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Issue Date: Vol. 47, No. 5, May 2007, Posted On: 5/16/2007


Coffee Service Selling Strategies Theme NBPA Educational Program

ATLANTIC CITY, NJ — Methods for increasing the effectiveness of new-account acquisition and building volume in an existing client base were addressed from many perspectives at the National Beverage & Products Association convention here.

The opening round-table idea exchange workshop provided a forum in which operators explored a variety of profit-enhancing opportunities. Among them were single-cup brewers and pure water systems. Each table traded views and experiences, then chose a spokesperson to summarize the discussion.

Participants agreed that a single-cup program can be a valuable tool in upselling existing clients as well as adding new ones. Suggestions for publicizing such a program included the use of a newsletter, which might be published quarterly; highlighting single-cup on the company’s website; and preparing and disseminating flyers. Newsletters and flyers can be mailed to customers and key prospects (the latter assembled into what a participant described as a “wish list”).

One table captain observed that offering a single-cup brewer in the context of a carefully-designed “package” that includes the equipment rental and a supply of product for a single monthly charge appeals to many customers. “For example, offer the machine and X portions of coffee for, say, $200 a month,” he suggested. “If they need more coffee, they can buy it, but you bill $200 a month.”

Industry veteran Len Rashkin, who moderated the workshop, suggested that operators seek to upgrade clients from one-year to three-year contracts by offering a lower monthly rental and a locked-in rate.

An operator from West Virginia, who explained that his situation is unusual in that he has little competition, reported that his single-cup program is built around the Keurig brewing system. The program can be provided to accounts with as few as three people at a cost of 60¢ per cup; the price goes down with volume.

“We do a demo to determine the volume,” he explained. “If the volume just isn’t there, we’ll keep them on a pour-over program. But if there is sufficient volume, we’ll eat the cost of plumbing the brewer.” He added that 80% of demos result in a close.

“And we have a Sam’s Club a mile away from us,” the West Virginian added. “We lost clients to the low prices it offers, but they came back to us when they got tired of picking up the coffee there. So we made a deal with Sam’s Club; if a customer calls in an order to us, we’ll pick it up and deliver it to them at a 25% markup.”

Rashkin asked Stuart Daw of Southern Heritage Coffee (St. Petersburg, FL) to summarize his “transaction analysis” approach to determining the price of coffee to large and small customers. Daw, who has been active in the coffee business for more than half a century and helped pioneer the office coffee service business, developed transaction analysis a quarter of a century ago, and it has been adopted by a number of business schools.

“You don’t take percentages to the bank,” Daw replied. “What is important is your cost to do the transaction, and your profit from doing it.” Looking at the actual dollars involved convinced him that, in many volume-discount programs, the small customer ends up subsidizing the larger one.

SELLING WATER

Turning to pure water service as a complement to coffee, the participants considered the relative merits of bulk bottled water and point-of-use treatment delivery systems. Water companies have preferred bottles for a variety of reasons, including the revenue stream produced by cooler rentals. Coffee services have tended to prefer point-of-use treatment because it can be provided without the logistical infrastructure needed to store, transport and deliver bottles, and it can be handled easily in conjunction with coffee service.

A participant explained that his firm, as a water company, has had to add point-of-use treatment, but so far has not actively promoted it. “We’ve used it defensively,” he explained. But the industry is changing, and point-of-use has attractive features; “we will go on the offensive,” he said.

Rashkin observed that a point-of-use system must be installed, and there is a cost associated with this. However, salespeople incline to be reluctant to ask for an installation charge.

In the ensuing discussion, it was pointed out that point-of-use water can be an easy sell when the prospect already has a bottled-water system installed. Arguments for switching, of course, will center around freedom from the need to store and lift heavy bottles, and consequent liability for injury.

The economics also can be very appealing, and this perception holds the answer to getting paid for the installation. A worksheet, prepared with the client, can be very persuasive. Rashkin recommended doing the math, multiplying the monthly cost for the number of bottles the client uses, plus the rental, over the life of a three-year contract. This total can be contrasted with the cost of the proposed point-of-use system over the same three-year contract term, with a monthly charge that incorporates the initial installation expense.

During the seminar program on the following morning, Basil Fornaci of Info USA provided an overview of the “Sales Genie” service that gives subscribers access to a continually updated comprehensive database of businesses, searchable and sortable on a variety of criteria. The program was introduced to the OCS industry by Info USA’s Richard Conover last year (see VT, June 2006).

Fornaci led off by pointing out that the persistent challenge for a coffee service company (and for most other enterprises, too) is, “I need new business.” In marketing, he noted, there really is not a “next best thing” to that.

Info USA is a 30-year-old company that has acquired most of its major competitors on its way to becoming the nation’s leading compiler of business and professional databases. It introduced “Sales Genie” three years ago.

“Sales Genie” is an online program that mines Info USA’s vast database system to generate lists of leads for its subscribers. The database, updated every month, includes prospected, qualified contact names, the speaker said. These lists represent the highest attainable “deliverability,” exceeding 92% in ongoing validation through the U.S. Postal Service. They are continually amended and verified over the telephone by 3,000-plus Info USA personnel.

SEARCH POWER

There are about 14 million businesses in the United States, Fornaci pointed out, and Info USA’s expertise is in verifying and indexing them. The indices allow Sales Genie subscribers to search the database for matches to a wide variety of criteria: ZIP Code, employee population, business type, sales volume, and the like. Lists are susceptible to further refinement; as an example, the program can select for businesses that are subsidiaries of a corporation or that are branches of a larger organization. Years in business and credit report status also are indexed. It even is possible to select by floor space or by spending on Yellow Pages advertising – or to exclude businesses that are franchises.

“If you sign up a customer on a particular street, you can get a list of every other business on that street,” the speaker explained. And contact names are indexed, too, so subscribers can select them by job title.

“If you do blanket mailings once or twice a year, you may get a 1% response,” Fornaci said. “It’s a waste of money. By targeting the members of a list generated by Sales Genie, and making follow-up calls, you can get a 10% to 12% return.”

The program is able to print these lists – in a popular mailing-label format, among others – and export them into Microsoft Excel. The user may sort them into groups for easier comprehension and follow-up, and the program can display group members in red, to avoid inadvertent duplication. Sales Genie also provides a contact manager that can keep track of such details as the date on which to follow up a call to a prospect. It is able to maintain a history of interactions with the prospect or client for easy recall.

Sales Genie is offered on a subscription basis with a one-year agreement. Fornaci explained that this has many advantages over charging by the number of leads returned; subscribers can mine the database for as many or as few prospects as they wish. The program is described online at salesgenie.com, and a free trial is available.


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