How to increase revenue by 135% (numbers in hand)

I bet your first reaction when you think about how to increase your coffee shop's earnings is something like, "I need to get more customers. Right away." It's natural; it's instinct. It's like when you're confronted by a pissed-off brown bear and your first reaction is to run as fast as the wind screaming for help.

It's time to shake this old way of thinking and act like the Barista who decides to replace bad coffee with a premium blend.

Jay Abraham, a kind of Yoda of marketing, enlightens us with a wisdom as simple as it is enlightening but too often ignored: there are only three ways to grow a (coffee) business. And they are these:

1) Increase the number of customers

2) Increase the average sales value

3) Increase the frequency of customer purchases.

"How can I increase the value of what I sell so that customers are happy to spend more?"

Does it seem obvious to you? Yet I am sure that if you keep reading you will feel like an idiot for not thinking of it sooner (as I did). What I am about to tell you must become your new bible, only unlike good old biblical precepts, this one you cannot afford to ignore without suffering the consequences.

Most coffee shop managers (as well as other businesses) get bogged down in chasing the new customer, ignoring the golden nuggets they already have under their noses. And that, let me tell you, is a tragic, gigantic, colossal mistake.

Would it suck for you to cash in 135% more in just 3 months?

Then read below because not only will I explain how to use J. Abraham's 3 strategies but I will show you, numbers in hand, exactly how to get 135% more cash in 3 months by making the most of the resources you already have and without spending a fortune.

Strategy 1 - How to increase the number of customers

Before you jump feet-first on this strategy like a child on a puddle, calm down and chalk it up. Increasing the number of customers is the obvious goal, the irresistible temptation for any self-respecting coffee shop owner.

You want the whole world to walk through your door, order a double Espresso, and fall in love with your industrial chic decor. I get it, I really do. But here's the truth as stark as a green coffee bean: this strategy can prove to be a double-edged sword.

First of all, don't sell out your soul for a few more likes on social or to get a few more asses in your chairs. Your promotions and events should shout "We are us" not "We are desperate, please come." Partner with businesses that do cool things like you, create events that make your customers say, "Wow, I had to be there!", and show on social what makes your coffee unique.

And be careful not to turn your team into a bunch of zombie survivors of a marathon business. Increasing customers without having the resources to handle them is like inviting a hundred people to dinner and then finding out you only have two steaks in the fridge. Result? A disaster foretold.

Attracting new customers is often an expensive battle. Advertising, promotions, special events, and you name it, all of these cost no small amount of money and resources. Just think of personnel costs. Investing in an extra workforce without a solid payback strategy can lead you into dangerous financial territory, where sales growth doesn't keep pace with rising expenses.

That's not to say you shouldn't look for new customers. But I challenge you to think about it as part of a broader, more balanced plan that also takes into account maintaining and growing the value of the ones you already have.

It's a bit like making the perfect espresso: the dose, grind, temperature, everything has to be balanced just right.

In short: Do you want more customers? Make every new arrival not only come to your establishment, but fall in love with what you do. Otherwise, it's just one more number today and one less customer tomorrow.

Strategy 2 - Increase average sales value

Let's face it: raising prices is the first thing that pops into your mind when you think about getting your customers to spend more, right? Raise the price of a cappuccino by a few cents and voila, higher margins. This is one of those decisions that may seem like genius, but in reality it's like playing Russian roulette: sooner or later, the bullet goes off and it's bad for someone.

Instead of rushing to play with prices, which can easily alienate your loyal customer base, think in terms of VALUE.

Write this question down where you can read it every day. And do it.

Be careful not to also fall into the pitfall of Taliban-style cost cutting and economizing on quality. These are paths that may seem tempting but lead to a dead end.

Instead of simply raising prices, use cross-selling and up-selling techniques. No, these aren't the usual American-made, and if you're thinking that, I strongly suggest you change your approach right away.

These techniques allow you to increase the value of the average receipt by offering customers complementary or superior options of what they are already buying. And the great thing is that they cost you nothing but the fear of "proposing."

No more of the usual coffee accompanied by a sad (free) cookie. If you really want to do self-respecting up-selling and cross-selling, you have to get out of your mindset, and it's not about doing pirouettes or making up super bullshit. It's about "asking" and offering something that increases the VALUE of the experience.

Get the idea out of your head that offering an alternative, offering an accompanying product or something new is tantamount to RUBBING. Yes, because this is the truth. If we are afraid to "sell" it is because we think that selling is wrong, is cheating the customer, is manipulating the customer.

The sooner you get away from this limiting conditioning, the better.

For example, if a customer orders coffee, why not suggest a homemade treat with which it pairs perfectly? Or why not suggest experimenting with a higher quality cup or an alternative extraction for a little extra? You never do this, but if you did, your take would change by a lot at the end of the year.

"Enhance the experience, not just the product"

Another way to increase average sales value is to elevate the overall customer experience. This could also mean investing in the environment of your venue, improving the atmosphere or even the quality of service. Without necessarily having to spend a fortune. Invest in quality and innovation and you will see that as soon as your customers perceive the added value, they will have no problem spending a little more.

The problems are only in your head.

Strategy 3 - Increase purchase frequency

This is the most underrated strategy, left in the corner while everyone is running after new customers. Forget the idea that customers come into your coffee shop by accident.

The Turnaround

If you think your business needs to get a good shake-up, then take a close look at this chart and let the numbers do the talking, because, as you well know, numbers never lie.

Let's look at three different scenarios, extracted directly from your daily business, that demonstrate the effectiveness of this approach:

In hypothesis 1 you only increase the number of customers by 10% each month (if you can). After three months, revenue increases 33%.

In hypothesis 2 you increase both the number of customers and the average receipt and purchase frequency by 5% per month. The result? Revenue jumps to +55%.
Better already, isn't it?

Observe now hypothesis 3. You are bold and increase all three variables by 10% per month. The effect is explosive: your takings increase by 135%. Does €23,500 more suck for you? I don't think so...

Now, if your goal is to really turn your coffee shop (and drawer) around, there is no doubt which way to go. By working on all aspects of your business, compound interest transforms growth exponentially. We are not talking about small changes; we are looking at radical transformation.

It's not a matter of believing me; look at the numbers, do your math, and you'll see that this is the way to go if you want your cash drawer to start singing.

"Remember, the greatest successes come not from the ability to go with the flow, but from the daring to swim against it"

If you have come this far, it is because you know you can improve and probably want to go further. If you want to discover specific strategies, delve into how to further customize your offering, and are ready to do a complete overhaul of your approach to business, I recommend that you consider a bar management consultation with me.

Jay Abraham