If you’ve paid attention to the coffee scene at all over the last several years, you know that Starbucks has expanded their operations and locations dramatically. While adding locations and presumably new customers is one way to grow business, there are other ways to grow business and ultimately profits for your company. Starbucks, of course, has some of these other strategies working for them.
I went to Starbucks to get a cup of coffee and a little breakfast bite to eat when I noticed a strategy they’re using to grow their business that has nothing to do with getting new customers. After I received my cup of coffee and was starting to leave, my barista gave me my receipt and pointed out that on the bottom of the receipt there was a coupon. The coupon said that if I brought in my morning receipt after 2pm and before a certain date, I could get a breakfast treat for $1! Who doesn’t like breakfast treats for $1?! While this might be something I enjoy, how could this be helping Starbucks increase their revenue and resulting profit? Well Starbucks knows that I and many of their other customers are likely to come back for another coffee/treat visit in the coming days. However, by giving me an end date by which I am allowed to redeem the coupon, that creates some additional incentive and urgency to come back sooner than I was probably going to originally. If I come back to Starbucks even just one day sooner than I was going to, this is going to increase the number of purchases and transactions I have with them. If my normal cadence of visiting Starbucks, for example, was once every six days and instead I’m coming back every five days, over the course of a month or a year, I’m going to make more purchases from Starbucks than normal. If I come back every three days instead of every six days, this is DOUBLE the amount of transactions. In other words, I would have purchased a coffee twice in six days instead of once in six days. Now not all of their customers are going to take advantage of this coupon and come in sooner but even if 10% do, that could be 10% more revenue, which would produce more profit! By utilizing this strategy, Starbucks is successfully increasing the number of transactions for their current customers and therefore producing more profit.
So my question is how can you increase the number of transactions in your business? What is your version of the Starbucks receipt with a coupon on the bottom? If you can’t seem to figure it out contact us and we will definitely help you out.
We offer a complimentary 2-hour strategy session (a $2000 value) for businesses that want to look at opportunities in their business. We can chat briefly about the details of that session to see if it would be beneficial for your business.
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