Focus vs. The Lost Customer
I’m working remotely today from cafes in Charleston, SC—a needed change from the home office. In search of a free wi-fi connection, I left a Starbucks for another cafe down the road. From a business owner’s perspective, I couldn’t help thinking about the customers that Starbucks looses by offering a pay wi-fi service while others give it away.
Surely it’s not because the mega franchise can’t afford to give it away. Which begs the question, do they charge just because they can? Or are there other considerations involved. Maybe it serves as a way to shew away squatters that plant themselves for hours on end. But the squatters at cafes are generally caffeine addicts that chain drink. I’m on my third cup now, not to mention the breakfast sandwich, bottled water and 1 lb. bag of coffee beans that I purchased.
Don’t get me wrong, I’m not bashing Starbucks. I’m actually a fan of franchises and admire their finely tuned business model. So I’m left to think that the free vs. paid wi-fi decision must have been run through “the formula” and the pay service option came up the winner.
On a side note, didn’t the company just announce the closing of over 600 stores due to changes in in-store traffic? …changes in traffic just like my relocation to another local cafe for free wi-fi? Perhaps not, but you have wonder.
So how does this example apply to your business? What is the relative cost of providing a service or feature that would keep customers at your store or on your website, vs. the added revenues gained by simply keeping that customer around a while longer?
To be sure, there are cost-benefit considerations to any and every service that you offer. A recent example with my business was discontinuing our email marketing service. The time and cost of maintaining the back-end applications outweighed the return we were getting. Now I refer clients to third-party email marketing services. While I can’t help thinking that I’m sending business elsewhere, I know that I made a business focus decision that made sense for my business at the time.
From a consumer’s point of view, the Starbucks paid wi-fi decision seems like a poor one. But is it?
I turn the question to you. What are some cost-benefit decisions that you’ve made recently with your business?
chazd on 16 Dec 2008 at 4:47 am #
I got caught at Starbucks feeding the meter. While I was upset that I had to pay for an internet connection, it did worked flawlessly . . . and I noticed that nobody was bothering the workers about the service. The cost, $3.95 for 2 hours, wasn’t outrageous and may just be worth outsourcing to keep the baristas focused on brewing. Thanks for the post! chazd
DrRadclif on 29 Dec 2008 at 10:36 pm #
It’s really hard to understand the decision making process and all factors involved if you haven’t gone through it. We dropped a service and received negative feedback from customers – but it was from only about 10% of our customers. Consequently the same 10% that used the service. It just wasn’t enough use to justify the cost.
On a side note, the repercussions of taking a service away from customers are more numerous than never having offered it to begin with.
Billy Jorel on 14 Jul 2009 at 3:05 pm #
It’s a very tough question. I have a favorite cafe that until last week offered free wi-fi. Word is too many people took advantage of it, sitting for hours, and not buying products. The cafe implemented a password log-on system, but that wasn’t helping. Now the cafe has tired of dealing with the issue at all, and disconnected the service. This cafe was an ideal place; size, comfort, staff, products. I for one need a high speed connection and am really lost without this cafe. Yes, there are others that offer free, and I will have to seek out somewhere, but nowhere have I found a cafe as pleasant as this.
Seeing the Starbuck’s $3.95 for 2 hours strikes me as expensive, btw. Another cafe I frequent used to offer the “surf & sip” network, which at the time it was a paid service was $5 for the entire day; $2 an hour seems high.
I researched a system that can be implemented and customized for specific accounts, each charged according to the wishes of the owner; you could charge 5 cents an hour, 5 dollars, whatever; and you can tailor a package to let customers buy many hours that do not need to be used by a certain date; just let them come and go as they please, using it until it’s expired. Plus these accounts are tied to the MAC of a PC, so it isn’t just a matter of passing along the day’s password to other customers (which is what was happening at the cafe I have been frequenting).
When the atmosphere of the cafe is so good as to be a location of choice, whether or not laptop use is required, then paying for the service isn’t too big a deal, so long as the charges don’t outweigh the need.