I was at Starbucks today, sipping a $4 coffee beverage, checking my email on $2/hour wi-fi Internet access, and eating a $5 sandwich when it hit me: Starbucks has mastered, more than any company I can think of, the art of increasing Revenue Per Customer.
A quick glance at their annual report will confirm this--they've more than doubled their average revenue per transaction in the last few years. This is an amazing feat: even if the number of customers coming through the door each day stays the same (hint: it hasn't) revenues and profits go up. So how can we as small business owners learn from this?
The first step to growing your revenue per customer (let's call it "RPC" for short) is to brainstorm what your customers might be interested in purchasing in addition to your core product or service. If you're Starbucks, it's a pretty natural thing to do:
"Well, while they're sipping their coffee they might want to check their email. We'll provide them pay-access to the Internet. In addition to the revenues from the access, they might even stay longer and buy another cup of coffee!"
OK, great idea... now let's take it a step further...
"People often comment on the music that's playing in our stores... perhaps they'd buy CD compilations?"
Great! Keep going...
"Our cookies and pastries sell especially well during the lunchtime hour... I wonder if people would buy sandwiches and salads?"
As you can see, Starbucks has taken their core revenue stream (coffee and coffee beverages) and added complementary products and services that make sense given their customer's primary reason for the visit. They've applied a little leverage to each customer that walks into their store, and have managed to increase--often double--the revenue they receive from that customer. Let's think about how we can apply this in other businesses.
If you own a video rental store are you selling popcorn and candy to your customers? How about movie soundtracks? Is there a copy of the "Lord of the Rings" books next to the movies? Why not?
If you are a consultant that provides web design and development services, have you partnered with a hosting company that provides you with a share of revenues for the customers you refer? Have you partnered with a company that provides a content management and/or commerce solution? Why not?
The key here is to find complementary products and services and monetize them, but without making your customers feel "over-sold." If you do it right you may find that your RPC goes through the roof.
If you need a little inspiration, I recommend you stop by the master and get yourself a cup of coffee.
Joseph Jones, Seattle, WA, USA