Coffee shop marketing

[CoffeeStudent]

Do coffee shops spend on marketing or does location trump everything? If they do spend, how do they determine how much to spend? Is it a percentage of revenue? Do they have any way of measuring the success of their marketing budget?

[Ads]

[CanadianBrian]

Hello CoffeeStudent;
All very good questions. I look at location as being the most important thing. The way I look at it rather than spend $1,000 on advertizing I would sooner spend more on location and use that part of rent as part of my advertizing budget. You would spend $2,000 on a location with (x) # of traffic or spend $3,000 and get 4 times as much traffic. There is alot of other things that you can use like in house promotions, customer loyalty, exchanging business card distribution with local merchants ie) local beauty salon hands out your business card with a discount for first coffee or free coffee and you in turn hand out their cards with discount. This is a type of "Guerella Marketing"
I am sure that other people will have other ideas for you and am always interested in other peoples perspectives.

[CoffeeStudent]

That's a good point Brian, it probably makes more sense in the beginning to invest in a good location with high traffic, instead of setting aside funds for marketing. Although I'm noticing that the best locations seem to have several cafes to choose from. Customer loyalty and retention is definitely key. Once you've invested in getting customers, you definitely want to keep them (and hopefully, the quality of the coffee and environment will do most of that for you).

I was talking with an owner this afternoon who mentioned that he uses Radio advertising, which he finds very expensive. I asked him if he knew how much he was spending to acquire one customer. He didn't know. I don't think anyone could, because there's no way to know how many people show up as a result of the radio advertisement.

I'm interested in hearing if anyone measures the cost to acquire one new customer and whether they think it's worth what they're spending.

[John P]

CoffeeStudent:

Both location and marketing go hand in hand. Location is part of your marketing. Traffic flow and foot count alone do not make a great location, in many cases, they make a lousy location. It's about understanding the location that best suits your paradigm. As an owner you need to understand all the pieces in the puzzle to build a long-term business.

The idea of Marketing has changed in the past ten years. Marketing in today's world includes both branding and positioning as well as the general "get your name out there" which (should be) is handled by Social Media platforms rather than the old and tired print media. For the small shop owner, internal marketing is crucial. Dollars spent on training, ceramic, higher quality coffee, ambiance, etc.. all are part of branding/marketing/positioning.

[CanadianBrian]

Well, I was just assuming that you would not even think of opening a store without having exceptional coffee and service. Yes, location is a key part but that must go hand in hand with your business plan. You must look at the whole picture. Having a great drive by traffic count does not guarantee success. If it is in an area where you are not accesable,poor parking, or people are in a rush and don't stop. that traffic will not do you any good. Just look at how drivethrus have become the norm for so many businesses whether they are coffee or food places. If the location is bad for any reason or multiple reasons you would have to spend alot to make people come to your coffee shop and your cost to acquire and keep those customers would soon outweigh any profits you would see. I agree with John P that social media is playing a much larger role in todays society.

[John P]

Let's be honest, the expected level of quality and service is much higher at a sit down location compared to a drive thru. This does not mean one should slack off at the drive thru, but they are apples and oranges.
Relative to whether it's an apple or an orange, each should be the best for their category.

[CanadianBrian]

True to a certain extent but the point was that MOST people will go for convience, and that is why drive thrus have become so prevalent, and I have seen coffee shops that have tried to set up on busy roads and they are hard to get to as far as turning into their location or getting out of their location, and I have even seen ones in little strip malls that have 3 parking stalls dedicated to them with the common ones being always occupied by other tenants of the mall. In cases like this you would loose most potential customers because no matter how great your coffee is alot will not bother. That is another reason you see so many corporate (Starbucks,etc) having 2 or 3 locations within a few blocks of one another.

[mobileloyal]

From my experience, location is important, but mostly for the start-up. Once the shop is up and running, building a loyal group of customers is key. The most successful coffee shops that I've seen have great coffee, and great atmosphere, and owners/managers who will talk to their customers. Now that I think about it, I've seen very little traditional marketing used by coffee shops here in Lubbock.

[coffee_students]

There is always e-marketing which cost less and is in this time more effective

[John P]

There is no "costs more" or "costs less". It's either effective marketing or not. The proof is in the numbers relative to each specific marketing program.