Survey says a Service Mindset is Crucial

The following is an article from Specialty Coffee Retailer by Nicholas Upton about ShopKeep POS:

In the coffee world, best practices change constantly. Businesses that thrive are those whose owners adapt based on the latest data.

With that in mind, the point of sale merchant ShopKeep sought to find key statistics from coffee retailers, with help from a third-party research firm.

ShopKeep Founder and a former coffee shop operator, says there were a few surprises as the survey of 83 shops across the U.S. started rolling in.

“One of the most interesting things that that I see, which I already knew from my own stores was that the best way to compete with larger chains and to retain your customers is to have great service in your stores,” ShopKeep Founder says. “It’s not all about the technology; it’s more about how you treat your customers when they come to the register.”

Thirty one percent of respondents say they set themselves apart with high-quality and unique products, 29 percent of respondents say great customer service sets them apart and 27 percent say personal customer relationships keep people coming back. As far as atmosphere and unique branding, 13 percent of respondents say their “cool factor” keeps customers coming back.

Staff and Service

Of course, any avid reader of Specialty Coffee Retailer knows that providing unique flavors, experiences and exceptional service is incredibly important. One common question in the industry, however, is employee compensation. ShopKeep Founder said he heard the question continuously at Coffee Fest.

“We found it was between $8 and $10 in the survey,” ShopKeep Founder says, noting that that’s the national average, so it can vary some. But paying a premium means premium employees. “Most coffee shops get it that it’s a service business, so they’re going to pay a little bit more to get good people.”

Finding good staff, however, was one of the biggest challenges cited by survey respondents. Seeing your shop as a service and investing in good employees is a great – though sometimes difficult — step toward running a successful coffee business.

Of course, smart pricing strategies are necessary to pay those great employees and make ends meet. Many shops look at discounts to sell more and keep people coming back. But according to ShopKeep’s survey, they should be doing just the opposite.

“I think a lot of retailers just don’t understand this. They always default to, ‘Let’s compete on price’ because they just assume that that’s what you should do,” ShopKeep Founder says. “But it’s a losing game.”

He says keeping that service business idea in mind is critical for pricing. Sure, people can brew a cup of Folgers at home or pick up a caffeinated drink at the gas station, but customers come to a coffee shop for more than just their caffeine fix.

“You’re not selling coffee, you’re selling a service,” ShopKeep Founder says. “The service is how quickly you move people through the line, being greeted with your name, having the barista remember what it is that you always order. When you do that, you can charge more for your coffee, and you should! People will not balk at that.”

The survey supports his argument; respondents say they generate more revenue with higher prices. It seems obvious, but especially in a service industry, the first thought is to make customers happy. In reality, they’re happy to pay more for a superior experience. ShopKeep Founder says that raising prices on a whim could upset customers, so aim high.

“It’s always easier to lower your prices than raise your prices. So it’s always better to start high,” he says.

Checking Customers Out

Another monumental headache is how to take customer’s money. But ShopKeep Founder says he was surprised how many respondents had moved away from standard registers. A whopping 83 percent of respondents said they were using a tablet and cloud or a Windows-based POS system, leaving just 17 percent of respondents on traditional electronic registers or pen-and-paper systems.

While the sample size isn’t huge, those 83 percent of shops in the survey understand that keeping things easy and efficient is another critical brick in the foundation of a service business.

The survey also shows that despite the fees, 98 percent of respondents take credit cards.

“Especially at Coffee Fest, when I run into the most retailers, they’re always complaining about the fees to accept credit cards,” ShopKeep Founder says. “It’s such an important thing to accept credit cards because I think a lot of retailers do not recognize or understand the actual cost involved in cash: cash handling, loss, mistakes, potential theft. Just the amount of work to count it, take it to the bank and deposit it – that costs money too.”

And if that isn’t a great reason to move away from a cash-only operation, the bottom line impact might be. ShopKeep Founder says that data from shops using the ShopKeep point of sale system shows credit card transactions are on average 60 percent higher than cash. Making it easy for customers to get an extra shot or a pastry can make those processing fees look miniscule by comparison.

“People will spend more if they use a credit card,” he says. “On the flip side, they’ll get mad at you if you don’t take credit cards because you’re a service business and you should make it easier for them to pay however they want.”

Additional Data

The survey demonstrated several other interesting coffee retailing statistics:

• Twenty percent of stores don’t know how much they lose to theft each month, but a store with more than 15 employees will lose twice as much to theft as a shop with one to three employees.
• Staffing is always a balancing act, but respondents making between $5,000 and $10,000 per month tend to employ one to three people. Shops making $50,000 each month tend to have more than 15 workers.
• About one third (28 percent) of shops with more than 10 staff members have a second register, 43 percent of shops with 15 staff have one.
• The average cup of drip coffee costs between $1.50 and $2.50.
• Eighty nine percent of shops surveyed provide free Wi-Fi to customers.

Paul Nugent

Paul Nugent is a small business advocate who uses his background in the startup space, along with his POS system expertise, to allow small business owners to make informed decisions within their specific budgets.