The £100k Cup of Coffee

By | August 28, 2007

When a typical small customer enters your business you should see £100,000 stamped on their forehead. This is why;

If your average spend is £3 and an average customer visits three times a week then that person is likely to spend around £400 per year if they come in regularly. Over five years that adds up to £2,000. Suppose that this loyal customer tells only a couple of people every year how good the experience is then this gets the potential value up to around £6,000. This does not include above average spend that this regular customer is likely to deliver and is very conservative in terms of actual spend and real potential referral power.

Now there is a third step to this idea. Figure out how many customers a member of staff handles in a day and multiply by that to get the lifetime value of your customer portfolio that the individual deals with each day. That person only has to directly deal with only 16 customers a day to get to £100,000!

The implication is clear : If you look at your customers in this or a related way you are likely to take a new view to a complaint from a small customer. It makes it very easy to give them a free coffee without question to keep them happy. This is the why the big multiples offer no quibble money back even if you just change your mind. It also then may change your attitude to your staff and to how you are hiring, training and compensating.

Changing the way we think is vital in a growing business and this simple quantifying device provides a great way to realise people’s potential.

Hugo

4 thoughts on “The £100k Cup of Coffee

  1. elementaryteacher

    Well, I’m American, and this standard of service is what was normal there through the 1980’s. I’ve lived overseas since 1990. Traveling in Britain, Ireland, France, Spain, Germany, and Italy, on several different trips, I was really shocked to find the quality of service generally about like what you would find in a third-world country. I’m not sure why that is. In America, everyone is taught since they are a child, “The customer is always right.”

    Anyway, I read your blog regularly and find all of your posts so exciting and refreshing (I’m a teacher, but used to be a businesswoman). I really enjoyed reading this particular post. If I lived in Ireland, I’d be having coffee at your place every day.

    Best regards,
    Eileen
    Dedicated Elementary Teacher Overseas (in the Middle East)
    elementaryteacher.wordpress.com

  2. darren

    I find that the vast majority of staff see work in the service industry as a means to an end. They have no pride, no passion. They can more or less walk from one job to the next as it suits them and many managers and trainers have adopted a kind of ‘no point training them because they will be gone soon’ mentality.
    On the odd occasion I find myself confronted with a smiling, happy well informed member of staff I get an overwhelming urge to poach them to work for me!

  3. Hugo

    Thanks Eileen .. I am delighted you are enjoying the blog. Dont forget that sometimes it is the right thing to say no to customers but only with real awareness of why … The paradox of the coffee business!

    leads me on to Darren – that fantastic coffee entrepreneur from the North West … you have some great staff who did well in last years WBC, great products and what I find refreshing is that you are still on a mission to improve what is one of the best coffee bar operations in UK & Ireland … that says a lot about why it is so good. For all of you out there who want a great job get to Ground in Portrush, Coleraine & Ballymena!

    Thanks for the contribution.

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