should never be used outside of your opening months, if at all. This can sometimes be used when you first open to get people in the door, but once again, it's of utmost importance to never use the word FREE in your advertising. Now a number of marketing tomes, most useless, will say that FREE is one of the words that grabs attention. Yes. It grabs the attention of people looking for a discount. "Buy a latte have a second of equal or lesser value on us." would be fine. Have a "One coupon per customer" and to all that is holy, put a freakin' expiration date on it. No more than two to four weeks out.

As a long term strategy, neither punch cards nor coupons are good. And here's why.

Punch cards and coupons are the number one contributors to "The leaky bucket syndrome" -- you keep trying to plug the hole with a discount, but you keep leaking customers because they are NOT customers, they are bargain shoppers. So if you use them at all, use them only as short term strategies. Get their attention, sure, but if you need to offer a discount a second time, then you have to face the reality -- you have a lousy product.

Changing the Menu:

"You should add blended drinks", "How about adding breakfast items", "Maybe you need soup." OR "Your prices are too high".

Changes like this are never good. Does it gain you customers? NO. But it will give you plenty of opportunities to test the merits of Excedrin.

The moment you take these kinds of suggestions from customers seriously is the moment you've signed on for a downward spiral of doom. Those people who want you to change what you are doing are not your core customers, and probably will not be long term supporters of your business.

Have a core philosophy. Know what you are doing as a business and stick to it. It is as simple as that. You're an owner now, act like one.

Raise prices, yes. Lower prices, never. A wise man once said, "I never saw someone go out of business by charging too much" It's about value, and value isn't a number, it's about getting more than they expected. It's about the customer saying, "$4.50? That was fantastic! I would have paid $5"

So the question was, "How do I get customers?"

Have a plan in place.

To expect hundreds through the door on the day you open is not grounded in reality. You should expect to have enough capital to cover all of your expenses for several months out. Didn't do it? The honest answer would be, "Good luck." That kind of situation is why 7-10 businesses fail. It can all be directly related to poor planning. So avoid failure by planning well.

Building a customer base takes time, but panicking never solves anything. With Twitter, Yelp, Google, Facebook, and all the other social media forums, it's much easier to get the word out now than it was five or ten years ago. Take advantage of the mediums available. They can connect you with potential customers in a way that wasn't possible before. Word of Mouth is always the fastest way to grow as a small business, and Word of Mouth via social media is a whole new ballgame today.

Have a great product.

This goes without saying, but this is where most fail. Don't do the "old and busted" do the "new hotness".

Offer something unique.

Be the first in your area to roast on site, to offer coffee by the cup, to offer espresso only, to offer house made syrups, to teach classes, etc...

Building a customer base is something you are constantly doing. It begins day one, and it never ends. It's a testamant to your business savvy, the quality of your product, and your willingness to be daring.

It all starts with your first cup.

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A Thousand Words

Les Roka, PR denizen and writer of pithy and poignant prose, and I often discuss the merits (or lack thereof) of the many ads in the local City Weekly dining section. As he clearly pointed out during one such conversation, "The quality of the business can be seen by the quality of the ad."

The often cited phrase, "a picture is worth a thousand words" gives us a good indication that much can be learned by looking at various ads and asking ourselves some questions. In my opinion, the key factors when looking at an ad are the Design and the Offer.

The aspect of Design covers several issues and asks several questions:
Is there Is there a good use of white space? Is it distinctive? Is a location easily identified? Is there a clear target? Is the logo professional? just to name a few.

On the aspect of the Offer we can ask:
Is there a clear offer? Does the offer raise or lower the value of the product? Does the offer speak of desparation--increase short term sales? Does the offer speak to position and brand--increase long term sales? Is there a clear target?

DESIGN

Clear Headline:
The headline can be actual text, or it can be a picture, but this should define and differentiate this particular business from all other businesses.

Correct Use of Fonts:
At most, two fonts. One for the headline, and all other text being one font. Multiple fonts, multiple sizes too confusing on the paper. Shows a business with no focus, this will carry through their entire operation.

Balance:
Is the ad balanced? Left/right? Text vs. Visuals? Whitespace vs. ...

Location:
Physical location of the store/restaurant/shop should be clearly indicated.

Target:

Does the ad target a specific niche? Does it have a clear message? Is there evident positioning going on?

Professional Logo:

Is the logo a clear indication of the business? Does it work in black and white? Does it work in color? Does it work large? Does it work small? Is it too busy? Is it "good artwork" but not a good logo?


OFFER:

Is there a clear offer? The offer could be something easily tangible such as a coupon (usually BAD choice) or the offer could be an experience, such as "excellence" or "Authentic Mexican", etc.

Does the offer raise or lower the value of the product?

Coupons, BOGO, and the like (with the exception of NEW offerings during opening) Always devalue the product.

Is the offer desparate?

Often Coupons, BOGO, and the like show panic or loss of business. The business, not understanding the dynamics of long term sustainability, choose to reap short term windfalls in place of establishing a long term customer base.

Does the establish position and promote the brand?

An offer of "traditional Japanese fare" will establish a position and build the brand.
An offer of "2 for 1 Dinner Entree" will also establish a position and build (negatively) a brand.

Target?

Who does the offer target? An offer in terms of "a good deal" is clearly a different audience that an offer that appeals to quality, authentic XX, ambiance, etc.
Those who coupon shop are a different category, their only loyalty is to their very tight wallets and if a business promotes itself via coupon, BOGO, and the like, then this is who they are appealing to. The notion that customers through the door equals long term dollars is an illusion that will be the downfall of many a poor business owner.

Ads don't always translate to immediate sales. Sometimes an ad exists to establish position and build brand on a long term basis, and while a quick fix is sometimes tempting, it can often leave the business owner with an empty business, and emptier pockets. So if you take the time to study the ads in your local weekly paper, ask yourself the above questions and check out a few of the businesses; soon you will understand that a while a picture is worth a thousand words, an ad speaks volumes.

A Question of Direction

It's often said that actions speak louder than words, and in this case it's the lack of direction that's speaking volumes. And what it clearly illustrates is the poor messaging put forth by coffee industry leaders -- in this case the WBC and it's "subsidies" around the world.

While this may seem like a minor decision, a blip on the Specialty Coffee radar, it's not. What I want to clearly point out is that the fault does not lie with a barista, the fault lies with the lack of leadership at the top of the industry and how apparent it's become that there needs to be unified and clear messaging from within in order for Specialty Coffee, the WBC, and the like, to move forward.

There has been much hullabaloo in the past couple of days regarding the advertisements that Italian Barista Champion Francesco Sanapo has made for Green Mountain Coffee Roasters promoting the K-cups (Keurig). The first to weigh in was Brian W. Jones, a graphic designer, former barista, and current coffee enthusiast who strongly questioned Francesco's involvement on a blog piece, "Molto Triste! Barista Prima K-Cups" on his blog, "Dear Coffee, I Love You" located HERE, where he writes, "... for a coffee culture that is continually discussed regarding their relevancy in the emerging progressive coffee scene, it’s sad to see the Italian Barista Champion being used in this way."

A short while later, Sprudge, the coffee news website, confusingly stood in support of Francesco's decision, with the following line being the central theme of their post, "...So many, many facets of specialty coffee are funded on the back of compromise..."

Now these could go by without much concern, however, Andrew Hetzel, one of the most respected consultants in the industry comments, and totally misses the boat. He writes, "By choosing Francesco or any genuinely skilled barista to head its campaign, the company has elevated the barista profession to a new height of public awareness and made the position of national champion even more desirable for competitors." and later, the following, "The specialty coffee industry is at a crossroads: will we go back down into the basement and play with our Chemex as we have done in the past or is it time to organize, commercialize and push for the public visibility, awareness and ultimately the appreciation from mainstream consumers that we need in order to revolutionize global coffee quality. There cannot be widespread change without widespread support."

What Andrew, Jordan from Sprudge, and to some extent, Brian, have missed is the consequences of this messaging. And again, in this case, the fault clearly lies at the lack of understanding within the WBC. When a Barista champion, (whether it be regional, national, or world) is crowned they are representing the both the industry and the craft as a whole by accepting the award. It is the job of the PR departments to have a unified message to create awareness of the vast difference between a commodity approach to coffee and espresso and a more artisan, Specialty approach towards coffee and espresso.

Linking someone like Francesco to this type of product is telling the public that there is no difference between K-Cup espresso and espresso produced by a Champion barista. But hey, they're potentially reaching millions, so it's ok!

Advertisements, commecials, product placement, etc. These are all messages, and these messages have consequences. For all the hours of hard work the various coffee associations put in regarding internal improvements through training and education, they need a little training of their own. A continual and methodical unified industry-wide message will have a far greater, and far more positive impact on educating the average consumer than the quick-fix mentality of "Let's let everyone know about us, then we'll worry about how to go from there."

As an industry, we do need to be concerned about educating consumers where we're going, but more importantly, how are we getting there?