The thesis supported was that "rightly from his point of view" that: "If I start giving away coffee, I'll close shop here, you don't make money by giving away stuff.. THEY'RE CRAZY!"
McDonald's Coffee Strategy
Anyone who has a commercial activity of any kind should carefully evaluate 2 fundamental aspects:
CUSTOMER ACQUISITION COST : How much does it cost me to acquire a new customer in terms of marketing expenditure? (of any kind, if I have not allocated any budget for marketing I have a serious problem, afghanistan phone number library much bigger).
THE LTV (Life Time Value) OF THE CUSTOMER : How much can that customer bring me in terms of “USEFUL LIFE”?
Obviously all this is counterintuitive and often generates conflict in our way of thinking, because in fact we need to "digest" a fundamental concept:
THE CUSTOMER MUST BE PAID
and yes, whether we are aware of it or not, acquiring a customer always has a cost to pay!
Let's now try to hypothesize some numbers that are completely exemplary for the specific case of McDonald's:
COST OF FREE COFFEE: 30 Cents
FREE COFFEE DISPENSED BY 1 SALES POINT: 100, therefore total promotional cost 30 Euros (only “live” cost)
NEW CUSTOMERS: n. 1 (Let's assume that only 1% are actually new customers who don't go to McDonald's regularly or have never been there)
LVT (Customer Lifetime): €30 (Let's assume an average customer eats 3 meals of €10 in 1 calendar year.)
In fact, by investing 30 Euros in this promotion, McDonald's gets 30, so nothing in immediate monetary terms, but in fact it has 1 NEW CUSTOMER!
He then created a SYSTEM (Funnel) to ACQUIRE NEW CUSTOMERS at ZERO COST!
Returning to the Barista's reasoning, but it is valid for any Business , we must never evaluate a customer on the basis of the dry TRANSACTION he makes on a single purchase but always evaluate him from a RELATIONAL and recurring LVT Business perspective (how much it brings me in 1 year for example).
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